<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 25, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SOUTHERN PERU COPPER CORPORATION
SOUTHERN PERU LIMITED
(EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
<TABLE>
<S> <C> <C>
DELAWARE 6719 13-3849074
DELAWARE 1021 13-5644139
(STATES OR OTHER JURISDICTIONS (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NOS.)
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBERS)
</TABLE>
------------------------
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 510-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES)
SOUTHERN PERU COPPER CORPORATION
SOUTHERN PERU LIMITED
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
AUGUSTUS B. KINSOLVING E. WAIDE WARNER, JR.
SOUTHERN PERU COPPER CORPORATION DAVIS POLK & WARDWELL
SOUTHERN PERU LIMITED 450 LEXINGTON AVENUE
180 MAIDEN LANE NEW YORK, NEW YORK 10017
NEW YORK, NY 10038 (212) 450-4000
(212) 510-2000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================
PROPOSED
AMOUNT TO BE MAXIMUM AGGREGATE AMOUNT OF
REGISTERED PROPOSED MAXIMUM OFFERING PRICE(1) REGISTRATION FEE
OFFERING PRICE
PER UNIT(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.90% Series A Secured
Export Exchange Notes Due
2007...................... $150,000,000 100% $150,000,000 $45,455
==================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 25, 1997
PROSPECTUS
, 1997
OFFER TO EXCHANGE
7.90% SERIES A SECURED EXPORT EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING 7.90% SERIES A SECURED EXPORT NOTES DUE 2007
OF
SOUTHERN PERU LIMITED
Payment of Principal and Interest Guaranteed by
SOUTHERN PERU COPPER CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , UNLESS EXTENDED
Southern Peru Limited ("SP Limited" or the "Issuer"), hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange $1,000 principal amount of 7.90% Series A Secured Export
Exchange Notes due 2007 (the "New Notes") for each $1,000 principal amount of
the issued and outstanding 7.90% Series A Secured Export Notes due 2007 (the
"Old Notes" and, together with the New Notes, the "Notes"). As of the date of
this Prospectus, there were outstanding $150,000,000 principal amount of Old
Notes. The terms of the New Notes are identical in all material respects to the
Old Notes, except that the offer of the New Notes will have been registered
under the Securities Act of 1933, as amended (the "Securities Act") and,
therefore, the New Notes will not be subject to certain transfer restrictions,
registration rights and related additional interest provisions applicable to the
Old Notes. This Prospectus and Letter of Transmittal will be first sent to all
holders of Old Notes on or about , 1997.
The Notes will be senior direct obligations of the Issuer and its Peruvian
Branch, (the "Branch") and will be secured by the proceeds of Dollar-denominated
Export Receivables (as defined herein) in respect of copper sales occurring
after the date of issuance of the Old Notes (the "Issue Date"), by SP Limited to
copper purchasers primarily under annual sales contracts. Payment of principal
of, and interest on, the Notes will be fully and unconditionally guaranteed as
described herein by Southern Peru Copper Corporation ("SPCC", "Southern Peru" or
the "Company"), which conducts its operations exclusively through its
wholly-owned subsidiary, SP Limited.
The New Notes will bear interest from , 1997 (the "Interest
Date"). Holders of Old Notes whose Old Notes are accepted for exchange will be
deemed to have waived the right to receive any payment in respect of interest on
the Old Notes accrued from the Interest Date to the date of the issuance of the
New Notes. Interest on the New Notes is payable monthly in arrears on the 30th
day of each month (or the 28th day of February), accruing from the interest
Date. Principal will be payable in monthly installments on such dates pursuant
to a level debt service schedule, commencing on June 30, 2000. Payments of
interest and principal and Additional Amounts (as defined herein), if any, will
be made by SP Limited or its Branch. See "Description of Notes -- Payments".
Payments on the Notes will be made after deduction and withholding for, or on
account of, Peruvian Tax (as defined herein), currently 1% and SP Limited or its
Branch will pay Additional Amounts in respect of such Peruvian Tax or will pay
such Peruvian Tax directly, subject to certain exceptions. Such exceptions
include that neither SP Limited nor its Branch will pay Additional Amounts
attributed to Peruvian Tax, currently 30%, with respect to Notes held by persons
that are individuals or estates. See "Description of Notes -- Payment of
Additional Amounts" and "Taxation -- Peruvian Taxation".
The final maturity date for the Notes will be May 30, 2007, unless
previously redeemed. The Notes will be redeemable, in whole or in part, at any
time at 100% of the principal amount thereof then outstanding, plus accrued
interest and a Make-Whole Premium (as defined herein). The Notes will also be
redeemable, in whole or under certain circumstances in part, at 100% of their
principal amount then outstanding, plus accrued interest and Additional Amounts,
if any, in the event that Peruvian Tax over 1%, or Additional Amounts attributed
thereto, are payable by SP Limited or the Branch or SPCC for any reason. Any
such redemptions will be at the option of SP Limited or SPCC. See "Description
of Notes -- Optional Redemption for Tax Reasons".
(continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 23 FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES
IN THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 3
(cover page continued)
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Issuer under the Registration Rights Agreement, dated May 30,
1997, among the Issuer and the other signatories thereto (the "Registration
Rights Agreement"). Based upon interpretations contained in letters issued to
third parties by the staff of the Securities and Exchange Commission (the
"Commission"), the Issuer believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by each holder thereof (other than a broker-dealer, as set
forth below, and any such holder which is an "affiliate" of the Issuer within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holder's
business and such holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes. Eligible holders wishing to
accept the Exchange Offer must represent to the Issuer in the Letter of
Transmittal that such conditions have been met. Each broker-dealer that receives
New Notes for its own account pursuant to the Exchange Offer must represent that
the Old Notes tendered in exchange therefor were acquired as a result of
market-making activities or other trading activities and must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
The Letter of Transmittal states that by so acknowledging and by delivery of a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of New Notes received in exchange of Old Notes where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Issuer has agreed that, for a period
of 90 days after the consummation of the Exchange Offer, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution".
The Issuer will not receive any proceeds from the Exchange Offer. The
Issuer will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date (as defined herein). In the event the Issuer terminates the
Exchange Offer and does not accept for exchange any Old Notes, the Issuer will
promptly return tendered Old Notes to the holders thereof. See "The Exchange
Offer".
Prior to this Exchange Offer, there has been no public market for the
Notes. The Issuer does not currently intend to list the New Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance than an active public market for the
New Notes will develop.
By tendering their Old Notes, each holder participating in the Exchange
Offer will be deemed to have consented, under the Registration Rights Agreement
(as defined herein) and the Amended and Restated Collateral Trust Agreement (as
defined herein), to the changes made in the Second Amended and Restated
Collateral Trust Agreement (as defined herein). See "Description of Notes -- The
Amended and Restated Collateral Trust and Security Agreement".
<PAGE> 4
AVAILABLE INFORMATION
This Prospectus constitutes a part of a registration statement (the
"Registration Statement", which term shall encompass any amendments thereto)
filed with the Commission under the Securities Act. As permitted by the rules
and regulations of the Commission, this Prospectus does not contain all of the
information contained in the Registration Statement and the exhibits and
schedules thereto and reference is hereby made to the Registration Statement and
the exhibits and schedules thereto for further information with respect to the
Issuer and the securities offered hereby. Statements contained herein concerning
the provisions of any documents filed as an exhibit to the Registration
Statement or otherwise filed with the Commission are not necessarily complete,
and in each instance reference is made to the copy of such document so filed.
Each such statement is qualified in its entirety by such reference.
SPCC is subject to the informational requirements of the Exchange Act, and
in accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
information may also be accessed electronically by means of the Commission's
home page on the Internet (http://www.sec.gov). In addition, such reports, proxy
statements and other information concerning SPCC can be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
on which exchange equity securities of SPCC are listed.
INCORPORATION OF DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference thereto and makes a part hereof
the following documents heretofore filed with the Commission pursuant to the
Exchange Act: (i) SPCC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, (ii) SPCC's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, and (iii) SPCC's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997. All documents filed by SPCC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering being made hereby shall
be deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the respective dates of the filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus will be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus, or in any other subsequently filed document which
is also incorporated or deemed to be incorporated by reference in this
Prospectus, modifies or supersedes such statement. Any statement so modified or
superseded will not be deemed, except as modified or superseded, to constitute a
part of this Prospectus.
SPCC will provide, without charge, to each person, including a beneficial
owner, to whom a Prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in the Prospectus, excluding exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the documents so
incorporated. Requests for copies of such documents should be addressed to the
Company at its principal executive offices as follows: Southern Peru Copper
Corporation, 180 Maiden Lane, New York, New York 10038, Attention: Secretary,
telephone number (212) 510-2000.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST FROM THE SECRETARY OF THE COMPANY AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICES LOCATED AT 180 MAIDEN LANE, NEW YORK, NEW YORK
10038, TELEPHONE NUMBER (212) 510-2000. IN ORDER TO ENSURE TIMELY DELIVERY OF
SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1997.
2
<PAGE> 5
FORWARD LOOKING STATEMENTS
FORWARD LOOKING STATEMENTS IN THIS PROSPECTUS IN DOCUMENTS INCORPORATED BY
REFERENCE HEREIN AND IN OTHER COMPANY STATEMENTS, INCLUDING STATEMENTS REGARDING
EXPECTED COMMENCEMENT DATES OF MINING OR METAL PRODUCTION OPERATIONS, PROJECTED
QUANTITIES OF FUTURE METAL PRODUCTION, ANTICIPATED PRODUCTION RATES, OPERATING
EFFICIENCIES, COSTS AND EXPENDITURES AS WELL AS PROJECTED DEMAND OR SUPPLY FOR
THE COMPANY'S PRODUCTS ARE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED (THE "EXCHANGE ACT"). ACTUAL RESULTS COULD DIFFER MATERIALLY
DEPENDING ON FACTORS INCLUDING THE AVAILABILITY OF MATERIALS, EQUIPMENT,
REQUIRED PERMITS OR APPROVALS AND FINANCING, THE OCCURRENCE OF UNUSUAL WEATHER
OR OPERATING CONDITIONS, LOWER THAN EXPECTED ORE GRADES, THE FAILURE OF
EQUIPMENT OR PROCESSES TO OPERATE IN ACCORDANCE WITH SPECIFICATIONS, LABOR
RELATIONS, ENVIRONMENTAL RISKS AS WELL AS POLITICAL AND ECONOMIC RISK ASSOCIATED
WITH FOREIGN OPERATIONS. RESULTS OF OPERATIONS ARE DIRECTLY AFFECTED BY METALS
PRICES ON COMMODITY EXCHANGES WHICH CAN BE VOLATILE. THE ACCOMPANYING
INFORMATION CONTAINED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION THE
INFORMATION SET FORTH UNDER THE HEADING "RISK FACTORS", IDENTIFIES IMPORTANT
FACTORS THAT COULD CAUSE SUCH DIFFERENCES.
3
<PAGE> 6
PRESENTATION OF FINANCIAL INFORMATION
All references in this Prospectus to "U.S. dollars", "Dollars", "$", "US$",
"cents", or "c" are to United States currency and all references to "Sol",
"Soles" or "S/." are to Peruvian Soles after the establishment of the new
currency unit, the Nuevo Sol, in September 1991, unless the context indicates
otherwise.
The consolidated financial statements of SPCC included herein are prepared
in U.S. dollars and in accordance with generally accepted accounting principles
in the United States ("U.S. GAAP"). SP Limited conducts its operations in Peru
through the Branch, which holds substantially all of the assets and liabilities
of SP Limited. As part of such registration, the Branch is deemed to have an
equity capital, of which SP Limited currently owns 97.5% and the holders of the
labor shares of the Branch, own the remainder. SPCC consolidates the financial
results of the Branch, and the labor shares are reflected in SPCC's financial
statements as a minority interest.
The Branch maintains its financial records in Soles, prepares financial
information in accordance with generally accepted accounting principles in Peru
("Peruvian GAAP") and reports such information to the Peruvian government on
this basis for purposes of calculating its Peruvian tax liability as well as
amounts payable in respect of the workers' participations and the equity
interest of the Labor Shares and the Company in the Branch. These amounts are
calculated on the basis of Peruvian GAAP and cannot therefore be directly
derived from the consolidated financial statements appearing in this Prospectus,
which are prepared in accordance with U.S. GAAP. Peruvian GAAP requires the
inclusion in the financial statements of the Branch of the Resultado de la
Exposicion a la Inflacion ("Result of Exposure to Inflation") which seeks to
account for the effects of inflation by adjusting the value of non-monetary
assets and liabilities and equity by a factor corresponding to wholesale price
inflation rates during the period covered by the financial statements. Monetary
assets and liabilities are not so adjusted.
Financial statements for SP Limited other than summary financial statements
are not presented because the results of SP Limited are included (and such
results constitute all of the results) in the consolidated financial statements
of SPCC, which has fully and unconditionally guaranteed payments on the Notes.
4
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the Consolidated
Financial Statements and the notes thereto included elsewhere or incorporated by
reference in this Prospectus.
Throughout this Prospectus, unless the context otherwise requires, the
terms "Southern Peru", "SPCC" and "Company" refer to the parent corporation and
its consolidated subsidiaries, including Southern Peru Limited, a wholly-owned
subsidiary of the Company and the Issuer of the Notes.
The Notes will be direct obligations of SP Limited and its Branch. Payments
of interest and principal and Additional Amounts, if any, will be made by SP
Limited or its Branch.
All tonnage information in this Prospectus is expressed in short tons and
all references to ounces are to troy ounces, in each case, unless otherwise
specified. Certain terms relating to the transaction are defined in "Description
of Notes -- Certain Definitions" and certain terms relating to the copper mining
business are defined in "Glossary of Certain Mining Terms".
THE COMPANY
GENERAL
SPCC is an integrated producer of copper, which operates mining, smelting
and refining facilities in the southern part of Peru. ASARCO Incorporated
("Asarco") holds 54.1% of the outstanding capital stock of SPCC and consolidates
SPCC's results. In 1996, Asarco had sales of $2.7 billion (of which SPCC sales
represented approximately 28%). At June 30, 1997, Asarco had total assets of
$4.4 billion and, based on 1996 copper production, was among the largest private
sector copper mining companies in the world. Several members of Asarco's
management hold management positions in SPCC, and Asarco holds eight seats on
SPCC's Board of Directors. SPCC, incorporated in Delaware in 1995, is a holding
company which conducts its operations through its wholly-owned subsidiary, SP
Limited. SP Limited was incorporated in Delaware in 1952 and has conducted
copper mining operations in Peru since 1960.
SPCC is among the world's ten largest private sector producers of copper,
producing 339,055 tons of copper from its mines in 1996. SPCC's average cash
cost of production was $0.539 per pound for copper sold in 1996. In 1996, the
Company had net sales of $753 million, of which $737 million were export sales.
At June 30, 1997, SPCC had total assets of $1.6 billion. The Company recently
approved an expansion of its Cuajone mine, which is expected to require a
capital investment of $245 million and to be completed in early 1999. The
Company also plans to modernize and expand its smelter in Ilo, Peru, which is
expected to require a capital investment of $787 million and to be completed in
2003. SPCC completed a five-year $445 million capital investment program in
1996, which included $120 million for new equipment and technology, $135 million
for environmental projects and $105 million for construction of a
solvent-extraction/electrowinning ("SX/EW") facility. As part of its $445
million investment program, the Company acquired the Ilo refinery in May 1994
from a Peruvian government-owned entity for $65 million and a commitment to make
an additional $20 million of improvements to the refinery over three years. The
Company's strategy is to continue to reduce costs and to increase production
through the expansion and modernization of its operations.
OPERATIONS
The Company currently operates two open pit mines, Toquepala and Cuajone,
pursuant to concessions from the Peruvian government. The concessions each have
an indefinite term, subject to payment of concession fees of up to $2 per
hectare annually for the mining concessions and a fee based on nominal capacity
for the processing concessions. See "Regulatory Framework -- Mining and
Processing Concessions". At December 31, 1996, the Company's proven and probable
sulfide ore reserves were approximately 332 million tons with an average copper
grade of 0.82% at Toquepala and 1,400 million tons with an average copper grade
of 0.65% at Cuajone. At current design operating rates of copper production, the
Toquepala and Cuajone mine ore reserves have lives of 20 years and 55 years,
respectively. Additionally, at December 31, 1996, the Company had proven and
probable
5
<PAGE> 8
leachable ore reserves of 650 million tons with an average copper grade of 0.20%
at Toquepala and 15 million tons with an average copper grade of 0.98% at
Cuajone. Copper concentrates produced at these two mines are processed at the
Company's smelter at Ilo, which also processes copper concentrates purchased
from external sources. In 1996, the smelter produced 316,804 tons of blister
copper, of which approximately 93% was from copper concentrates produced at the
Company's two mines. The Company also refines blister copper at its Ilo
refinery, which was acquired in May 1994. Acquisition of the refinery allowed
the Company to integrate its operations from mining of copper ore to the
production of refined copper and to reduce its cash costs of production. The
refinery currently has the capacity to refine approximately 247,000 tons
annually, representing approximately 78% of the Company's smelter production of
copper. The remaining unrefined blister copper is sold directly to various
customers under annual contracts.
In addition to copper cathode produced from its refinery, the Company
produces copper cathode from its SX/EW facility, which commenced operations in
November 1995. The SX/EW facility produced 46,585 tons of cathode copper in 1996
at a cash operating cost of less than $0.35 per pound. The SX/EW process
involves leaching of low grade ore dumps and production of refined copper
through electrowinning.
In 1996, the Company sold 347,145 tons of copper contained in blister or
copper cathodes. The Company also sold 8.7 million pounds of molybdenum and 3.1
million ounces of silver, produced as copper by-products.
To support its operations, the Company owns and operates port facilities,
rail equipment, a 134-mile rail network, a water system and warehousing
facilities, as well as housing, schools and hospitals for approximately 4,000
employees and their families.
EXPANSION AND MODERNIZATION PROGRAM
In September 1996, the Company announced its multi-year plan for the
expansion of the Cuajone copper mine and the modernization and expansion of its
copper smelter at Ilo.
Stage I, the expansion of the Cuajone mine, is expected to require a
capital investment of approximately $245 million (including cost escalation and
contingencies) and is expected to be completed in early 1999. The expansion is
designed to increase ore production at Cuajone by 50% to 96,000 tons per day
from the current 64,000 tons per day and to increase copper production by the
Company by 130 million pounds annually or 19%. The project will include
upgrading Cuajone's ore conveying system and installing an additional secondary
and tertiary crushing line, two ball mills, additional flotation capacity and an
additional tailings thickener. The Company also expects to purchase one new
56-cubic yard shovel and 11 new 240-ton haul trucks.
Stage II, the modernization of the Ilo smelter, is expected to be completed
in 2003 and to cost approximately $787 million (including cost escalation and
contingencies) based on the Company's engineering studies. The Company is
undertaking the smelter project in order to increase smelter production capacity
and to modernize the smelter in accordance with its recently approved agreement
with the government of Peru relating to environmental matters (the "Programa de
Adecuacion y Manejo Ambiental" or "PAMA"). See "Regulatory Framework --
Regulations, Permitting and Environmental Matters". The modernization of the Ilo
smelter will be completed in two phases. A new smelting furnace utilizing flash
furnace technology and associated support and environmental control facilities
will be installed by 2001. The converter operations will be modernized by
installing either flash technology or conventional Peirce-Smith converter
technology. This choice of converter technology is expected to be made before
2000 and new converter operations are planned to be in service by 2003. The time
frame allowed to select the converter technology will allow the Company to
evaluate the operation by others of the new flash converting technology. The
Company's modernization plan for the Ilo smelter is designed to avoid
significant disruptions in smelter production of blister copper during
construction and startup. Plans call for the smelter to continue to operate its
existing furnaces and converters until the new installations prove capable of
operating reliably at designed rates.
BRANCH AND LABOR SHARES
SP Limited conducts its operations in Peru through the Branch. The Branch
is not a corporation separate from SP Limited. It is, however, an establishment,
registered pursuant to Peruvian law, through which SP Limited
6
<PAGE> 9
holds assets, incurs liabilities and conducts operations in Peru. The Branch is
subject to Peruvian laws and jurisdiction and is considered to have a separate
legal identity for purposes of determining Peruvian income taxes. Although it
has neither its own capital nor liability separate from that of SP Limited, it
is deemed to have an equity capital for purposes of determining the economic
interests of holders of labor shares. Labor shares are non-voting ownership
interests distributed to workers in accordance with former Peruvian laws. As of
June 30, 1997 the labor shares represented a 2.5% interest in the equity of the
Branch. The Branch consists of substantially all the assets and liabilities of
SP Limited associated with its copper operations in Peru.
PRINCIPAL STOCKHOLDERS
As of June 30, 1997 the percentage of outstanding common shares held by
Asarco, Cerro Trading Company, Inc. ("Cerro"), Phelps Dodge Overseas Capital
Corporation ("Phelps Dodge"), and the other common stockholders in the Company
were Asarco (54.1%), Cerro (14.2%), Phelps Dodge (13.9%) and other common
stockholders (17.8%), respectively. SPCC's Common Stock is traded on the New
York Stock Exchange, Inc. (the "NYSE") and the Lima Stock Exchange. SPCC's
ownership structure is shown below.
SPCC OWNERSHIP STRUCTURE
FLOW CHART
SPCC's and SP Limited's principal office in the United States is located at
180 Maiden Lane, New York, NY 10038, tel. (212) 510-2000. Their principal office
in Peru is located at Avenida Caminos del Inca No. 171, Chacarilla del Estanque,
Santiago de Surco, Lima 33, Peru, tel. (511) 438-6565.
7
<PAGE> 10
TRANSACTION OVERVIEW
[FLOW CHART]
1. SP Limited issues US$150 million of Notes, secured by an interest in
Export Contracts, Export Receivables and the proceeds thereof equal to
the Total Collateral Percentage applicable to the Notes.
2. SPCC fully and unconditionally guarantees payment of principal and
interest on the Notes.
3. SP Limited's Export Customers make payment in U.S. dollars in respect of
Export Contracts directly into the offshore Collection Account held by
the Collateral Trustee for the benefit of the holders of the Notes and
certain other secured debt of SP Limited.
4. A percentage of the Collections deposited in the Collection Account equal
to the Total Collateral Percentage applicable to the Notes is transferred
on a daily basis to the Note Collateral Account and a percentage of
Collections equal to the Total Collateral Percentage for the other
secured debt is transferred to one or more accounts for the benefit of
the holders of other secured debt. The balance of the Collection Account
is distributed daily to SP Limited. Amounts deposited to the Note
Collateral Account are also distributed to SP Limited on a daily basis,
except as set forth in note 6 below. Each series of SENs will have a
separate Collateral Account and Reserve Account.
5. Unless a Retention Trigger Event or a Debt Service Retention Event has
occurred and is continuing (in which case the provisions of Note 6 will
be applicable), SP Limited will make payments of principal and interest
on the Notes directly from its own funds.
6. During the continuance of a Retention Trigger Event or Debt Service
Retention Event, prior to the release of any funds from the Note
Collateral Account to SP Limited, the Trustee shall have retained from
Collections deposited to the Note Collateral Account funds sufficient to
pay the debt service due on the Notes on the next Payment Date. During
the continuance of a Retention Trigger Event, a percentage of the
remaining Collections in the Note Collateral Account equal to the Blocked
Percentage will be retained in the Note Collateral Account and, in
certain circumstances, will be used to redeem a portion of the Notes.
Upon acceleration of the Notes following the occurrence of an Event of
Default, all Collections in the Note Collateral Account will be retained
and used to make payments on the Notes.
7. SP Limited will initially fund the Note Reserve Account from the proceeds
of the Notes in an amount equal to the Required Balance. The Note Reserve
Account will be used to make payments on the Notes in the event that SP
Limited fails to make payments of debt service as described above. The
Note Reserve Account will be replenished from the Note Collateral Account
if it is not replenished by SP Limited.
8
<PAGE> 11
THE TRANSACTION
The following summary does not purport to be complete and is qualified in
its entirety by reference to the provisions of the New Notes, the Guarantee, the
Indenture, the Supplemental Indenture and the Amended and Restated Collateral
Trust Agreement.
Introduction. The New Notes offered hereby are part of a program (the
"SENs Program") established by SP Limited providing for the issuance of up to
$750 million of Secured Export Notes (the "SENs") in series from time to time.
Payment of principal and interest on the SENs will be fully and unconditionally
guaranteed by SPCC as described herein (the "Guarantee"). The SENs will be
issued pursuant to an Indenture among SP Limited, SPCC, and Citibank, N.A., as
Trustee (the "Trustee"), as supplemented by a supplemental indenture (the
"Supplemental Indenture") for each series of SENs (collectively, the
"Indenture"). SP Limited has also entered into a $600 million secured term loan
and revolving credit facility (the "Credit Facility") with a group of lenders
(the "Lenders"). The Credit Facility will rank pari passu with the SENs and will
also be guaranteed, on a pari passu basis with the SENs, by SPCC. The SENs
Program and the Credit Facility are referred to herein as the "Program". The
maximum amount of principal which may be outstanding under the Program is $750
million (the "Program Amount"). In connection with the Program, SP Limited has
granted a security interest in favor of the Collateral Trustee pursuant to an
Amended and Restated Collateral Trust and Security Agreement between SP Limited
and Deutsche Bank AG, New York Branch (the "Collateral Trustee"), dated as of
May 30, 1997 (the "Amended and Restated Collateral Trust Agreement") for the
benefit of the holders of the SENs, the Lenders and holders of certain other
secured debt of SP Limited (collectively, the "Secured Parties") in the Export
Contracts (as defined herein) and Export Receivables arising from future copper
sales by SP Limited to customers located outside of Peru, covering up to a
maximum aggregate amount of 320,000 short tons annually. Collections (the
"Collections") in respect of Export Receivables will be deposited to a New York
segregated trust bank account (the "Collection Account") held by the Collateral
Trustee for the benefit of the Secured Parties. While the Collateral Trustee
will hold its interest in the Export Receivables for the benefit of all the
Secured Parties, each of the Notes, the other series of SENs, the Credit
Facility and the other secured debt will benefit only from a percentage interest
in the Export Receivables and the Collections as more fully described below. To
the extent that the aggregate percentage interest of all Secured Parties is less
than 100%, the Company will be entitled to receive the remaining percentage of
Collections on a daily basis in all circumstances, whether or not a default or
any other event has occurred. Except under certain circumstances, the Company
will also be entitled to receive on a daily basis the percentage of Collections
deposited to the sub-accounts described below. In addition to the security
interest described above, there has been established pursuant to the Indenture
for the benefit of the holders of the Notes, a collateral account (the "Note
Collateral Account") and a reserve account (the "Note Reserve Account"), which
are segregated trust accounts held by the Trustee in New York. Each series of
SENs will have a separate collateral account and reserve account established
pursuant to the related Supplemental Indenture.
The Notes are initially entitled to a percentage security interest in the
Export Receivables and the Collections equal to the percentage of the Program
Amount represented by the original principal amount of the Notes (the "Note
Basic Collateral Percentage"). Subject to certain conditions, the Company will
have the option of designating an additional percentage security interest in the
Export Receivables and the Collections for the benefit of the Notes (the "Note
Additional Collateral Percentage") (together with the "Note Basic Collateral
Percentage", the "Note Total Collateral Percentage").
Structure. In connection with the granting of a security interest in the
Export Contracts and the Export Receivables to the Collateral Trustee, SP
Limited will (i) notify in writing each of its customers that is a party to an
Export Contract in respect of Export Receivables (the "Export Customers") of
such security interest and (ii) authorize and direct in writing each such
customer to pay all amounts owed by it under such Export Contracts directly into
the Collection Account. SP Limited will request each customer party to an Export
Contract to execute a consent and acknowledgment to pay in accordance with such
notice. SP Limited has filed UCC-1 financing statements with respect to the
security interest of the Secured Parties in the Export Contracts and the Export
Receivables. The Trustee will have a security interest in the Note Collateral
Account and Note Reserve Account (the "Note Collateral").
9
<PAGE> 12
As described above, all Collections will be deposited on a daily basis in
the Collection Account. On a daily basis, the Collateral Trustee will allocate
the Collections to the Secured Parties and the Company in accordance with their
respective percentage interests in the Collections on that day. Each day, the
percentage of Collections equal to the Note Total Collateral Percentage will be
deposited in the Note Collateral Account. Unless certain events (as more fully
described below) have occurred and are continuing, Collections deposited in the
Note Collateral Account will be paid on a daily basis to the Company. If, as of
the last day of the most recent month, the ratio of aggregate Collections
transferred to the Note Collateral Account during the preceding six-month period
to the sum of all scheduled payments of principal of, and interest (including
Additional Amounts) on the Notes for such six-month period is less than three to
one (a "Debt Service Retention Event"), then the Trustee will retain on deposit
in the Note Collateral Account an amount equal to the scheduled principal of,
and interest on, the Notes due on the next monthly Payment Date before remitting
the balance to SP Limited. Pursuant to the Indenture, if (i) the ratio of
Collections in the Note Collateral Account to the sum of scheduled debt service
on the Notes, each for the preceding three months, is less than 1.50, 1.75 or
2.00 (if the principal amount outstanding under the Program for such period is
less than $300 million, $300 to $500 million or greater than $500 million,
respectively), or (ii) the ratio of the Collections in the Note Collateral
Account to the sum of scheduled debt service on the Notes, each for the
preceding six months, is less than 1.75, 2.00 and 2.25 (if the principal amount
outstanding under the Program for such period is less than $300 million, $300 to
$500 million or greater than $500 million, respectively) (the "Debt Service
Coverage Ratios"), or (iii) default by the Company in the payment of any
principal or premium, if any, due on the SENs of such series, whether at
maturity, redemption or otherwise, or default by the Company in the payment of
any interest or Additional Amounts due on any SEN of such series within five
Business Days (as defined herein) of its scheduled payment date and (iv) any
governmental authority of the Republic of Peru shall have condemned,
nationalized, seized or otherwise expropriated (for a period greater than 60
days) all or substantially all of the property of SP Limited or SPCC, a Trigger
Event (as defined herein) will automatically occur (each, an "Automatic Trigger
Event").
In addition, if, among other things, (i) the Company fails to meet its
financial covenants or violates other covenants which restrict the effecting of
certain mergers, consolidations or sales of assets, (ii) liens, other than
permitted liens, are incurred on the Export Receivables or the Company's copper
inventory or the Collateral Trustee or the Trustee ceases to have a perfected,
first priority security interest subject to certain permitted liens in the
Collateral or the Note Collateral, respectively, (iii) the Company defaults on
the payment of indebtedness greater than $30 million other than a Mandatory
Prepayment Event or otherwise defaults, which default results in the
acceleration of the repayment of such indebtedness, (iv) any Governmental
Authority of the Republic of Peru shall have enacted any rule, regulation or law
or have taken any other action which imposes restrictions on the free access to
foreign exchange affecting SPCC, SP Limited or the Branch or which prohibits the
payment of Export Receivables into the Collection Account and such rule,
regulation, law or action shall result in a Material Adverse Effect (as defined
herein) or (v) certain other events of default under the Indenture ("Events of
Default") occur, then the holders of 51% or more in principal outstanding amount
of the Notes may vote to declare that a Trigger Event has occurred (each, a
"Declared Trigger Event"). The Indenture provides that, upon the occurrence of
and during the continuance of an Automatic Trigger Event, any other event
described in clause (i), (ii), (iii) or (iv) of the immediately preceding
sentence, after applicable notice and cure periods, or any other Declared
Trigger Event (collectively, a "Retention Trigger Event"), the Trustee will
retain on deposit an amount equal to the scheduled principal of, and interest
on, the Notes due on the next monthly Payment Date. In addition, upon the
occurrence and during the continuance of an Automatic Trigger Event or a
Declared Trigger Event (a "Blocking Event"), the Trustee also will retain on
deposit a percentage of the remaining Collections equal to the applicable
blocked percentage (the "Blocked Percentage") and the remaining Collections will
be remitted to the Company. The Blocked Percentage will vary from 100% to 50%
depending on the amount of the Program which has been utilized at such time.
Amounts retained in the Note Collateral Account will be invested in Eligible
Investments. In the event that a Trigger Event based on the Debt Service
Coverage Ratios continues for a period in excess of twelve months and in certain
other cases, the Blocked Collections will be used to partially redeem the Notes
on each monthly Payment Date at a price equal to the principal amount of the
Notes being redeemed, plus a Make-Whole Premium, if any.
Unless a Retention Trigger Event or Debt Service Retention Event has
occurred, the Company will make direct payments to the holders of scheduled
principal and interest on each monthly Payment Date. If a Retention
10
<PAGE> 13
Trigger Event or a Debt Service Retention Event has occurred and is continuing,
payments of principal and interest on each monthly Payment Date will be made
from funds on deposit in the Note Collateral Account. In the event that the
Company fails to make the required payments or there are insufficient funds on
deposit in the Note Collateral Account to make the required payment, amounts on
deposit in the Note Reserve Account will be used to make the payments.
The Note Reserve Account will be established and funded from the proceeds
of the issuance of the Old Notes. The required balance in the Note Reserve
Account (the "Required Balance") will be equal to the principal plus interest
due for the following three-month period under the Notes. Following any
withdrawal from the Note Reserve Account or any increase in the Required Balance
resulting from the commencement of the amortization of the Notes, Collections
deposited in the Note Collateral Account will be transferred to the Note Reserve
Account to bring the amounts on deposit in such account to the Required Balance.
The Company may, at its option, choose to substitute for any or all of the
Required Balance, one or more stand-by letters of credit issued by one or more
banks with a rating of A-1 and P-1, or better, by Moody's Investors Services,
Inc. ("Moody's") and Standard & Poor's Rating Services ("Standard & Poor's"),
respectively and D-1 by Duff & Phelps Credit Rating Co. ("Duff & Phelps"), if
rated by Duff & Phelps. Amounts on deposit in the Note Reserve Account will be
invested at the direction of the Company in short term, high grade investments.
Events of Default include, among other things, (i) default in the payment
of principal, interest and Additional Amounts, (ii) the violation of covenants
restricting the effecting of certain mergers, consolidations or sales of assets,
(iii) the commencement of bankruptcy proceedings against the Guarantor, the
Issuer (or their respective Material Subsidiaries, as defined in the Indenture)
or the Branch, (iv) the Trustee ceasing to have a perfected, first priority
security interest in the Collateral, subject to certain permitted liens, and
additional collateral not being provided within 30 days, (v) the default in
payment of other indebtedness in excess of $30 million or (vi) the violation of
certain other covenants that are not cured within applicable grace periods. Upon
the occurrence of an Event of Default, the holders of a majority in principal
amount of the Notes may declare the principal amount of the Notes to be
immediately due and payable and thereafter 100% of the Collections in the Note
Collateral Account will be retained and applied to amounts due to the holders of
the Notes.
Certain export receivables and contracts, including contracts covering up
to 40,000 tons in the aggregate, which secure current debt arrangements of the
Company, are excluded each year from the pool of export receivables and
contracts securing the Notes (the "Excluded Receivables"). SP Limited may elect
to exclude up to an additional 10% of Net Certified Export Sales (as defined in
the Amended and Restated Collateral Trust Agreement) from the Program Amount so
long as the Debt Service Coverage Ratios are being met; provided, that the
Program Amount will be reduced by the same percentage of receivables that are so
excluded. In addition, in any year when SP Limited's anticipated export copper
sales are less than 320,000 tons, if SP Limited sells more than 20% of its
copper production domestically, the Program Amount will be reduced by a
percentage equal to the percentage of domestic sales in excess of 20%. In 1997,
SP Limited expects to sell approximately 6% of its copper production
domestically.
Receivables. SP Limited sells substantially all of its copper production
directly to customers pursuant to Dollar-denominated annual and long-term sales
contracts. The majority of its copper production is sold to customers in Europe,
Asia and the United States. In general, SP Limited seeks each year to sell 100%
of its forecast mine production pursuant to long-term or annual sales contracts.
Any excess is generally sold on a spot basis to entities with whom SP Limited
has commercial relationships.
SP Limited's principal copper customers include Union Miniere, Mitsui &
Co., Ltd., Pechiney Group, BICC Group, Asarco, Cerro Sales Corporation, MG Metal
& Commodity Co. Ltd., Delta Enfield Metals, Ltd., AB Electrokoppar and Colata
Continua Italiana SpA. These customers are expected to account for approximately
60% of SP Limited's total sales in 1997. SP Limited has a long-term commitment
to sell 46,300 tons of copper annually to Union Miniere. This contract expires
in 2003. SP Limited also has a long-term commitment to sell 26,500 tons of
copper annually to Mitsui, which expires in 2000. The receivables under the
Mitsui copper sales contract are Excluded Receivables.
11
<PAGE> 14
The remaining 40% of SP Limited's total sales that is not accounted for by the
customers described above is accounted for by other customers around the world.
SP Limited has long-standing relationships with the majority of its customers
and relatively stable sales volumes to its customers.
The table below shows anticipated sales quotas for SP Limited's principal
export customers for 1997.
1997 ANTICIPATED SALES QUOTAS TO PRINCIPAL EXPORT CUSTOMERS
(SHORT TONS)
<TABLE>
<CAPTION>
PRODUCTS
---------------------------------
SX/EW BLISTER
CUSTOMER ILO CATHODES CATHODES COPPER
- ----------------------------------------------------------------- ------------ -------- -------
<S> <C> <C> <C>
Union Miniere (Belgium).......................................... 6,600 660 46,300
Mitsui (Japan)................................................... 16,100 20,400
Pechiney Group (France).......................................... 27,800 550
BICC (England)................................................... 18,500 1,300
Asarco (U.S.).................................................... 18,600
MG Metals (England).............................................. 12,600
Colata (Italy)................................................... 9,900
Enfield (England)................................................ 10,400 220
Cerro Sales (U.S.)............................................... 7,550 2,800
Electrokoppar (Sweden)........................................... 9,900
------------ -------- -------
Total.................................................. 137,950 25,930 46,300
========= ======= ======
</TABLE>
SP Limited anticipates that approximately 6% of its copper sales in 1997
will be to domestic purchasers. In 1996, approximately 2% of copper sales were
sold domestically.
SP Limited's electrolytic copper cathodes are registered on the London
Metal Exchange (the "LME"). All of SP Limited's copper sales, including domestic
sales, are denominated in U.S. dollars, except in certain limited circumstances,
and use LME prices as a reference. Domestic sales are denominated in U.S.
dollars, but are payable in Soles at the prevailing exchange rate. Most
customers receive shipments on a monthly basis at a constant volume throughout
the year. As a result, there is little seasonality in SP Limited's sales
volumes.
SP Limited generally invoices its customers for copper sales on the basis
of market prices for refined metals and the amounts of metal contained in
unrefined products. Provisional invoices are issued upon shipment to customers.
Adjusted final invoices are issued following determination of the average LME
price for the month of final pricing as established by the contract which is
generally the month following delivery of the copper. In the case of blister
copper sales, the invoice reflects a deduction for third party refining charges.
Copper is shipped from the port of Ilo and title and risk of loss of the
shipment pass to the customer upon the loading of copper onto the ship at Ilo.
SP Limited's sales contracts provide for cash payment upon delivery of
documents, which entitle the customers to take possession of the copper at the
port of arrival. Blister copper contracts provide for payment of 90% of the
estimated amount due upon delivery of documents, with the remaining 10% due
following receipt of final assays to determine the actual amount of contained
copper and other metals. Contracts for sales to European customers call for cash
payment and delivery of documents upon delivery of copper to the port of
arrival. Contracts for sales to Asian customers call for cash payment and
delivery of documents twenty days after shipment, which is usually two or more
weeks before the copper's arrival at its Asian destination. As an accommodation
to certain long-standing customers, SP Limited provides documents prior to
payment in accordance with industry practices.
SP Limited's internal credit group evaluates the creditworthiness of each
potential customer by reviewing financial records and external credit reports.
SP Limited monitors its outstanding receivables and takes appropriate actions to
collect full payment for all of its sales. SP Limited has experienced two
uncollected debts during the past fifteen years totaling US$410,000.
12
<PAGE> 15
THE EXCHANGE OFFER
Notes Offered.................. Up to $150,000,000 principal amount of 7.90%
Series A Secured Export Exchange Notes due
2007. The terms of the New Notes and the Old
Notes are identical in all material respects,
except that the offer of the New Notes will
have been registered under the Securities Act
and therefore, the New Notes will not be
subject to certain transfer restrictions,
registration rights and related additional
interest provisions applicable to the Old
Notes.
The Exchange Offer............. The Issuer is offering, upon the terms and
subject to the conditions of the Exchange
Offer, to exchange $1,000 principal amount of
New Notes for each $1,000 principal amount of
Old Notes. See "The Exchange Offer" for a
description of the procedures for tendering
Old Notes. The Exchange Offer is intended to
satisfy obligations of the Issuer under the
Registration Rights Agreement, dated May 30,
1997, between the Issuer and Credit Suisse
First Boston Corporation, Chase Securities
Inc., Citicorp Securities, Inc., Deutsche
Morgan Grenfell Inc., Goldman Sachs & Co. and
J.P. Morgan Securities Inc.
Consent to Amendments in
Amended and Restated Collateral
Trust Agreement.............. By tendering their Old Notes, each holder
participating in the Exchange Offer will be
deemed to have consented, under the
Registration Rights Agreement and the Amended
and Restated Collateral Trust Agreement, to
the changes made in the Second Amended and
Restated Collateral Trust Agreement. See
"Description of Notes -- The Amended and
Restated Collateral Trust and Security
Agreement".
Tenders, Expiration Date;
Withdrawal................... The Exchange will expire at 5:00 p.m., New
York City time, on , 1997, or such
later date and time to which it is extended.
The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any time
prior to the Expiration Date. Any Old Notes
not accepted for exchange for any reasons
will be returned without expense to the
tendering holder thereof as promptly as
practicable after the expiration or
termination of the Exchange Offer.
Federal Income Tax
Consequences................... The exchange pursuant to the Exchange Offer
will not result in any income, gain or loss
to the holders or the Issuer for federal
income tax purposes. See "Taxation -- United
States Taxation -- Tax Consequences of the
Exchange Offer".
Use of Proceeds................ There will be no proceeds to the Issuer from
the issuance of the New Notes pursuant to the
Exchange Offer.
Exchange Agent................. Citibank, N.A. is serving as Exchange Agent
in connection with the Exchange Offer.
CONSEQUENCE OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Based upon interpretations contained in letters issued to third parties by
the staff of the Commission, the Issuer believes that, generally, any holder of
Old Notes (other than a broker-dealer, as set forth below, and any holder who is
an "affiliate" of the Issuer within the meaning of Rule 405 under the Securities
Act) who exchanges its Old Notes for New Notes pursuant to the Exchange Offer
may offer such New Notes for resale,
13
<PAGE> 16
resell such New Notes, or otherwise transfer such New Notes without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided such New Notes are acquired in the ordinary course of the holder's
business and such holder has no arrangement or understanding with any person to
participate in a distribution of such New Notes. Eligible holders wishing to
accept the Exchange Offer must represent to the Issuer in the Letter of
Transmittal that such conditions have been met and must represent, if such
holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, that neither such holder
nor the person receiving such New Notes, if other than the holder, is engaged in
or intends to participate in the distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes must represent that the Old Notes tendered in exchange therefor were
acquired as a result of market-making activities or other trading activities and
must acknowledge that it will deliver a prospectus in connection with any resale
of such New Notes. See "Plan of Distribution". To comply with the securities
laws of certain jurisdictions, it may be necessary to qualify for sale or
register the New Notes prior to offering or selling such New Notes. The Issuer
does not currently intend to take any action to register or qualify the New
Notes for resale in any such jurisdiction. If a holder of Old Notes does not
exchange such Old Notes for New Notes pursuant to the Exchange Offer, such Old
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Old Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. Any holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose or participating, in a distribution of New Notes
could not rely on the position of the staff of the Commission enunciated in
Exxon Capital Holdings Corporation (available May 13, 1988) or similar no-action
letters and, in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring liability
under the Securities Act for which the holder is not indemnified by the Issuer.
See "The Exchange Offer -- Consequences of Failure to Exchange" and
"Registration Rights Agreement; Special Interest".
14
<PAGE> 17
SUMMARY DESCRIPTION OF THE NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except that the offer of the New Notes will have been registered under
the Securities Act and, therefore, the New Notes will not be subject to certain
transfer restrictions, registration rights and related special interest
provisions applicable to the Old Notes.
Issuer..................... Southern Peru Limited
Guarantor.................. Southern Peru Copper Corporation
Securities Offered......... Up to $150 million principal amount of 7.90%
Secured Export Exchange Notes due 2007.
Program Amount............. $750 million available in total for (i) issuance in
series of SENs and (ii) outstandings under the $600
million secured term loan and revolving credit
facility.
Maturity Date.............. May 30, 2007
Scheduled Interest Payment
Dates.................... The 30th day of each month (or the 28th day of
February), accruing from , 1997
(each, a "Payment Date"). The New Notes will bear
interest from , 1997. Interest on each
New Note will accrue from (A) the latter of (i) the
last interest payment date on which interest was
paid on the Old Note surrendered in exchange
therefor, or (ii) if the Old Note is surrendered
for exchange to occur on a date after the record
date for the next succeeding interest payment date
and prior to such interest payment date, the date
of such interest payment date.
Scheduled Amortization..... Principal on the Notes is payable on each monthly
Payment Date, commencing June 30, 2000, in an
amount such that there will be "level debt"
installment payments of principal and interest on
the Notes over a period of 7 years.
Optional Redemption........ The Notes are redeemable in whole or in part at the
option of the SP Limited at 100% of the principal
amount thereof then outstanding, plus accrued
interest and a Make-Whole Premium equal to the
excess, if any, of (i) the present value of the
future debt service on the Notes being redeemed
(discounted at 75 basis points above the then
current yield on U.S. Treasury securities of a
maturity comparable to the remaining average life
of the Notes) over (ii) the outstanding principal
amount of the Notes being redeemed.
Ratings.................... The Notes and the SENs Program have been rated Baa3
by Moody's, BBB- by Standard & Poor's and BBB- by
Duff & Phelps. See "Description of
Notes -- Ratings".
Ranking of the Notes....... The Notes are direct, unconditional senior
obligations of SP Limited and its Branch and will
rank pari passu with the other outstanding series
of SENs and with borrowings under the Credit
Facility. The Notes are entitled to the benefits
and security of the Collateral described below.
Guarantee.................. The Guarantee is a direct, unconditional senior
obligation of SPCC which will rank pari passu with
the guarantee by SPCC of borrowings under the
Credit Facility.
Collateral................. The Notes are secured by the following Collateral:
Export Receivables, Export
Contracts............... SP Limited will grant a security interest in the
Export Contracts and the Export Receivables to the
Collateral Trustee for the benefit of the holders,
lenders under the Credit Facility and holders of
certain other
15
<PAGE> 18
secured debt of SP Limited. Export receivables
subject to the security interest in favor of the
Collateral Trustee do not include receivables from
the sale of copper products (i) pursuant to certain
current loan agreements up to an amount of 40,000
tons annually and (ii) at the option of SP Limited,
up to 10% of Net Certified Export Sales (as defined
herein), provided that if SP Limited elects to
exclude such 10%, the Program Amount will be reduced
by a percentage equal to the percentage of
receivables so excluded. If the Company has utilized
the full Program Amount of $750 million, it may not
exclude such 10%. SP Limited may not elect to exclude
such 10% if either the Three-Month Debt Service
Coverage Ratio or the Six-Month Debt Service Coverage
Ratio (each as defined herein) is not satisfied with
respect to the preceding three or six months,
respectively. In addition, SP Limited may exclude
receivables in respect of Excess Certified Export
Sales. See "Description of Notes -- The Collateral"
and "-- Certain Definitions".
Collection Account........ Collections in respect of Export Receivables will be
deposited in a segregated trust account maintained by
the Collateral Trustee in New York for the benefit of
the Secured Parties (including the holders of the
Notes).
Note Collateral Account... The Collateral Trustee will transfer on a daily basis
from the Collection Account a portion of the
Collections equal to the Note Total Collateral
Percentage into the Note Collateral Account. The Note
Total Collateral Percentage is equal to the Note
Basic Collateral Percentage plus the Additional
Percentage (as defined herein), if any. The Note
Basic Collateral Percentage is proportionate to the
ratio of the original principal amount of outstanding
Notes to the Program Amount. Except as described
below, amounts in the Note Collateral Account will be
remitted daily to SP Limited. Amounts in the Note
Collateral Account will be retained by the Trustee up
to an amount equal to the scheduled debt service on
the Notes due on the next monthly Payment Date upon
the occurrence and continuance of a Retention Trigger
Event or a Debt Service Retention Event. In addition,
during the continuance of a Blocking Event, a portion
of the remaining Collections deposited in the Note
Collateral Account equal to the Blocked Percentage
will be retained in the Note Collateral Account. Upon
acceleration of the Notes following the occurrence of
an Event of Default, all Collections in the Note
Collateral Account will be retained and used to make
payments on the Notes.
Note Reserve Account...... SP Limited will be required to maintain the Required
Balance in the Note Reserve Account. The Required
Balance is equal to the debt service due on the Notes
for the next three monthly Payment Dates. The
Required Balance will be funded initially from the
proceeds of the Notes. Alternatively, letters of
credit issued for the benefit of the Trustee may be
substituted for all or part of the Required Balance.
On any monthly Payment Date that SP Limited fails to
pay the scheduled principal of, and interest on the
Notes due on such date, the Trustee will draw on the
Note Reserve Account (or the letters of credit) to
meet such scheduled debt service on the Notes. Any
deficiency in the Required Balance will be
replenished with funds deposited to the Note
Collateral Account. See "Description of Notes -- The
Collateral".
16
<PAGE> 19
Taxes; Additional
Amounts.................... Payments on the Notes (including principal and
interest) will be made free and clear of any
withholding or deduction for or on account of any
Peruvian Tax, unless SP Limited is required by law
to pay such Peruvian Tax directly or by means of
withholding or deduction. In case of withholding or
deduction, additional amounts will, subject to
certain exceptions, be paid (the "Additional
Amounts") so that holders of the Notes will receive
the amounts that they would have received had no
such Peruvian Tax been withheld or deducted. See
"Description of Notes -- Payments of Additional
Amounts".
Payments of interest on the Notes to holders that
are not corporations, partnerships or trusts
organized under the laws of the United States or a
State thereof or a corporation or other entity
organized or established under the laws of any
jurisdiction outside Peru will be subject to income
tax withholding in Peru, currently at a rate of
30%, for which no Additional Amounts will be paid.
As a consequence, no Additional Amounts will be
payable to individuals or estates. Therefore, such
holders could face adverse tax consequences if they
purchase the Notes. See "Taxation -- Peruvian
Taxation".
Tax Redemption............. The Notes are redeemable at the option of SP
Limited or SPCC as a whole (or in part if SP
Limited or its Branch or SPCC is or will become
obligated to pay Additional Amounts or excess
Interest Tax (as defined below) aggregating at
least $1,000,000 per annum) at their principal
amount together with accrued interest and any
Additional Amounts thereon to the date of
prepayment if at any time SP Limited or its Branch
or SPCC for any reason would be obligated,
notwithstanding efforts to avoid such obligation,
to pay Additional Amounts in excess of those
attributed to Peruvian Tax of 1% withheld from
interest payments to holders of Notes that are not
domiciled in Peru for Peruvian tax purposes or to
pay a tax in excess of 1% on payments of interest
to holders of Notes that are not domiciled in Peru
for Peruvian tax purposes directly to the
applicable Peruvian taxing authority (an "Interest
Tax"), provided that SP Limited delivers an opinion
of independent legal counsel confirming the tax
obligation. See "Description of Notes -- Optional
Redemptions for Tax Reasons". If the Issuer or
Guarantor is or will become obligated to pay excess
Additional Amounts or excess Interest Tax only with
respect to Notes held by a certain type (or types)
of holders, the Issuer or Guarantor may effect a
partial redemption for tax reasons of the Notes
held by such holders and may not redeem the Notes
of other holders. Any other partial redemption of
the Notes for tax reasons will be limited to the
aggregate amount of Notes required to be redeemed
such that the aggregate Additional Amounts and
Interest Tax on the outstanding Notes after such
redemption equals the amount of Additional Amounts
and Interest Tax which would have been payable at a
withholding or tax rate of 1% (without giving
effect to such partial redemption).
Holders of two-thirds or more of the aggregate
principal amount of the Notes may waive the right
to Additional Amounts in respect of withholding
taxes in excess of a rate of 1% or agree to receive
interest payments net of Interest Taxes in excess
of 1%, in which case SP Limited or SPCC will not be
entitled to redeem the Notes for tax reasons and
will not be obligated to pay any excess Additional
Amounts.
Certain Covenants.......... In the Indenture, the Company covenants to maintain
a Consolidated Tangible Net Worth at least equal to
$750 million and a Debt to Capitalization (each as
defined herein) ratio of no greater than 50%. The
Indenture
17
<PAGE> 20
also contains covenants restricting, among other
things, the creation of liens on the Principal
Properties (as defined herein), and the effecting
of certain mergers, consolidations or sales of
assets. In addition, the Company will covenant that
it will not create liens with respect to Export
Contracts or Export Receivables other than those in
favor of the Collateral Trustee and certain
permitted liens. See "Description of
Notes -- Covenants" and "-- Trigger Events".
Trigger Events............. Trigger Events in the Indenture, include, among
other things, (i) if the ratio of Collections in
the Note Collateral Account to the sum of scheduled
debt service on the Notes, each for the preceding
three months, is less than 1.50, 1.75 or 2.00 (if
the principal amount outstanding under the Program
for such period is less than $300 million, $300 to
$500 million or greater than $500 million,
respectively), (ii) if the ratio of the Collections
in the Note Collateral Account to the sum of
scheduled debt service on the Notes, each for the
preceding six months, is less than 1.75, 2.00 and
2.25 (if the principal amount outstanding under the
Program for such period is less than $300 million,
$300 to $500 million or greater than $500 million,
respectively), (iii) the Company failing to meet
its financial covenants or violating other
covenants which restrict the effecting of certain
mergers, consolidations or sales of assets, (iv)
the creation of liens, other than permitted liens,
on the Export Receivables or the Company's copper
inventory or the Collateral Trustee or Trustee
ceases to have a perfected, first priority security
interest in the Collateral subject to permitted
liens, (v) the Company defaulting on the payment of
indebtedness greater than $30 million or otherwise
defaulting if such default results in the
acceleration of the repayment of such indebtedness
other than as a result of a Mandatory Prepayment
Event (as defined herein), (vi) any Governmental
Authority of the Republic of Peru shall have
enacted any rule, regulation or law or have taken
any other action which imposes restrictions on the
free access to foreign exchange affecting SPCC, SP
Limited or the Branch or which prohibits the
payment of Export Receivables into the Collection
Account and such rule, regulation, law or action
shall result in a Material Adverse Effect (as
defined in the Indenture) and (vii) the occurrence
of other Events of Default. Generally, the events
described above (except for certain specified
events, including the events specified in clauses
(i) and (ii) above) will not become Trigger Events
until the Company has failed to remedy a default
after the applicable grace period set forth in the
Indenture which generally commences on the earlier
of knowledge of the default by a Responsible
Officer of the Company or receipt of notice by the
Company from the Trustee or Holders of 10% of the
aggregate principal amount of the Notes. Upon the
occurrence of a Trigger Event which becomes a
Retention Trigger Event and/or a Blocking Event
(which, in the case of certain Trigger Events
requires the vote of holders of 51% or more of the
outstanding principal amount of the Notes), the
Collateral Trustee will retain collections in the
Note Collateral Account as provided above under
"Note Collateral Account" until such Trigger Event
is cured or deemed to be cured as provided in the
Indenture. See "Description of Notes -- Trigger
Events".
Accelerated Amortization
Event...................... Certain Blocking Events, with the passage of time
or the vote of 51% or more of the outstanding
principal amount of the Notes, will become
Accelerated Amortization Events (as defined in the
Indenture). Blocked Collections will be applied to
redemption of the Notes at a price equal to
18
<PAGE> 21
par plus a Make-Whole Premium. An Accelerated
Amortization Event may be rescinded or waived by
the affirmative vote of holders of 51% or more of
the outstanding principal amount of Notes.
Following cure of the underlying Trigger Event, the
resulting Accelerated Amortization Event shall be
deemed cured, and there will be no further
prepayment of Notes. Prepayments will be applied
pro rata to all remaining scheduled payments on the
Notes. Upon cure of the underlying Trigger Event,
the Company will again pay principal of, and
interest on, the Notes pursuant to the original
schedule of "level debt" installment payments of
principal and interest, with each such installment
amount reduced pro rata to reflect the pro rata
application of prepayments, during the pendency of
the Accelerated Amortization Event. See
"Description of Notes -- Accelerated Amortization
Event".
Events of Default.......... Events of Default in the Indenture include, among
others, the following: (i) failure to pay principal
when due or interest within five business days of
the date when due; (ii) failure to comply with
financial and certain other covenants; (iii)
bankruptcy events; (iv) failure to deliver notice
and form acknowledgment to customers with intent to
avoid the security arrangements for the Notes; (v)
the creation of liens, other than permitted liens,
on the Export Receivables or the Company's copper
inventory or the Trustee or the Collateral Trustee
ceasing to have a perfected first priority security
interest in the collateral, subject to permitted
liens, and (vi) the Company defaulting on the
payment of indebtedness greater than $30 million or
otherwise defaulting if such default results in the
acceleration of the repayment of such indebtedness
other than as a result of a Mandatory Prepayment
Event and expropriation of all or substantially all
of SP Limited's assets for a period in excess of 60
days. Generally, the events described above (except
for certain specified events) will not become
Events of Default until the Company has failed to
remedy a default after the applicable grace period
set forth in the Indenture, which grace period
generally commences upon the earlier of (i)
knowledge of the default by a responsible officer
of the Company or (ii) receipt of notice by the
Company from the Trustee or holders of 10% of the
aggregate principal amount of the Notes.
The Notes will become due and payable and 100% of
the Collections deposited in the Note Collateral
Account will be retained and used to repay the
Notes automatically upon the occurrence of a
bankruptcy-related Event of Default or in all other
cases upon the direction of holders having 51% of
the outstanding principal amount of the Notes;
provided, however, that if any Event of Default
constituted a Trigger Event, the holders of Notes
will conduct a vote (separate from any vote taken
to direct the Collateral Trustee to retain Blocked
Collections) to declare the Notes due and payable.
Indenture.................. The Notes are issued pursuant to an Indenture and a
Supplemental Indenture.
Governing Law.............. The Indenture, the Notes and the Amended and
Restated Collateral Trust Agreement are each
governed by the laws of the State of New York.
Risk Factors............... For a discussion of certain material factors to be
considered by potential investors in connection
with an investment in the Notes, see "Risk
Factors".
Collateral Trustee......... Deutsche Bank AG, New York Branch
Indenture Trustee.......... Citibank, N.A.
19
<PAGE> 22
SELECTED SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary financial information of SPCC and its consolidated
subsidiaries, as of and for each year in the five years ended December 31, 1996
has been derived from the consolidated financial statements audited by Coopers &
Lybrand, L.L.P. independent accountants. The summary financial information as of
and for the six months ended June 30, 1997 and June 30, 1996 is unaudited. In
the opinion of management, all adjustments (consisting only of normal recurring
accruals) have been made to present fairly on a basis consistent with generally
accepted accounting principles the condensed consolidated balance sheet and
statements of earnings for such periods. The results of operations for the six
months ended June 30, 1997 are not necessarily indicative of results for the
year ending December 31, 1997. This information is qualified in its entirety by,
and should be read in conjunction with, the Consolidated Financial Statements
and the related notes thereto included elsewhere and incorporated herein by
reference in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED JUNE 30,
----------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS AND COPPER PRICE)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
EARNINGS:
Net sales..................... $ 441,008 $ 369,577 $ 753,032 $ 928,840 $701,678 $547,511 $622,033
Operating costs and
expenses(1)................. 291,658 233,371 504,267 562,183 559,651 477,326 490,094
Operating income.............. 149,350 136,206 248,765 366,657 142,027 70,185 131,939
Minority interest of labor
shares in income of Peruvian
Branch...................... 3,418 3,364 5,208 43,558 18,610 11,218 20,510
Earnings before cumulative
effect of the change in
accounting principle........ 115,416 94,337 180,512 217,754 91,224 29,130 45,638
Cumulative effect of the
change in accounting
principle................... -- -- -- 165,092(2) --
-------- -------- ---------- ---------- -------- -------- --------
Net earnings.................. $ 115,416 $ 94,337 $ 180,512 $ 217,754 $ 91,224 $194,222 $ 45,638
======== ======== ========== ========== ======== ======== ========
PER SHARE AMOUNTS(3)
Earning before cumulative
effect of the change in
accounting principle........ $ 1.44 $ 1.18 $ 2.25 $ 3.31 $ 1.39 $ 0.45 $ 0.69
Cumulative effect of the
change in accounting
principle................... -- -- -- -- -- 2.51 --
Net earnings.................. 1.44 1.18 2.25 3.31 1.39 2.96 0.69
Dividends paid................ 0.65 0.95 1.47 1.27 0.33 0.27 0.23
BALANCE SHEET INFORMATION (END
OF PERIOD):
Cash and marketable
securities.................. $ 419,115 $ 237,737 $ 174,205 $ 262,099 $136,333 $ 67,548 $ 83,073
Working capital............... 608,816 318,129 297,795 312,476 242,384 184,761 164,587
Net property.................. 854,632 811,345 855,808 779,368 522,850 390,719 390,187
Total assets.................. 1,612,814 1,255,757 1,279,849 1,271,701 968,506 727,951 723,253
Long-term debt................ 271,050 105,397 82,892 76,828 114,118 15,600 --
Total liabilities and minority
interest.................... 534,497 285,279 264,822 318,214 333,657 162,911 334,435
Stockholders' equity.......... 1,078,317 970,478 1,015,027 953,487 634,849 565,040 388,818
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS AND COPPER PRICE)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER ITEMS:
Depreciation, amortization and
depletion................... $ 23,107 20,670 $ 41,623 $ 35,952 $ 39,742 $ 34,601 $ 32,491
Capital expenditures.......... 61,354 51,931 120,803 183,041 181,912 31,859 23,063
Cash dividends................ 52,125 76,204 117,913 83,747 21,415 18,000 15,000
Ratio of earnings to fixed
charges(4).................. 20.26 21.49 19.95 23.35 15.14 123.57 294.51
Average LME Copper Price
(per pound)................. $ 1.12 $ 1.14 $ 1.04 $ 1.33 $ 1.05 $ 0.87 $ 1.04
</TABLE>
- ---------------
(1) Includes provision for workers' participation of $10.9 million, $10.4
million, $18.0 million, $32.2 million, $13.9 million, $8.8 million and $14.1
million in the six months ended June 30, 1997 and 1996 and in years ended
December 31, 1996, 1995, 1994, 1993 and 1992, respectively.
(2) Represents the cumulative effect, as of January 1, 1993, of adopting
Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes".
(3) Per share amounts are presented after giving retroactive effect to a 100 to
1 stock split declared and made on November 4, 1994.
(4) The ratio of earnings to fixed charges has been computed by dividing
operating income by interest expense.
21
<PAGE> 24
SELECTED SUMMARY OPERATING INFORMATION
The following table presents summary production and sales data for the
Company for the periods indicated. For more information regarding such data, see
"Business and Properties".
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
COPPER MINING
Ore Mined (in tons):
Toquepala mine.............. 9,302,000 8,984,000 18,609,000 16,937,000 15,907,000 16,044,000 15,559,000
Cuajone mine................ 10,499,000 10,321,000 21,249,000 21,378,000 21,785,000 21,409,000 21,471,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total................... 19,801,000 19,305,000 39,858,000 38,315,000 37,692,000 37,453,000 37,030,000
========== ========== ========== ========== ========== ========== ==========
Average Copper Ore Grade:
Toquepala mine.............. 0.74% 0.87% 0.81% 0.86% 0.80% 0.83% 0.85%
Cuajone mine................ 0.93% 0.95% 0.96% 0.79% 0.84% 0.83% 0.86%
Weighted Average........ 0.84% 0.91% 0.89% 0.82% 0.82% 0.83% 0.86%
COPPER PRODUCTION
(contained copper in tons):
Mines
Toquepala mine.............. 60,067 63,780 126,464 128,064 111,797 115,047 113,232
Cuajone mine................ 83,180 80,922 166,006 145,491 156,037 150,410 157,946
SX/EW(1).................... 24,029 22,658 46,585 5,006 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total................... 167,276 167,360 339,055 278,561 267,834 265,457 271,178
========== ========== ========== ========== ========== ========== ==========
ILO SMELTER
(blister copper in tons):
From SPCC concentrates........ 124,984 137,643 294,997 268,761 268,432 265,046 268,407
From purchased concentrates... 13,700 8,255 21,807 48,467 53,671 47,749 35,482
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total................... 138,684 145,898 316,804 317,228 322,103 312,795 303,889
========== ========== ========== ========== ========== ========== ==========
REFINED COPPER (in tons) (2):
Cathode production (for
SPCC)....................... 125,715 101,871 219,800 216,207 210,671 198,375 197,059
SX/EW(1)...................... 24,029 22,658 46,585 5,006 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total................... 149,744 124,529 266,385 221,213 210,671 198,375 197,059
========== ========== ========== ========== ========== ========== ==========
SILVER PRODUCTION
(troy ounces contained in
blister):
From SPCC concentrates........ 1,369,147 1,434,195 3,096,506 2,957,670 2,979,199 2,813,242 2,675,094
From purchased concentrates... 167,573 87,787 192,684 605,244 555,511 444,983 345,686
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total................... 1,536,720 1,521,982 3,289,190 3,562,914 3,534,710 3,258,225 3,020,780
========== ========== ========== ========== ========== ========== ==========
MOLYBDENUM PRODUCTION
(in tons contained in
concentrates):.............. 2,198 1,913 4,370 4,004 3,060 3,156 3,542
========== ========== ========== ========== ========== ========== ==========
COPPER SALES (IN TONS):
Refined....................... 150,539 124,849 265,936 223,006 212,388 200,447 191,977
In blister.................... 27,436(3) 40,574 81,209 100,296 114,173 106,223 102,555
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total................... 177,975 165,423 347,145 323,302 326,561 306,670 294,532
========== ========== ========== ========== ========== ========== ==========
COPPER EXPORTS (IN TONS):
Refined....................... 139,677 123,261 257,151 223,006 212,388 200,447 191,977
In blister.................... 27,436(3) 40,574 80,604 100,296 114,173 106,223 102,555
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total................... 167,113 163,835 337,755 323,302 326,561 306,670 294,532
========== ========== ========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) The SX/EW facility commenced production in November 1995.
(2) The Ilo refinery was purchased by the Company in May 1994. The data prior to
the acquisition reflects cathode production for SPCC on a toll basis.
(3) In the six months ended June 30, 1997 copper sales and copper exports in
blister included 9,977 tons of copper contained in concentrate.
22
<PAGE> 25
RISK FACTORS
Holders of Old Notes should consider carefully all the information in this
Prospectus and, in particular, the following risk factors before accepting the
Exchange Offer. For additional information concerning Peru and certain matters
described below see "Annex A -- The Republic of Peru". As a general matter,
investing in the securities of an issuer, substantially all of whose operations
are in a developing country such as Peru, involves a higher degree of risk than
investing in securities of issuers with substantially all of their operations in
the United States and other jurisdictions.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon, and, except in
certain limited circumstances, will no longer have any registration rights with
respect to the Old Notes. However, the Company will offer the holders who are
not permitted to participate in the Exchange Offer the right to exchange in a
private exchange offer the Old Notes for New Notes, which will be subject to
restrictions on transferability. In general, the Old Notes may not be offered or
sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Issuer does not intend to register the Old
Notes under the Securities Act. The Issuer believes that, based upon
interpretations contained in letters issued to third parties by the staff of the
Commission, New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold or otherwise transferred by each holder
thereof (other than a broker-dealer, as set forth below, and any such holder
which is an "affiliate" of the Issuer within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Notes are acquired in
the ordinary course of such holder's business and such holder has no arrangement
or understanding with any person to participate in the distribution of such New
Notes. Eligible holders wishing to accept the Exchange Offer must represent to
the Issuer in the Letter of Transmittal that such conditions have been met and
must represent, if such holder is not a broker-dealer, or is a broker-dealer but
will not receive New Notes for its own account in exchange for Old Notes, that
neither such holder nor the person receiving such New Notes, if other than the
holder, is engaged in or intends to participate in the distribution of such New
Notes. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must represent that the Old Notes tendered in exchange
therefor were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with the resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Issuer
has agreed that, for a period of 90 days after the consummation of the Exchange
Offer it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution". However, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered or sold unless they have been registered or qualified for
sale in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Issuer does not currently intend to take any
action to register or qualify the New Notes for resale in any such
jurisdictions. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of the Old Notes outstanding, which may
have an adverse effect upon, and increase the volatility of, the market price of
the Old Notes due to a reduction in liquidity.
FACTORS RELATING TO THE COPPER INDUSTRY, THE COMPANY AND THE SOURCE OF PAYMENT
FOR NOTES
Production of Copper; Reserves
Substantially all of the Company's revenues are derived from copper
produced by the Toquepala mine, the Cuajone mine and the smelter and refinery at
Ilo, all of which are located within a 30-mile radius in the southern part of
Peru. If operations at any of these locations were significantly reduced,
interrupted or curtailed, the
23
<PAGE> 26
Company's ability to generate export receivables, revenues and profits and make
required payments on the Notes could be materially and adversely affected.
As of December 31, 1996, SPCC had sulfide ore reserves at the Toquepala
mine of 332 million tons and at the Cuajone mine of 1,400 million tons. In
addition, SPCC had leachable reserves of 665 million tons and mineralized
material of 380 million tons at the two mines. The Company's reported ore
reserves are estimated quantities of proven and probable ore that under present
and anticipated conditions may be economically mined and processed by the
extraction of their mineral content. The Company determines the amount of its
ore reserves in accordance with the regulations of the Commission. The volume
and grade of reserves actually recovered and rates of production from the
Company's present ore reserves may not conform exactly to geological
measurements of the reserves. Further, market price fluctuations in copper and
changes in operating and capital costs may render certain ore reserves
uneconomic to mine. See "Business and Properties -- Reserves".
The business of mining, smelting and refining copper is generally subject
to a number of risks and hazards, including industrial accidents, labor
disputes, unexpected geological conditions, slope failures, changes in the
regulatory environment, environmental hazards and weather and other natural
phenomena such as earthquakes and floods. Such occurrences could result in
damage to, or destruction of, mineral properties or production facilities,
personal injury or death, environmental damage, delays in mining, monetary
losses and possible legal liability. The Company maintains insurance typical in
the copper mining industry and in amounts that the Company believes to be
adequate, but which may not provide complete coverage in certain circumstances.
However, insurance against certain risks (including certain liabilities for
environmental pollution or other hazards as a result of exploration and
production) is not generally available to the Company or to other companies
within its industry.
Under each of the Company's copper sales agreements, the Company or its
customer may suspend or cancel delivery of copper during a period of force
majeure. Events of force majeure under the agreements include acts of nature,
strikes, fires, floods, wars, transportation delays, government actions or other
events that are beyond the control of the parties. Any suspension or
cancellation of deliveries under copper sales contracts that are not replaced by
delivery under new contracts or sales on the spot market would reduce the amount
of Export Receivables available to secure the Notes and could have a material
adverse effect on the business, financial condition, results of operations or
prospects of the Company.
Prices of Copper/Cyclicality of Industry
The copper market is highly cyclical and the Company's business, financial
condition, results of operations and prospects depend to a large degree on the
international prices for copper established by the LME. Such prices have
historically fluctuated widely and are affected by numerous factors beyond the
Company's control, including the overall demand for and worldwide supply of
copper, the availability and price of competing commodities, international
economic trends, currency exchange fluctuations, expectations of inflation,
actions of commodity markets participants, consumption and demand patterns and
political events in major producing countries. See "Overview of Copper Market".
The Company believes that it is currently ranked among the lowest cost, private
sector copper producers. There can be no assurance, however, that the Company
will continue to be one of the lowest cost copper producers and that competition
from lower cost producers will not have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Company.
Depending on metal markets and other conditions, the Company may enter into
forward sales or purchase put options or establish synthetic put options to
reduce the risk of copper price declines on its anticipated future production.
From time to time, the Company has hedged a portion of its copper production,
and subject to market conditions, may choose to pursue such opportunities in the
future. All hedging activity is reviewed by a senior management committee and
reported to the Board of Directors.
For the full year 1996, the Company sold or exercised put options covering
151.2 million pounds of copper for a pre-tax gain of $11.1 million. Earnings for
the first six months included a pre-tax gain of $5.6 million in 1997 and a
pre-tax loss of $0.3 million in 1996 from the Company's price protection
program. There were no pre-tax gains or losses from price protection in the
second quarter of 1997 compared with a pre-tax gain of $0.5 million in the
second quarter of 1996. At June 30, 1997, the Company held copper put options,
with a strike
24
<PAGE> 27
price of 95 cents, for 94.1 million pounds of fourth quarter 1997 production and
44 million pounds of first quarter 1998 production. The Company has purchased
put options covering portions of its copper production in the past and,
depending on metal markets and other conditions, may purchase put options or
employ other metal price hedging strategies in the future in order to reduce the
risk of copper price declines on its anticipated future production. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Metal Hedging and Trading Activity", "Business and
Properties -- Sales of Metals and Hedging".
Expansion and Modernization Program
The proceeds of the Offering of Old Notes will be used by the Company, in
part, to fund the expansion and modernization program. The expansion and
modernization program is being undertaken by the Company in order to enhance the
competitive position and financial performance of the Company and to comply with
Peruvian environmental regulations applicable to its operations. The Company's
modernization plan for the Ilo smelter is designed to avoid significant
disruptions in smelter production of blister copper during construction. The
modernization project has two phases: installation of a flash furnace and
replacement of existing converter operations. During the first phase, which is
expected to be completed in 2001, the Company plans to operate two existing
reverberatory furnaces until the new flash smelting furnace reaches design rates
of production. During the second phase, the Company expects to continue to
operate its existing converters until the new units are operating at design
capacity. However, there can be no assurance that current production levels will
be maintained during the modernization, that there will be no interruptions of
production or that the costs of the modernization will not significantly exceed
management's current estimates. See "Summary -- The Company -- Expansion and
Modernization Program".
Any failure to complete, or any significant delay in completion of, the
smelter modernization could have a material adverse effect on the business,
financial condition, results of operations or prospects of the Company, if the
Company were required to reduce or cease copper production due to failure to
comply with the PAMA. Under the PAMA, the Company has until January 2007 to
achieve compliance with environmental controls applicable to the smelter.
Although the Company believes that its modernization plan, which calls for
completion by the year 2003, provides sufficient time to meet this schedule,
there can be no assurance that the smelter modernization will be completed by
such date. See "-- Impact of Government Regulation".
The Company's expansion and modernization program has an estimated capital
cost of $1 billion to be spent over approximately six years. Although management
expects that cash from existing and future operations and from the issuance of
SENs and borrowings under the Credit Facility and from anticipated borrowings in
the future will be sufficient to cover the costs of the Company's capital
investment plan, there can be no assurance that the Company will not be required
to seek additional funds in order to complete its expansion and modernization
program. Following the Offering of Old Notes and borrowings under the Credit
Facility there can be no assurance that the Company's increased leverage will
not have an adverse impact on the Company's liquidity. If additional funds are
necessary, there can be no assurance that the Company will be able to obtain the
required funds on terms and conditions acceptable to the Company. If such
additional financing is unavailable, the Company may have to delay completion of
the expansion and modernization program until additional financing or sufficient
internally generated funds become available and any such delay could have a
material adverse effect on the business, financial condition, results of
operations or prospects of the Company.
Supply and Cost of Fuel Oil and Electricity
The Company requires substantial amounts of fuel oil and electricity for
its operations and energy costs constitute a substantial portion of the
Company's cost of production. Although the Company believes that fuel oil and
electricity are available to it in adequate quantities at market prices, the
availability and prices may be subject to curtailment or change due to, among
other things, new laws or regulations, imposition of new taxes or tariffs,
interruptions in production by suppliers, worldwide price levels and market
conditions. During the 1970s and 1980s, the Company's ability to import fuel oil
was restricted by government policies. The Company was required to purchase fuel
oil domestically from a government-owned oil producer at prices substantially
above those prevailing in the world market. The Company has recently sold its
power facility to a wholly owned subsidiary of Tractebel S.A. ("Tractebel").
Tractebel has agreed to provide electricity to meet SPCC's requirements for the
next 20 years, including increased requirements as a result of the expansion and
modernization program. Under this agreement, the Company's cost of power will
increase somewhat from its
25
<PAGE> 28
current level, while the Company will benefit by avoiding significant capital
expenditures. The Company believes it will be able to import sufficient fuel oil
and, under this agreement, will have sufficient electricity to meet its needs.
Nevertheless, a protracted interruption in the supply of fuel oil or
electricity, or substantial increases in fuel oil or electricity costs, could
have a material adverse effect on the business, financial condition, results of
operations or prospects of the Company. See "Business and
Properties -- Electrical Power" and "-- Other Facilities and Water Resources".
Labor Matters
Approximately 60% of the Company's workforce is represented by labor
unions. The Company recently entered into new five-year collective bargaining
agreements with its nine labor unions, which replaced the previous three-year
contracts. Although management believes its present labor relations are
generally good, the Company has, in the past, experienced work stoppages and
strikes. Most of these work stoppages have been of only a few days' duration,
although the Company has experienced more protracted strikes, including one for
approximately 145 days in 1988, but since 1991 only five days have been lost due
to work stoppages. There can be no assurance that a work stoppage or strike will
not occur prior to expiration of the current labor agreements or during
negotiations on new labor agreements (including extensions of the existing labor
agreements) or as to the effect of any such work stoppage or strike on the
Company's production levels. Work stoppages or other labor-related developments
affecting the Company could have a material adverse effect on the business,
financial condition, results of operations or prospects of the Company. See
"Business and Properties -- Employees".
Program Collateralized by Substantially All Receivables
Security for the Notes consists solely of (i) the Export Receivables of SP
Limited under export contracts for the sale of copper products outside of Peru,
(ii) the Note Reserve Account and (iii) the Note Collateral Account. On any day,
in the absence of a Retention Trigger Event or Debt Service Retention Event,
Collections in respect of Export Receivables that are deposited to the
Collection Account and the Note Collateral Account will be released to SP
Limited.
Substantially all of SP Limited's export receivables will be pledged to the
Collateral Trustee in connection with the Credit Facility and SENs to be issued
under the Program. The Notes permit the Collateral Trustee to retain Collections
or portions thereof in the Note Collateral Account in the event of certain
Trigger Events, Accelerated Amortization Events and Events of Default. In
addition, the terms of the Credit Facility permit the Collateral Trustee to
retain amounts deposited to the Credit Facility Collateral Account upon the
occurrence of certain Blocking Events under the SENs and upon the occurrence and
continuance of an Event of Default under the Credit Facility. See "Description
of Credit Facility". It is possible under such circumstances that Blocked
Collections under the Notes, the Credit Facility and any subsequent SENs series
would represent a significant portion of the Company's operating cash flow. Any
reduction in cash flow available to the Company to fund its operations on a
day-to-day basis could affect its ability to produce copper and meet the
delivery requirements of its customers. If the Company's operations were
significantly curtailed as a result of reduced cash flow available to fund
operations during a Blocking Event, the Company's ability to meet its
obligations under sales contracts in respect of Export Receivables securing the
Notes during the pendency and after the curing of such Blocking Event would be
materially and adversely affected, as would the business, financial condition,
results of operations and prospects of the Company.
Receivables Excluded from the Program
Certain receivables of SP Limited in respect of export copper sales are
excluded from the lien and security interest granted by SP Limited to the
Collateral Trustee. Specified export contracts covering up to 40,000 tons
annually and securing other debt arrangements of SP Limited are excluded. Also,
SP Limited may exclude, on an annual basis, additional export contracts
providing for sales of copper up to an aggregate annual amount equal to the sum
of (i) 10% of Net Certified Export Sales and (ii) Excess Certified Export Sales
(as defined herein), if any, in such calendar year, with proportionate
adjustments for exclusions occurring after commencement of the calendar year.
See "Description of Notes -- Excluded Receivables".
26
<PAGE> 29
Effects of U.S. Bankruptcy Law
The principal collateral for the Notes is the percentage security interest
in favor of the Collateral Trustee for the benefit of the holders of Notes in
the Export Contracts and Export Receivables to be generated in the future from
time to time. The amount of Export Receivables in existence at any time in which
the Notes will have a percentage security interest will only represent a small
portion of the Program Amount. In addition, under Section 552 of the United
States Bankruptcy Code (the "Bankruptcy Code"), assets that are acquired by a
debtor in a U.S. bankruptcy proceeding after the commencement of bankruptcy
proceedings are not subject to a security interest created by such debtor before
such commencement unless such assets constitute "proceeds, product, offspring,
or profits of such property," in which case such assets would be subject to the
security interest except to the extent that the bankruptcy court, after notice
and a hearing and based on the equities of the case, orders otherwise. As a
result, even if Export Receivables continue to be generated after the
commencement of U.S. bankruptcy proceedings involving SP Limited, it is unlikely
that such Export Receivables will be subject to the security interest in favor
of the Collateral Trustee on behalf of holders of Notes or any other Secured
Party.
Under the terms of the Amended and Restated Collateral Trust Agreement, the
Collateral Trustee would have the right, and would be required in certain
circumstances, to sell the Collateral in order to pay the principal of, and
accrued interest on, the Notes and debt held by other Secured Parties. However,
upon the commencement of bankruptcy proceedings in which SP Limited is a debtor,
the Collateral Trustee will be stayed from foreclosing upon and selling the
Collateral. Even if the Collateral Trustee were able to exercise its remedies,
in light of the foregoing discussion of the scope of the security interest, it
is likely the proceeds allocable to the Notes from the sale of the Collateral
would not be sufficient to pay the aggregate outstanding principal balance of
the Notes plus accrued interest. In any plan of reorganization or liquidation
under the Bankruptcy Code, secured creditors are entitled to receive their
collateral or other consideration that provides the equivalent thereof. However,
the Trustee's claim on behalf of the holders of Notes, to the extent not covered
by the Collateral, would be unsecured and would rank pari passu in priority of
payment with all other senior unsecured creditors of the Company (subject to
certain statutory preferences) and the amount, if any, recoverable in respect of
such claim, as with other unsecured debt obligations of SP Limited, would depend
upon the outcome of the U.S. bankruptcy proceeding.
Enforceability of Judgments under Peruvian Law
Substantially all of the assets of SP Limited are located in Peru and are
held by the Branch in Peru. In the event that the holders were to obtain a
judgment in the United States against SP Limited or SPCC and seek to enforce
such judgment in Peru, the holders' ability to enforce the judgment in Peru
would be subject to Peruvian laws regarding enforcement of foreign judgments. In
general, Peruvian law provides that a judgment of a competent court outside of
Peru rendered against SP Limited or SPCC in connection with an action arising
out of or relating to the Notes or the other Transaction Documents (as defined
herein), would be recognized and could be enforced against the assets of the
Branch in Peru, subject to the following statutory limitations set forth in the
Peruvian civil code: (i) the judgment must not resolve matters for which
exclusive jurisdiction of Peruvian courts applies (i.e., disputes relating to
real estate located in Peru); (ii) the competence of the foreign court which
issued the judgment must be recognized by Peruvian conflict of laws rules; (iii)
the party against whom the judgment was obtained must have been properly served
in connection with the foreign proceedings; (iv) the judgment of the foreign
court must be a final judgment, not subject to any further appeal; (v) no
pending proceedings may exist in Peru among the same parties and on the same
subject; (vi) the judgment by the foreign court cannot be in violation of public
policy; and (vii) the foreign court must grant reciprocal treatment to judgments
issued by Peruvian courts.
Moreover, there can be no assurance that a judgment rendered against SP
Limited or SPCC in the United States in a bankruptcy-related action would be
enforceable against the assets of the Branch in Peru or that a Peruvian court
would not assert jurisdiction in a bankruptcy proceeding relating to SP Limited.
Guarantee by SPCC
SPCC is a holding company with no independent operations and no significant
assets other than its ownership of the capital stock of SP Limited. It will,
therefore, be dependent upon the receipt of dividends or other distributions
from SP Limited to fund any obligations that it incurs, including obligations
under the
27
<PAGE> 30
Guarantee. Accordingly, if SP Limited should at any time be unable to make
distributions to SPCC, SPCC's ability to meet its obligations under the
Guarantee would be materially and adversely affected.
Impact of Government Regulation
The Company's activities in Peru are dependent on concessions previously
granted by the government with respect to the Company's mining rights and
compliance by the Company with certain agreements entered into with the Peruvian
government. The concessions are in full force and effect under applicable
Peruvian laws and the Company is in compliance with all material terms and
requirements applicable to the concessions and is not under any condition,
occurrence or event that would cause the revocation, cancellation, lapsing,
expiration or termination thereof. The Company may, from time to time, let
lapse, revoke, cancel or terminate concessions that are not material to the
conduct of its business. The principal concessions include the mining and
processing concessions at Toquepala and Cuajone, the processing concessions for
the smelter and refinery and the mining and processing concessions for the SX/EW
facility. The concessions each have an indefinite term, subject to payment of
concession fees which totaled $183,300 in 1996.
The Peruvian government has recently adopted environmental regulations
requiring various industrial companies operating in Peru to enter into
agreements with the government, pursuant to which they will undertake programs
to reduce, control or eliminate emission generations and/or waste discharges.
The Company's PAMA was approved by the Peruvian government in January 1997. See
"-- Expansion and Modernization Program", "Business and Properties" and
"Regulatory Framework -- Regulations, Permitting and Environmental Matters". The
Company has also entered into agreements from time to time with the Peruvian
government relating to taxes, exchange controls, repatriation of earnings and
investments and other matters which affect its business, financial condition and
results of operations. No assurance can be given that the Peruvian government
will not in the future demand changes to the terms and conditions of any of
these agreements, including the PAMA, or impose other conditions that may
adversely affect the Company's financial condition or results of operations.
The Company's exploration, mining, milling, smelting and refining
activities are also subject to Peruvian laws and regulations which change from
time to time. Matters subject to regulation include, but are not limited to,
concession fees, transportation, production, reclamation, export, taxation,
labor standards, mine safety and occupational health. Although the Company
believes that it is in substantial compliance with all applicable laws, the
effect of any future regulatory changes on the Company's operations cannot
presently be determined. See "Regulatory Framework -- Regulations, Permitting
and Environmental Matters".
FACTORS RELATING TO PERU
Political and Economic Situation
During the past 30 years, Peru has experienced political instability under
both civilian and military governments. These governments have pursued various
policies, including frequent intervention in the economy and social structure.
Past governments have imposed controls on prices, exchange rates, local and
foreign investment and international trade, restricted the ability of companies
to dismiss employees, expropriated private sector assets and prohibited the
remittance of profits to foreign investors.
Since the current administration took office in July 1990, the Peruvian
government has implemented a broad-based reform of Peru's political system,
economy and social conditions, aimed at stabilizing the economy, restructuring
the national government by reducing bureaucracy, privatizing state-owned
companies, promoting private investment, developing and strengthening free
markets, institutionalizing democratic representations, and enacting programs
for the strengthening of basic services related to education, health, housing
and infrastructure. Congress was dissolved in April 1992 and a democratically
elected congressional body was reestablished in November 1992. A new
Constitution was enacted and ratified in the fourth quarter of 1993. Under the
current administration, inflation as measured by the Peruvian Instituto Nacional
de Estadstica e Informatica (INEI) consumer price index has decreased from
7,650% in 1990 to 10.2% in 1995 and was 11.8% for 1996. In addition, the
country's gross domestic product ("GDP") in real terms increased by 5.3% in
1993, 12.8% in 1994, 6.9% in 1995 and 2.5% in 1996.
28
<PAGE> 31
In April 1995, the incumbent president was reelected to a second five-year
term of office with approximately 64% of the vote. Additionally, the
administration's political party, the Cambio 90 -- Nueva Mayora, won a majority
of the seats in Congress. Notwithstanding the progress achieved in restructuring
Peru's political institutions and revitalizing the economy during the
administration's first term, there can be no assurance that the current
administration or future administrations can sustain such progress. While the
Peruvian economy has experienced strong growth in recent years, there can be no
assurance that such growth will continue at similar rates in the future or at
all. The Company's results of operations and financial condition could also be
affected by changes in economic or other policies of the Peruvian government or
other political or economic developments in Peru.
Exchange Controls
During the 1970s and 1980s, government policies restricted the ability of
the Company and its Branch to, among other things, repatriate funds and import
products, including oil, from abroad. In addition, currency exchange rates were
strictly controlled and all export sales revenues were required to be deposited
in Peru's Central Reserve Bank where they were exchanged from U.S. Dollars to
the then local currency at less-than-market rates of exchange. These policies
generally affected the results of operations of the Company and the Branch
similarly. Controls on repatriation of funds limited the ability of the
Company's stockholders to receive dividends outside of Peru, but did not limit
the ability of holders of Labor Shares to receive distributions of earnings in
Peru. The current Peruvian legal framework imposes no restrictions on the
ability of a company operating in Peru to transfer foreign currency from Peru to
other countries or to convert Peruvian currency into foreign currency or foreign
currency into Peruvian currency. Prior to 1991, Peru had restrictive exchange
controls and exchange rates. In the 1970s and 1980s, all foreign exchange
proceeds were required to be deposited with the Central Reserve Bank of Peru.
During this period the Company, under a bilateral agreement with the Central
Reserve Bank of Peru, was allowed access to foreign currency derived from its
export sales to make debt service payments on its foreign currency obligations.
Under this agreement, proceeds from the Company's exports were paid into an
account held in trust for the Central Reserve Bank of Peru at Chase Manhattan
Bank in New York. Pursuant to irrevocable instructions from the Central Reserve
Bank of Peru, the trustee was allowed to transfer funds to the Company's
accounts to pay for such items as debt service, imports and dividends. During
the period of exchange controls and restricted access to foreign currency, the
Company repaid all of its debts on time as scheduled. Notwithstanding the
Company's ability to service its debt during previous periods of government
exchange controls, there can be no assurance that the Peruvian government will
continue its current policy of permitting currency transfers and conversions
without restriction or that the Company would be able to timely service its debt
obligations were the Peruvian government to reinstitute exchange controls.
Terrorist Activity
Peru experienced significant terrorist activity in the 1980s and early
1990s, during which period anti-government groups escalated their acts of
violence against the government, the private sector and Peruvian residents.
According to Peruvian government estimates, terrorist activity in Peru during
the last sixteen years has resulted in an estimated 25,000 deaths and damage to
property and the economy is estimated at US$25 billion. The Company's operations
have not been directly affected by the terrorist activity.
There has been substantial progress in suppressing terrorist activity since
1990, in part as a result of the arrest of the leaders and approximately 2,000
members of the two principal terrorist groups. Approximately 6,000 additional
persons have agreed to cooperate with the government under an amnesty law.
Notwithstanding the success achieved, some incidents of terrorist activity
continue to occur, including the hostage incident at the residence of the
Japanese Ambassador to Peru, which was resolved earlier this year. There can be
no assurance that the progress achieved in combating terrorist activity can be
sustained.
Inflation and Currency Devaluation
Peru has in the past experienced high levels of inflation. However, the
inflation rate in Peru, as measured by the INEI consumer price index, fell from
7,650% in 1990 to 139.2% in 1991, 56.7% in 1992, 39.5% in 1993, 15.4% in 1994
and 10.2% in 1995. In 1996, the inflation rate was 11.8%. Although the Peruvian
government's
29
<PAGE> 32
3stabilization plan has significantly reduced inflation, there can be no
assurance that domestic inflation will not increase from its current level. In
addition, the Peruvian currency has been devalued numerous times during the last
20 years. The devaluation rate was 4,019.3% in 1990, 83.7% in 1991, 69.1% in
1992, 31.7% in 1993, 1.4% in 1994 and 6.0% in 1995. In 1996, the devaluation
rate was 12.1%. A portion of the operating costs of the Company are denominated
in Soles and therefore could be significantly affected by the rate of inflation
in Peru. If inflation in Peru were to increase without a corresponding
devaluation of the Sol, the financial position and results of operations of the
Company could be materially and adversely affected.
The Company generally does not enter into currency hedging arrangements, as
substantially all of the Company's sales are denominated in U.S. Dollars.
Taxation of Non-Peruvian Individuals
Payments of interest on the Notes to holders that are not (a) corporations,
partnerships or trusts organized under the laws of the United States or a State
thereof or (b) a corporation or other entity organized or established under the
laws of any other jurisdiction outside Peru and that are domiciled outside Peru
will be subject to income tax withholding in Peru, currently at a rate of 30%,
for which no Additional Amounts will be paid. As a consequence, no Additional
Amounts will be payable to individuals or estates. Therefore, such holders could
face adverse tax consequences if they purchase the Notes. See
"Taxation -- Peruvian Taxation".
OTHER FACTORS
Certain Loan Agreement Restrictions
SP Limited has entered into an agreement with a group of lenders to loan
funds under the Credit Facility. Under the Credit Facility, the Company may
borrow up to $600 million, including $200 million available under a revolving
credit facility. The Credit Facility will be secured with a percentage interest
in the Export Contracts and the Export Receivables thereunder. See
"Summary -- Transaction Structure". Under the terms of the Credit Facility, SPCC
has covenanted, among other things, to maintain a Consolidated Tangible Net
Worth (as defined therein) of $750 million and a debt to capitalization ratio of
.50 to 1.00. Further, SPCC may not fail, at the end of two consecutive fiscal
quarters, to have an EBITDA (earnings before interest, taxes, depreciation and
amortization) to interest coverage ratio for the most recent twelve months of at
least 1.5 to 1. See "Description of the Credit Facility". The Credit Facility
also provides that upon an event of default, rather than remitting the daily
Collections deposited to the Credit Facility Collateral Account (as defined
therein) to the Company, the Collateral Agent will retain Collections from the
percentage of the Export Receivables allocated as security to the Credit
Facility for thirty days and, if required thereafter by the Required Lenders (as
defined therein), until the event of default has been cured.
As of June 30, 1997, SP Limited had 94.7 million of debt outstanding under
loan agreements with Corporacion Andina de Fomento ("CAF"), Mitsui & Co. Ltd.
("Mitsui") and the Export Import Bank of the United States ("U.S. Eximbank"), as
well as $50 million of bonds outstanding in Peru and $150 million of Old Notes,
which are expected to be exchanged for New Notes pursuant to the Exchange Offer.
In addition, SP Limited had available $600 million under the Credit Facility.
See "Description of Credit Facility". On July 31, 1997, SP Limited prepaid the
$40.0 million balance outstanding on the Mitsui loan. As security for the CAF
loan, SP Limited has pledged certain SX/EW concessions and has granted CAF a
mortgage on the SX/EW facility. SP Limited also maintains an escrow account
equal to six months' debt service under the CAF loan agreement. A default by SP
Limited on the CAF loan could result in CAF's commencing foreclosure proceedings
on the SX/EW facility. U.S. Eximbank has a security interest in the receivables
under annual copper sales contracts covering 7,700 tons of copper production and
in an escrow account equal to six months' debt service under the loan. The CAF
loan agreement contains covenants requiring, among other things, maintenance of
a ratio of long-term debt to stockholders' equity and minimum stockholders'
equity of at least $750 million. The U.S. Eximbank loan agreement contains
covenants requiring a minimum ratio of current assets to current liabilities and
compliance with a limitation on total long-term liabilities.
30
<PAGE> 33
Any reduction of (or commitment to reduce) Asarco's direct or indirect
voting interest in the Company to 50% or less would constitute an event of
default under certain of the financing agreements including the Credit Facility.
Voting Rights; Effective Control by Principal Stockholders
The Company has outstanding two classes of capital stock: the common stock
and Class A common stock. The Company's Board of Directors is composed of 15
members. Two directors are elected by the holders of common stock, voting as a
separate class; one director is the President of the Company and 13 directors
(including the President) are elected by the holders of Class A common stock,
voting as a separate class. On all other matters with respect to which the
Company's stockholders have voting rights, each share of Common Stock is
entitled to one vote and each share of Class A common stock is entitled to five
votes. Class A common stockholders and the Company have entered into an
agreement (the "Stockholders' Agreement") which, in accordance with the terms of
the Company's Restated Certificate of Incorporation provides that the Class A
common stockholders are entitled to elect 13 of the 15 directors of the Company.
Based on its ownership of Class A common stock and the terms of the
Stockholders' Agreement, Asarco nominates and elects a majority of the directors
of the Company and determines the outcome of substantially all actions requiring
stockholder approval. See "Summary -- The Company -- Principal Stockholders" and
"Certain Transactions -- Stockholders' Agreement".
Absence of Public Market
The New Notes will be a new issue of securities for which there is
currently no public market. The Issuer does not intend to apply for listing of
the New Notes on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System. There can be no
assurance that an active trading market for the New Notes will develop. If a
trading market develops for the New Notes, future trading prices of such
securities will depend on many factors, including prevailing interest rates, the
Issuer's results of operations and financial condition and the market for
similar securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the periods shown.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges....... 20.26 21.49 19.95 23.35 15.14 123.57 294.51
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
operating income by interest expense.
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<PAGE> 34
CAPITALIZATION
The following table sets forth the capitalization of SPCC as of June 30,
1997.
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Short-term debt:
Current portion of long-term debt....................................... $ 23,683
Long-term debt:
$35 Million Export Financing Credit Agreement, term loan maturing 1996
through 2001......................................................... 17,500
$60 Million CAF Credit Facility, term loan maturing 1996 through 2001... 23,550
$50 Million Mitsui Credit Facility, term loan maturing 1996 through
2001................................................................. 30,000
$600 Million Credit Facility, term and revolving loans maturing 2000
through 2004......................................................... 0
$150 Million SENS....................................................... 150,000
$50 Million Bond Issue.................................................. 50,000
Total long-term debt............................................ 271,050
Minority interest of labor shares in the Branch........................... 22,094
Stockholder's equity:
Common Stock, $0.01 par value, 34,099,167 shares authorized; 14,302,149
shares outstanding................................................... 143
Class A Common Stock, $0.01 par value, 65,900,833 shares authorized;
65,900,833 shares outstanding........................................ 659
Additional paid-in capital.............................................. 265,745
Retained earnings....................................................... 812,242
Treasury stock at cost, 27,944 shares................................... (472)
Total stockholders' equity...................................... 1,078,317
Total capitalization(1)......................................... $1,395,144
Debt to Capital Ratio........................................... 21.13%
</TABLE>
- ---------------
(1) Total capitalization represents the sum of total long-term debt, minority
interest of labor shares in the Branch and total stockholders' equity.
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<PAGE> 35
SELECTED SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary financial information of SPCC and its consolidated
subsidiaries, as of and for each year in the five years ended December 31, 1996
has been derived from the consolidated financial statements audited by Coopers &
Lybrand, L.L.P., independent accountants. The summary financial information as
of and for the six months ended June 30, 1997 and June 30, 1996 is unaudited. In
the opinion of management, all adjustments (consisting only of normal recurring
accruals) have been made to present fairly on a basis consistent with generally
accepted accounting principles the condensed consolidated balance sheet and
statements of earnings for such periods. The results of operations for the six
months ended June 30, 1997 are not necessarily indicative of results for the
year ending December 31, 1997. This information is qualified in its entirety by,
and should be read in conjunction with, the Consolidated Financial Statements
and the related notes thereto included elsewhere and incorporated herein by
reference in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS AND COPPER PRICE)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF EARNINGS:
Net sales............................. 441,008 $ 369,577 $ 753,032 $ 928,840 $701,678 $547,511 $622,033
Operating costs and expenses(1)....... 291,658 233,371 504,267 562,183 559,651 477,326 490,094
Operating income...................... 149,350 136,206 248,765 366,657 142,027 70,185 131,939
Minority interest of labor shares in
income of the Branch................ 3,418 3,364 5,208 43,558 18,610 11,218 20,510
Earnings before cumulative effect of
the change in accounting
principle........................... 115,416 94,337 180,512 217,754 91,224 29,130 45,638
Cumulative effect of the change in
accounting principle................ -- -- -- 165,092(2) --
---------- ---------- ---------- ---------- -------- -------- --------
Net earnings.......................... $ 115,416 $ 94,337 $ 180,512 $ 217,754 $ 91,224 $194,222 $ 45,638
========== ========== ========== ========== ======== ======== ========
PER SHARE AMOUNTS(3)
Earning before cumulative effect of
the change in accounting
principle........................... $ 1.44 $ 1.18 $ 2.25 $ 3.31 $ 1.39 $ 0.45 $ 0.69
Cumulative effect of the change in
accounting principle................ -- -- -- -- -- 2.51 --
Net earnings.......................... 1.44 1.18 2.25 3.31 1.39 2.96 0.69
Dividends paid........................ 0.65 0.95 1.47 1.27 0.33 0.27 0.23
BALANCE SHEET INFORMATION (END OF
PERIOD):
Cash and marketable securities........ 419,115 $ 237,737 $ 174,205 $ 262,099 $136,333 $ 67,548 $ 83,073
Working capital....................... 608,816 318,129 297,795 312,476 242,384 184,761 164,587
Net property.......................... 854,632 811,345 855,808 779,368 522,850 390,719 390,187
Total assets.......................... 1,612,814 1,255,757 1,279,849 1,271,701 968,506 727,951 723,253
Long-term debt........................ 271,050 105,397 82,892 76,828 114,118 15,600 --
Total liabilities and minority
interest............................ 534,497 285,279 264,822 318,214 333,657 162,911 334,435
Stockholders' equity.................. 1,078,317 970,478 1,015,027 953,487 634,849 565,040 388,818
OTHER ITEMS:
Depreciation, amortization and
depletion........................... $ 23,107 $ 20,670 $ 41,623 $ 35,952 $ 39,742 $ 34,601 $ 32,491
Capital expenditures.................. 61,354 51,931 120,803 183,041 181,912 31,859 23,063
Cash dividends........................ 52,125 76,204 117,913 83,747 21,415 18,000 15,000
Ratio of earnings to fixed
charges(4).......................... 20.26 21.49 19.95 23.35 15.14 123.57 294.51
Average LME Copper Price (per
pound).............................. $ 1.12 $ 1.14 $ 1.04 $ 1.33 $ 1.05 $ 0.87 $ 1.04
</TABLE>
- ---------------
(1) Includes provision for workers' participation of $10.9 million, $10.4
million, $18.0 million, $32.2 million, $13.9 million, $8.8 million and $14.1
million in the six months ended June 30, 1997 and 1996 and in years ended
December 31, 1996, 1995, 1994, 1993 and 1992, respectively.
(2) Represents the cumulative effect, as of January 1, 1993, of adopting
Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes".
(3) Per share amounts are presented after giving retroactive effect to a 100 to
1 stock split declared and made on November 4, 1994.
(4) The ratio of earnings to fixed charges has been computed by dividing
operating income by interest expense.
33
<PAGE> 36
SELECTED SUMMARY OPERATING INFORMATION
The following table presents summary production and sales data for the
Company for the periods indicated. For more information regarding such data, see
"Business and Properties".
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
COPPER MINING OPERATIONS
Ore Mined (in tons):
Toquepala mine........... 9,302,000 8,984,000 18,609,000 16,937,000 15,907,000 16,044,000 15,559,000
Cuajone mine............. 10,499,000 10,321,000 21,249,000 21,378,000 21,785,000 21,409,000 21,471,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............... 19,801,000 19,305,000 39,858,000 38,315,000 37,692,000 37,453,000 37,030,000
========== ========== ========== ========== ========== ========== ==========
Average Copper Ore Grade:
Toquepala mine........... 0.74% 0.87% 0.81% 0.86% 0.80% 0.83% 0.85%
Cuajone mine............. 0.93% 0.95% 0.96% 0.79% 0.84% 0.83% 0.86%
Weighted Average.... 0.84% 0.91% 0.89% 0.82% 0.82% 0.83% 0.86%
COPPER PRODUCTION
(contained copper in tons):
Mines
Toquepala mine........... 60,067 63,780 126,464 128,064 111,797 115,047 113,232
Cuajone mine............. 83,180 80,922 166,006 145,491 156,037 150,410 157,946
SX/EW(2)................. 24,029 22,658 46,585 5,006 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............... 167,276 167,360 339,055 278,561 267,834 265,457 271,178
========== ========== ========== ========== ========== ========== ==========
ILO SMELTER (blister copper
in tons)
From SPCC concentrates..... 124,984 137,643 294,997 268,761 268,432 265,046 268,407
From purchased
concentrates............. 13,700 8,255 21,807 48,467 53,671 47,749 35,482
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............... 138,684 145,898 316,804 317,228 322,103 312,795 303,889
========== ========== ========== ========== ========== ========== ==========
REFINED COPPER (in tons)(1)
Cathode production (for
SPCC).................... 125,715 101,871 219,800 216,207 210,671 198,375 197,059
SX/EW(2)................... 24,029 22,658 46,585 5,006 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............... 149,744 124,529 266,385 221,213 210,671 198,375 197,059
========== ========== ========== ========== ========== ========== ==========
SILVER PRODUCTION (troy
ounces contained in
blister):
From SPCC concentrates..... 1,369,147 1,434,195 3,096,506 2,957,670 2,979,199 2,813,242 2,675,094
From purchased
concentrates............. 167,573 87,787 192,684 605,244 555,511 444,983 345,686
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............... 1,536,720 1,521,982 3,289,190 3,562,914 3,534,710 3,258,225 3,020,780
========== ========== ========== ========== ========== ========== ==========
MOLYBDENUM PRODUCTION (in
tons contained in
concentrates):............. 2,198 1,913 4,370 4,004 3,060 3,156 3,542
========== ========== ========== ========== ========== ========== ==========
COPPER SALES (in tons):
Refined.................... 150,539 124,849 265,936 223,006 212,388 200,447 191,977
In blister................. 27,436(3) 40,574 81,209 100,296 114,173 106,223 102,555
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............... 177,975 165,423 347,145 323,302 326,561 306,670 294,532
========== ========== ========== ========== ========== ========== ==========
COPPER EXPORTS (in tons):
Refined.................... 139,677 123,261 257,151 223,006 212,388 200,447 191,977
In blister................. 27,436(3) 40,574 80,604 100,296 114,173 106,223 102,555
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............... 167,113 163,835 337,755 323,302 326,561 306,670 294,532
========== ========== ========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) The Ilo refinery was purchased by the Company in May 1994. The data prior to
the acquisition reflects cathode production for SPCC on a toll basis.
(2) The SX/EW facility commenced production in November 1995.
(3) In the six months ended June 30, 1997 copper sales and copper exports in
blister included 9,977 tons of copper contained in concentrate.
34
<PAGE> 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere and
incorporated herein by reference in this Prospectus as well as the data set
forth in "Selected Consolidated Financial Information".
OVERVIEW
The Company's business is affected by the factors outlined below which
should be considered in reviewing the financial position, results of operations
and cash flows of the Company for the periods described herein.
Inflation and Devaluation of the Peruvian Sol. A portion of the Company's
operating costs are denominated in Peruvian Soles. Since the revenues of the
Company are primarily denominated in U.S. dollars, when inflation in Peru is not
offset by a corresponding devaluation of the Sol, the financial position,
results of operations and cash flows of the Company could be adversely affected.
The Peruvian economy has improved significantly following the implementation of
the government's stabilization and reform plan in 1991. The recent inflation and
devaluation rates are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
SIX MONTHS 31,
ENDED JUNE ----------------------
30, 1997 1996 1995 1994
------------- ---- ---- ----
<S> <C> <C> <C> <C>
Peruvian Inflation Rate........................... 4.14% 11.8% 10.2% 15.4%
Sol/Dollar Devaluation Rate....................... 2.04% 12.1% 6.0% 1.4%
</TABLE>
Peruvian Branch. The consolidated financial statements included herein are
prepared in U.S. dollars and in accordance with U.S. GAAP. The Branch consists
of substantially all of the assets and liabilities of SPCC, associated with its
copper operations in the Republic of Peru. The Branch is registered with the
Peruvian government as a branch of a foreign mining company. The results of the
Branch are consolidated in the financial statements of the Company.
The Branch maintains its books of account in Soles, prepares financial
information in accordance with Peruvian GAAP and reports such information to the
Peruvian government on this basis for purposes of calculating its Peruvian
income tax liability as well as amounts payable for workers' participation.
Since these amounts are determined on the basis of Peruvian GAAP, they cannot be
directly derived from the consolidated financial statements of the Company.
Peruvian GAAP requires the inclusion in the financial statements of the Branch
of the Result of Exposure to Inflation, which seeks to account for the effects
of inflation by adjusting the value of non-monetary assets and liabilities and
equity by a factor corresponding to wholesale price inflation rates during the
period covered by the financial statements. Monetary assets and liabilities are
not so adjusted.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996
The Company reported net earnings of $59.6 million, or $0.74 per share, for
the second quarter ended June 30, 1997 compared with net earnings of $45.2
million, or $0.56 per share, for the second quarter of 1996. For the six month
period ended June 30, 1997, the Company reported net income of $115.4 million or
$1.44 per share, compared with net income of $94.3 million or $1.18 per share in
the comparable 1996 period.
The Company's earnings in the second quarter 1997 increased $14.4 million
compared with the comparable 1996 period. Higher sales prices for copper and
molybdenum, as well as a reduction in the Company's effective tax rate,
primarily due to a reinvestment tax incentive in Peru, contributed to the
increase in earnings. As a result of a sharp decline in copper prices in June of
1996, second quarter provisionally priced copper sales were adjusted. The impact
of the adjustment in the second quarter 1996 reduced sales by $13.8 million and
net earnings by $8.2 million.
Net earnings for the six months ended June 30, 1997 increased $21.1
million, over the same period in 1996, primarily as a result of 1996 price
adjustments to provisionally priced sales, the reduction in the Company's
35
<PAGE> 38
effective tax rate due to the reinvestment tax incentive allowed in Peru and
pre-tax gains of $5.6 million recorded in the first quarter of 1997 related to
the Company's price protection program.
Copper mine production decreased 2% in the second quarter of 1997 compared
with the second quarter of 1996 to 170.1 million pounds. Ore grades at the
Company's Toquepala and Cuajone mines were lower; however, throughput and better
recoveries at the Company's concentrators offset much of the effect of the lower
grades. Copper mine production for the six month period ended June 30, 1997 was
approximately the same as in the comparable 1996 period.
In the first quarter of 1997, the Government of Peru approved a
reinvestment allowance for the Company's program to expand the Cuajone mine. The
reinvestment allowance provides the Company with tax incentives in Peru and, as
a result, certain U.S. tax credit carryforwards, for which no benefit has
previously been recorded, are expected to be realized. The estimated net
earnings impact of the reduction in the Company's effective tax rate, as a
result of the reinvestment allowance, for the second quarter of 1997 is
approximately $4.5 million and $7.7 million for the six months ended June 30,
1997. Pursuant to the reinvestment allowance the Company will receive tax
deductions in Peru in amounts equal to the cost of the qualifying property
(approximately $245 million). As qualifying property is acquired, the book
carrying value of the qualifying property will be reduced to reflect the tax
benefit associated with the reinvestment allowance (approximately $73 million).
As a result, book depreciation expenses related to the qualifying property will
be reduced over its useful life (approximately 15 years).
In the second quarter the Company placed $150 million of secured export
notes. In addition, a $50 million bond offering was sold in the Peruvian market.
At June 30, the Company had $419 million of cash and marketable securities and
an undrawn committed bank facility of $600 million. These funds are sufficient
to assure the financing of the Company's $1 billion expansion program which is
proceeding on schedule. Construction contracts for the Cuajone mine expansion
have been awarded and site construction commenced in July. Engineering work on
the Ilo smelter expansion is also underway.
Net Sales: Net sales in the second quarter of 1997 were $226.2 million,
compared with $173.2 million in the second quarter of 1996. Sales for the six
months ended June 30, 1997 were $441.0 million compared with $369.6 million for
the comparable 1996 period. The $53.0 million increase in net sales in the
second quarter of 1997 is primarily attributable to 1996 price adjustments to
provisionally priced sales, higher sales volume and higher copper and molybdenum
prices. The increase in sales in the six month period ended June 30, 1997 as
compared with the comparable prior year period reflects increased sales volume,
adjustments to provisionally priced sales in 1996 and the recognition of a $5.6
million gain on the sale of copper put options covering first quarter 1997
copper sales.
At June 30, 1997, the Company has recorded sales of 73.6 million pounds of
copper, at a provisional price of $1.17 per pound. These sales are subject to
final pricing based on average monthly LME copper prices in the third quarter of
1997.
36
<PAGE> 39
Prices: Sales prices for the Company's metals are established principally
by reference to prices quoted on the London Metal Exchange ("LME"), the New York
Commodity Exchange ("COMEX") or published in "Metals Week" for dealer oxide
prices for molybdenum products.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1997 1996
------- -------
<S> <C> <C>
PRICE/VOLUME DATA
Average Metal Prices
Copper (per pound-LME)......................................... $ 1.12 $ 1.14
Molybdenum (per pound-Metals Week Dealer Oxide)................ $ 4.38 $ 3.56
Silver (per ounce-COMEX)....................................... $ 4.87 $ 5.42
Sales Volume (in thousands)
Copper (pounds)................................................ 356,000 330,800
Molybdenum (pounds)(1)......................................... 4,488 3,804
Silver (ounces)................................................ 1,495 1,545
</TABLE>
- ---------------
(1) The Company's molybdenum production is sold in concentrate form. The volume
represents pounds of molybdenum contained in concentrate.
Metal Hedging Activities. Depending on the market fundamentals of a metal
and other conditions, the Company may purchase put options to reduce or
eliminate the risk of metal price declines on a portion of its anticipated
future production. Put options purchased by the Company establish a minimum
sales price for the production covered by such put options and permit the
Company to participate in price increases above the option price. Depending upon
market conditions the Company may sell put options it holds or exercise the
options at maturity. Gains or losses, net of unamortized acquisition costs are
recorded as current liabilities or current assets and are subsequently
recognized in the period in which the underlying hedged production is sold.
Earnings for the six months included a pre-tax gain of $5.6 million in 1997
and a pre-tax loss of $0.3 million in 1996 from the Company's price protection
program. There were no pre-tax gains or losses from price protection in the
second quarter of 1997 compared with a pre-tax gain of $0.5 million in the
second quarter of 1996.
COPPER PRICE PROTECTION HELD AT JUNE 30, 1997
(IN MILLIONS, EXCEPT PER LB. AMOUNTS)
<TABLE>
<CAPTION>
PERCENT OF
STRIKE PRICE UNAMORTIZED ESTIMATED
POUNDS PERIOD PER POUND COST PRODUCTION
---------------------------------- ------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
94.1.............................. 10/97-12/97 $ 0.95 $ 1.4 54%
44.0.............................. 1/98-3/98 $ 0.95 0.6 28%
-----
$ 2.0
</TABLE>
Operating Costs and Expenses. Operating costs and expenses were $152.2
million in the second quarter of 1997 compared with $109.1 million for the same
period in 1996. For the six month period ended June 30, 1997 operating costs
were $291.7 million as compared with $233.4 million in the comparable 1996
period.
Cost of sales for the three month and six month period ended June 30, 1997
was $119.8 million and $228.3 million, respectively, this compares to $82.2
million and $176.9 million in the comparable 1996 periods. The increase in the
second quarter of 1997 is primarily attributable to greater sales of copper
produced from purchased concentrates, higher power costs and increased mine
stripping at the Toquepala mine. In the second quarter of 1997 the Company sold
its power plant to an independent power company in order to avoid substantial
capital improvements to meet the power needs of expanded operations, and as a
consequence power costs have increased. These factors which increased second
quarter 1997 cost of sales also affected the six month period ended June 30,
1997.
37
<PAGE> 40
Depreciation expense for the three and six month periods ended June 30,
1997 was $11.6 million and $23.1 million, respectively, compared with $10.3
million and $20.7 million in the comparable periods in 1996. The higher 1997
depreciation reflects additions to property.
Nonoperating Items. Interest income for the three month and six month
periods ended June 30, 1997 was $4.8 million and $7.7 million, respectively,
compared to $4.9 million and $11.1 million in the comparable 1996 periods. The
decrease in 1997 reflects lower interest rates on invested funds, offset in part
in the second quarter of 1997 by $1.1 million interest income received on a
federal income tax refund. The increase of $1.6 million in interest expense in
the second quarter of 1997 reflects financing fees primarily on new borrowings.
Taxes on Income. Taxes on income for the three and six month periods ended
June 30, 1997 were $15.8 million and $35.6 million, respectively, as compared
with $21.8 million and $48.1 million for the respective periods in 1996. The
decrease was principally due to a reduction in the Company's effective tax rate
as a result of the reinvestment allowance in Peru.
Minority Interest of Labor Shares: The income statement provision for
minority interest of labor shares during the second quarter represents an
accrual of approximately 2.5% in 1997 and 3.3% in 1996, of the operating
Branch's after-tax earnings, as determined under Peruvian GAAP. The labor share
percentage participation in earnings decreased due to the purchase of labor
shares by the Company.
Cash Flows -- Operating Activities: Net cash provided from operating
activities for the three month and six month period ended June 30, 1997 was
$84.0 million and $144.9 million, respectively as compared with $68.0 million
and $81.3 million in the comparable 1996 periods. The increase in the second
quarter was primarily a result of higher net earnings. The increase in the six
month period was primarily a result of lower payments for prior year's Peruvian
income taxes and workers' participation and higher net earnings, partially
offset by higher accounts receivable in 1997.
Cash Flows -- Investing Activities: Investing activities used cash of
$199.2 million for the second quarter of 1997 compared with $37.4 million for
the second quarter of 1996. The 1997 period included purchases of
held-to-maturity investments of $208.8 million consisting of bank time deposits
with maturities ranging from three months to one year and proceeds from the sale
of property of $41.9 million. In the second quarter of 1997, capital
expenditures were $32.3 million compared with $37.4 million in the respective
period of 1996.
In the six month period ended June 30, 1997 and 1996 capital expenditures
were $61.4 million and $51.9 million, respectively. Proceeds from sale of
held-to-maturity investments in the six month period ended June 30, 1997 and
1996 were $1.0 million and $42.5 million, respectively.
Cash Flows -- Financing Activities: Financing activities in the second
quarter of 1997 included the placement of $200 million of debt. Dividends paid
in the second quarter of 1997 were $28.1 million as compared with $24.1 million
in the comparable 1996 period. For the six months ended June 30, 1997 and 1996,
dividends paid were $52.1 million and $76.2 million, respectively.
Liquidity and Capital Resources: At June 30, 1997, the Company's debt as a
percentage of total capitalization (total debt, minority interests and
stockholders' equity) was 21.1%, compared with 9.3% at December 31, 1996. Debt
at June 30, 1997 was $294.7 million, compared with $106.6 million at the end of
1996.
In April 1997, the Company entered into a $600 million seven-year loan
facility with a group of international financial institutions. The facility
consists of a $400 million term loan and a $200 million revolving credit line.
The term loan bears an interest rate of LIBOR plus 1.75%.
In May, the Company privately placed $150 million of Secured Export Notes
in the United States and offshore. These notes which have an average maturity of
seven years and a final maturity in 2007 were priced at par with a coupon rate
of 7.9%. In addition, in June the Company sold $50 million of bonds, due June
2004 to investors in Peru. The bonds have a fixed interest rate of 8.25%. These
funds and the loan facility of $600 million will provide the Company with
sufficient resources for its $1 billion expansion program.
38
<PAGE> 41
In the second quarter of 1997, the Company paid a dividend to shareholders
of $28.1 million or $0.35 per share. On July 30, 1997, the Company declared a
quarterly dividend on the common stock of $0.37 per share payable September 2,
1997 to stockholders of record at the close of business on August 15, 1997.
Dividends by the Company are limited by covenants under the Company's
financing agreements. Certain of these dividend restrictions directly apply to
SP Limited as the issuer of the debt, however, they also apply to SPCC in
consolidation or as the guarantor. The most restrictive of these covenants
limits the payment of dividends by SPCC to 50% of consolidated net income.
Expansion and Modernization Project: In September 1996, the Company
announced a two stage project which includes an expansion of the Cuajone mine
and an expansion and modernization of its copper smelter at Ilo. The total
capital cost for this project is estimated at $1.0 billion, budgeted to be spent
over the next six years.
The Cuajone mine expansion is expected to increase the Company's annual
copper production by 130 million pounds and require an estimated capital
investment of approximately $245 million. Construction contracts for the
expansion have been awarded and site construction commenced in July. Completion
of this stage of its expansion program is expected in 1999.
Engineering for the second stage of the program, the expansion and
modernization of the Ilo smelter began in 1997, following completion of
preliminary engineering SPCC plans to modernize and increase the capacity of its
existing copper smelter at Ilo. The expected cost of the second stage, based on
the Company's preliminary engineering studies, is approximately $787 million and
is expected to be completed in 2003.
A future opportunity for a third stage of the expansion and modernization
plan, consisting of a second expansion at Cuajone and further expansion of the
Ilo smelter capacity will be evaluated at a later date and will depend on the
availability of financing and other conditions at the time. A decision to
proceed on this stage of the project is not expected before 2000. The Company
anticipates that the projects will be funded from a combination of existing
cash, internally generated funds and external financing.
Environmental Matters. The Company has made a significant number of
environmental capital expenditures, including, a sulfuric acid plant at the Ilo
smelter for partial recapture of sulfur dioxide, completed in 1995 at a cost of
$103.0 million; a sewage treatment plant at Ilo, completed in 1994 at a cost of
$2.0 million; and a tailings storage facility at Quebrada Honda, which became
operational in 1996 and will be completed in 1997 at a cost of approximately $60
million. The Company has also incurred capital costs of $3.0 million for
environmental projects as a result of the commitment made in connection with the
Ilo refinery acquisition. In addition, in April 1996 the Company began a $35
million expansion of the Ilo sulfuric acid plant. The expansion will increase
the capture of sulfur dioxide emissions from the smelter from 18% to 30% and
will also increase sulfuric acid production at the smelter to 330,000 tons per
year in 1998, the expected year of expanded plant operation. Capital
expenditures in connection with these and other environmental projects were
approximately $29.8 million in 1996.
The Company's exploration, mining, milling, smelting and refining
activities are subject to Peruvian laws and regulations, including environmental
laws and regulations, which change from time to time. The Company's recently
approved environmental compliance and management plan, PAMA, sets forth the
investment to be made by the Company to comply with Peruvian environmental
regulations applicable to its operations. To implement the PAMA, the Company is
required to make a minimum annual investment of 1% of net annual sales until
compliance is met. The PAMA will require the Company to make significant
additional capital expenditures to achieve compliance with the maximum
permissible levels for its emission and waste discharges ("MPLs") within a
period of five years, except for environmental controls applicable to its
smelter operation which must be put in place within ten years. The PAMA
contemplates a number of environmental projects, the largest and most capital
intensive of which is the planned modernization of the Ilo smelter. Management
believes that under current Peruvian law and regulations, compliance with the
PAMA will satisfy the MPL requirements pertaining to the Company's operations
during the applicable five-or ten-year implementation period. The Company
remains, however, subject to other environmental requirements applicable to its
operations.
Impact of New Accounting Standards. In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" (the "Statement"). The Statement
39
<PAGE> 42
specifies the computation, presentation and disclosure requirements for earnings
per share ("EPS"). It will require the Company to present both basic and diluted
EPS amounts from income for continuing operations and net income on the face of
the income statement. The Company does not expect the impact of this statement
to have a material effect on its calculation of EPS. The statement will be
effective for financial statements issued for periods ending after December 15,
1997, including interim periods.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income". The
Company is currently assessing the impact of this statement, which is effective
for fiscal years beginning after December 15, 1997.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Earnings. The Company reported net earnings for the year 1996 of $180.5
million or $2.25 per share, compared with net earnings of $217.8 million, or
$3.31 per share, in 1995 and net earnings of $91.2 million, or $1.39 per share
in 1994. Earnings are significantly affected by changes in copper prices. Lower
copper prices decreased 1996 net earnings by an estimated $109 million compared
with 1995. This decline in earnings due to lower copper prices are somewhat
offset by increased production and lower production costs. Sales of copper
produced from the Company's mines, including the new SX/EW facility increased
significantly in 1996 compared with 1995.
The improvement in the 1995 earnings over 1994 was primarily due to higher
copper and molybdenum prices and reduced operating costs, in part, as a result
of the acquisition of the Ilo refinery in May 1994.
Net earnings in 1996 reflect a reduction in the minority interest of labor
shares in the Branch. An exchange of labor shares for common shares was
completed in the fourth quarter of 1995 and reduced the interest of labor shares
from 17.3% to 3.3.%. At December 31, 1996, the interest of labor shares was
2.8%.
As a result of ongoing drilling programs at the Company's mines, proven and
probable ore reserves increased substantially in 1996. At December 31, 1996,
proven and probable ore reserves at Toquepala were 331.6 million tons with an
average grade of 0.82% copper, and at Cuajone were 1,400.3 million tons with an
average grade of 0.65% copper. In addition, leachable reserves at the two mines
were 665 million tons with an average grade of 0.22% copper.
Net Sales. Net sales in 1996 were $753.0 million compared with $928.8
million in 1995 and $701.7 million in 1994. While copper sales volume was 47.7
million pounds higher in 1996 than in 1995, net sales decreased by $175.8
million, principally due to lower copper prices. Copper sales volume was 6.5
million pounds lower in 1995 than in 1994 primarily due to slightly lower
smelter production in 1995 and a reduction in inventory levels in 1994. The
resulting decrease in copper sales volume was more than offset by higher copper
and molybdenum prices and higher molybdenum volume in 1995.
Prices. Sales prices for the Company's metals are established principally
by reference to prices quoted on the LME, COMEX or published in "Metals Week"
for dealer oxide prices for molybdenum products. See "Overview of Copper
Market".
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<PAGE> 43
PRICE/VOLUME DATA
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
AVERAGE METAL PRICES
Copper (per pound -- LME)........................ $ 1.04 $ 1.33 $ 1.05
Molybdenum (per pound)........................... 3.61 7.42 4.50
Silver (per ounce -- COMEX)...................... 5.18 5.18 5.28
SALES VOLUME (IN THOUSANDS)
Copper (pounds).................................. 694,290 646,604 653,122
Molybdenum (pounds)(1)........................... 8,813 8,402 5,698
Silver (ounces).................................. 3,110 3,761 3,184
</TABLE>
- ---------------
(1) The Company's molybdenum production is sold in concentrate form. Volume
represents pounds of molybdenum contained in concentrate.
Financial Instruments. Depending on the market fundamentals of a metal and
other conditions, the Company may purchase put options to reduce or eliminate
the risk of metal price declines below the options strike price on a portion of
its anticipated future production. Put options purchased by the Company
establish a minimum sales price for the production covered by such put options
and permit the Company to participate in price increases above the option price.
The cost of options is amortized on a straight-line basis during the period in
which the options are exercisable. Depending upon market conditions the Company
may either sell options it holds or exercise the options at maturity. Gains or
losses, net of unamortized acquisition costs, are recognized in the period in
which the underlying production is sold and are reported as a component of the
underlying transaction.
For the full year 1996, the Company realized pre-tax gains of $16.7 million
as a result of its copper price protection program, of which $11.1 million was
recognized in 1996. The remaining $5.6 million will be recognized in the first
quarter of 1997 when the underlying production is sold. Copper put options with
a cost of $1.2 million expired during the first six months of 1996. The
recognized pre-tax gains (losses) of the Company's metal hedging activities, net
of transaction costs were $9.9 million $(2.1) million and $(1.8) million in
1996, 1995 and 1994, respectively.
Operating Costs and Expenses. Operating costs and expenses were $504.3
million in 1996 compared with $562.2 million in 1995 and $559.7 million in 1994.
Cost of sales decreased to $389.6 million in 1996 from $439.4 million in 1995.
While the volume of all copper sold increased by 47.7 million pounds in 1996 as
compared with 1995, cost of sales decreased by $49.8 million. The cost of sales
decrease was principally attributable to a reduction in sales of copper produced
from purchased concentrates of 61.3 million pounds, and an increase of 109.0
million pounds in sales of copper produced from Company mines, of which 83.1
million pounds represented increased production from the new low-cost SX/EW
facility. The unit cost of purchased concentrates in 1995 was considerably
higher, as a result of market prices. Cost of sales decreased from $454.0
million in 1994 to $439.4 million in 1995, principally reflecting the savings
derived from operating the Ilo refinery, purchased in May 1994, partially offset
by higher sales volumes of by-products and the higher cost of purchased
concentrates.
Administrative and other expenses were $50.0 million in 1996 compared with
$52.7 million in 1995 and $48.1 million in 1994.
Depreciation, amortization and depletion expense was $41.6 million in 1996
compared with $36.0 million in 1995 and $39.7 million in 1994. The increase in
1996 includes the depreciation expense on major additions to property in late
1995. Increased ore reserves had the effect of reducing depreciation,
amortization and depletion expense by $6.1 million in 1995. The increase in ore
reserves in 1996 had no material impact on 1996 depreciation expense.
The provision for workers participation was $18.0 million in 1996 compared
with $32.2 million in 1995 and $13.9 million in 1994. The decrease in 1996 was
due to lower pre-tax profits of the Branch, and the 1995 increase
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<PAGE> 44
reflects higher profits. Peruvian law provides that workers in mining companies
participate in 8% of pre-tax profits. Such participations are paid in the
following year.
Non-Operating Items. Interest income was $18.3 million in 1996 compared
with $14.8 million in 1995 and $6.5 million for 1994. The increases in 1996 and
1995 reflected higher interest rates and higher invested cash balances. Interest
income is expected to decrease as available cash is used to fund the Company's
expansion program. Other income was $11.4 million in 1996 compared with $12.8
million in 1995 and $23.2 million in 1994. 1995 and 1994 include pre-tax gains
on sales of investments of $1.3 million and $18.4 million, respectively.
Exchange gains included in other income are $6.7 million, $6.0 million and $1.6
million for the years 1996, 1995 and 1994, respectively. Interest expense was
$12.5 million in 1996 compared with $13.9 million in 1995 and $7.8 million for
1994. Interest expense in 1995 included the write-off of $2.0 million of
previously capitalized loan fees related to the pre-payment of $77 million of
the Company's long-term debt.
Taxes on Income. Taxes on income were $80.2 million, $119.1 million and
$54.1 million for 1996, 1995 and 1994, respectively, and include $74.9 million,
$114.5 million and $46.8 million for Peruvian income taxes and $5.3 million,
$4.6 million and $7.3 million, respectively, for U.S. federal and state taxes.
U.S. income taxes are primarily attributable to investment income as well as
limitations on use of foreign tax credits in determining the alternative minimum
tax.
The Company obtains income tax credits in Peru for value-added taxes
("VAT") paid in connection with the purchase of capital equipment and other
goods and services employed in its operations and records these payments as a
prepaid expense. Under current Peruvian law, the Company is entitled to credit
the amount of such VAT against its Peruvian income tax liability or receive a
refund.
Minority Interest of Labor Shares. The minority interest of labor shares
of the Branch was $5.2 million in 1996 compared with $43.6 million in 1995 and
$18.6 million in 1994. The income statement provision for minority interest of
labor shares represents an accrual of 3.1%, 17.3% and 17.5% for 1996, 1995 and
1994, respectively, of the Branch's after-tax earnings as determined under
Peruvian GAAP.
The reduction in the minority interest of labor shares principally reflects
the effect of the exchange of SPCC common stock for labor shares completed in
the fourth quarter of 1995.
Cash Flows -- Operating Activities. Net cash flow from operating
activities was $158.8 million in 1996, compared with $330.4 million for 1995 and
$134.9 million in 1994. The decrease in operating cash flow in 1996 was a result
of higher Peruvian income taxes paid in 1996, principally relating to the final
tax payment for 1995 and lower cash earnings. The increase in operating cash
flow in 1995 reflects higher cash earnings and changes in working capital.
Cash Flows -- Investing Activities. Net cash used for investing activities
was $79.3 million in 1996 as compared with $119.5 million in 1995 and $138.8
million in 1994. Capital expenditures in 1996 were $120.8 million as compared
with $183.0 million in 1995 and $181.9 million in 1994. In 1996, $19.4 million
was spent to complete the Quebrada Honda tailings project, through the starter
dam phase. In addition, $27.2 million was spent on new large capacity shovels
and haul trucks for the mines. In 1995, the Company spent $36 million for
completion of the sulfuric acid plant at the Ilo smelter and $77 million for
completion of the Toquepala SX/EW plant. In 1995, $61.1 million was transferred
from a restricted account and used to support the capital spending.
In May 1994, the Company purchased the Ilo refinery from a Peruvian
government-owned entity for $65 million in cash and a commitment to make an
additional $20.2 million of capital improvements over three years. The Company
had substantially completed this commitment at December 31, 1996. The
acquisition of the refinery has allowed the Company to integrate its operation
from the mining and smelting of copper to the production of refined copper and
to reduce its cash costs of operations.
In 1994, the Company realized proceeds of $50.3 million from the sale of
investments. Investments in marketable securities include a net redemption in
1996 and 1995 of $41.5 million and $0.5 million, respectively, as compared with
a net investment in marketable securities of $7.2 million in 1994.
Cash Flows -- Financing Activities. Financing activities used cash of
$127.6 million in 1996 as compared with $86.1 million in 1995 and cash provided
of $64.7 million in 1994. The 1996 amount includes purchase of
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<PAGE> 45
labor shares and treasury stock of $8.3 million, net borrowings of $2.6 million
as compared with net repayment of borrowings of $13.3 million in 1995 and net
proceeds from borrowing of $90.3 million in 1994. The 1995 amount includes
proceeds from a subscription of labor shares of $10.9 million. Distributions to
the labor share minority interest were $4.1 million in 1996. Dividends paid in
1996 were $117.9 million as compared with $83.7 million in 1995 and $21.4
million in 1994. On February 4, 1997 a dividend of $0.30 a share, totaling $24.1
million was declared, payable March 3, 1997.
The information set forth below under "-- Liquidity and Capital Resources";
"Exchange Offer for Labor Shares"; "Dividends and Capital Stock"; "Environmental
Matters"; "Accounting Matters" and "Subsequent Events" has been derived from
SPCC's Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
For updates with respect to certain of the information in these sections, see
the corresponding sections under "-- Results of Operations for the Six Months
Ended June 30, 1997 and June 30, 1996".
LIQUIDITY AND CAPITAL RESOURCES
1991 Agreement. In December 1991, the Company and the Government of Peru
signed an agreement (the "1991 Agreement") resolving all open issues concerning
the conclusion of the investment recovery contract which governed the
development and operation of the Cuajone mine. Under the 1991 Agreement, the
Company agreed to undertake an investment program over the five years,
1992-1996, and the Peruvian Government agreed not to discriminate against the
Company in comparison with treatment given to other mining companies. As part of
this agreement, in 1991 the Company transferred $55.0 million from its accounts
in New York to an interest-bearing account with the Central Reserve Bank of
Peru, to be withdrawn by the Company at its discretion solely for application to
the investment program. In March 1995, these funds, aggregating $61.1 million,
including accumulated interest, were transferred to the Branch as a capital
contribution and used for the capital spending program. In conjunction with the
transfer, labor shareholders contributed $10.9 million to the capital of the
Branch.
At December 31, 1996, the Company had expended $443.6 million under the
agreed five-year program and has met its obligations under the 1991 Agreement.
Financing. In January 1996, the Company borrowed $47 million, the
remaining commitment available under a $50 million loan from Mitsui at a rate of
LIBOR plus 2.87%. In addition, in November 1996, the Company prepaid $12.9
million, the remaining loan balance from two Peruvian commercial banks. At
December 31, 1996 the Company had outstanding borrowings under its long-term
loan agreements of $106.6 million. There were no amounts available under these
facilities at December 31, 1996. The loans are payable in semi-annual
installments through 2001 and bear interest based on LIBOR, except for a 6.43%
fixed-rate loan from the U.S. Eximbank. The December 31, 1996 balance on this
loan was $26.3 million.
The financing agreements contain covenants which limit the payment of
dividends to stockholders. Under the most restrictive loan, the Company may not
pay a dividend if the aggregate amount of all dividend payments with respect to
any fiscal quarter is greater than 50% of Net Income (as defined therein) of the
Company for such fiscal quarter. However, this agreement permits dividends with
respect to the final quarter of each fiscal year to the extent that total
dividends for such fiscal year do not exceed 50% of the first $50 million of
earnings plus 100% of earnings in excess of $50 million for such fiscal year.
These dividend restrictions directly apply to SP Limited as the issuer of the
debt. However, on consolidation they also apply to SPCC. Net assets of SP
Limited unavailable for the payment of dividends to SPCC totaled $821 million at
December 31, 1996.
The financing agreements are collateralized by pledges of receivables from
34,200 tons of copper per year and liens on certain product inventory, fixed
assets and mining concessions. In addition, certain of the agreements require
the Company to maintain a minimum stockholders' equity of $750 million,
specified ratios of debt to equity, current assets to current liabilities and an
interest coverage test. Any reduction of Asarco's voting interest in the Company
to less than a majority would constitute an event of default under one of the
financing agreements. The Company is in compliance with the various loan
covenants at December 31, 1996. Included in other assets are $11.3 million held
in escrow accounts as required by the Company's loan agreements. The funds will
be released from escrow as scheduled loan repayments are made.
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<PAGE> 46
At December 31, 1996, the Company's debt as a percentage of total
capitalization was 9.3% as compared with 8.8% at December 31, 1995. Debt at
December 31, 1996 was $106.6 million, compared with $93.9 million at the end of
1995.
Cash Position and Requirements. At December 31, 1996, the Company's cash
and cash equivalents and marketable securities amount to $174.2 million as
compared with $262.1 million at December 31, 1995.
Expansion and Modernization Project. In September 1996, the Company
announced a project including an expansion of the Cuajone mine and an expansion
and modernization of its copper smelter at Ilo. Commencement of the project will
begin once financing has been arranged. The Company is in the process of
arranging financing for the program. In January 1997, the Company received
preliminary commitments from a group of six financial institutions for a loan
facility of $600 million with a final maturity of 7 years. The commitment and
terms of the financing are subject to final documentation which is expected to
be completed in early 1997. Upon closing of this financing, the Company expects
to commence the modernization and expansion project. Additional financing for
the project also is being sought from other sources. The Cuajone mine expansion
which will expand the annual copper production by 130 million pounds represents
the first stage of the project. Engineering for the second stage of the program,
the modernization of the Ilo smelter has begun. Following completion of the
preliminary engineering and securing of the financing, SPCC plans to modernize
its existing copper smelter at Ilo to meet current international environmental
guidelines and to increase capacity. Total capital cost for the first two stages
of the project is estimated at $1.0 billion, budgeted to be spent over the next
six years.
Stage I, the expansion of the Cuajone mine, is expected to require a
capital investment of approximately $245 million and is expected to be completed
in early 1999. Stage II, the expansion and modernization of the Ilo smelter, is
expected to cost approximately $787 million, based on the Company's preliminary
engineering studies, and is expected to be completed in 2003.
A future opportunity for a third stage of the expansion and modernization
plan, consisting of a second expansion at Cuajone and further expansion of the
Ilo smelter capacity will be evaluated at a later date and will depend on the
availability of financing and other conditions at the time. A decision to
proceed on this stage of the project is not expected before 2000. The Company
expects that the projects will be funded from a combination of existing cash,
internally generated funds and external financing.
EXCHANGE OFFER FOR LABOR SHARES
In November 1995, the Company offered to exchange newly issued common stock
for any and all of the outstanding labor shares of the Peruvian Branch.
The exchange offer expired on December 29, 1995, with 80.8% of outstanding
labor shares exchanged for 11,480,093 shares of common stock. The common stock
has been listed on the New York Stock Exchange and the Lima Stock Exchange since
January 5, 1996.
In conjunction with the exchange of labor shares, the founding common
stockholders of the Company exchanged their shares for Class A common shares.
The exchange of common stock for labor shares has been accounted for as a
purchase of a minority interest. The value of the common stock issued in the
exchange (based on the average per share trading value for the three business
days ended January 9, 1996) plus issuance costs exceeded the carrying value of
the minority interests acquired by $82.0 million, net of tax. The increase in
value was assigned to metal inventory and to proven and probable sulfide and
leachable ore reserves and mineralized material.
DIVIDENDS AND CAPITAL STOCK
The Company paid dividends to stockholders of $117.9 million, or $1.47 per
share, in 1996, $83.7 million or $1.27 per share, in 1995 and $21.4 million, or
$0.33 per share in 1994.
At the end of 1996 and 1995, the authorized and outstanding capital stock
of the Company consisted of 66,550,833 and 68,750,833 shares of Class A common
stock, par value $0.01 per share, respectively; and 33,449,167 and 31,249,167
authorized shares of common stock, par value $0.01 per share, respectively, of
which
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<PAGE> 47
13,633,674 shares were outstanding at December 31, 1996 and 11,479,667 shares
were outstanding at December 31, 1995. At the end of 1994, 76,251,193 shares of
old common stock were issued of which 65,717,493 shares were outstanding.
ENVIRONMENTAL MATTERS
As part of the 1991 Agreement, the Company made a significant number of
environmental capital expenditures, including a sulfuric acid plant at the Ilo
smelter for partial recapture of sulfur dioxide, completed in 1995 at a cost of
$103.0 million; a sewage treatment plant at Ilo, completed in 1994 at a cost of
$2.0 million; and a tailings storage facility at Quebrada Honda, which became
operational in 1996 at a cost of $40.8 million. The Company has also incurred
capital costs of $3.0 million for environmental projects as a result of the
commitment made in connection with the Ilo refinery acquisition. In addition, in
April 1996 the Company began a $35.0 million expansion of the Ilo sulfuric acid
plant. The expansion will increase the capture of sulfur dioxide emissions from
the smelter from 18% to 30% and will also increase sulfuric acid production at
the smelter to 330,000 tons per year in 1998, the expected year of expanded
plant operation. Capital expenditures in connection with these and other
environmental projects were approximately $29.8 million in 1996.
The Company's exploration, mining, milling, smelting and refining
activities are subject to Peruvian laws and regulations, including environmental
laws and regulations, which change from time to time. The Company recently
approved an environmental compliance and management plan, PAMA, which sets forth
the investments to be made by the Company to comply with current Peruvian
environmental regulations applicable to its operations. To implement the PAMA,
the Company is required to make a minimum annual investment of 1% of net annual
sales until compliance is met. The PAMA will require the Company to make
significant additional capital expenditures to achieve compliance with the
maximum permissible levels for its MPLs within a period of five years, except
for environmental controls applicable to its smelter operation which must be put
in place within ten years. The PAMA contemplates a number of environmental
projects, the largest and most capital intensive of which is the planned
modernization of the Ilo smelter. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Expansion and Modernization
Project". Management believes that under current Peruvian law and regulations,
compliance with the PAMA will satisfy the MPL requirements pertaining to the
Company's operations during the applicable five or ten year implementation
period. The Company remains, however, subject to other environmental
requirements applicable to its operations.
ACCOUNTING MATTERS
The American Institute of Certified Public Accountants issued Statement of
Position 96-1, "Environmental Remediation Liabilities" ("SOP 96-1") in October
1996. SOP 96-1 provides authoritative guidance on specific accounting issues in
connection with recognizing, measuring and disclosing environmental remediation
liabilities. Application of SOP 96-1 in the fourth quarter of 1996 had no effect
on the Company's financial statements.
SUBSEQUENT EVENT
On February 21, 1997, the Company entered into agreements with a wholly
owned subsidiary of Tractebel, for the sale of a new turbine at its Ilo power
plant and a 20-year power purchase agreement for its copper operations in Peru.
In April 1997, the Company completed the sale of its existing power plant assets
to Tractebel.
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<PAGE> 48
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Issuer will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 1997; provided, however, that if the Issuer,
in its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $150,000,000 aggregate principal amount
of the Old Notes were outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about the date set forth on the cover
page to all holders of Old Notes at the addresses set forth in the security
register with respect to Old Notes maintained by the Trustee. The Issuer's
obligations to accept Old Notes for exchange pursuant to the Exchange Offer is
subject to certain conditions as set forth under "Certain Conditions to the
Exchange Offer" below.
The Issuer expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance of any Old Notes, by giving oral or written notice of
such extension to the Exchange Agent (as defined below) and notice of such
extension to the holders as described below. During any such extension, all Old
Notes previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Issuer. Any Old Notes not accepted for exchange for
any reason will be returned without expense to the tendering holder thereof as
promptly as practicable after the expiration or termination of the Exchange
Offer.
The Issuer expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange offer
specified below under "Certain Conditions to the Exchange Offer". The Issuer
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Issuer intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Issuer of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Issuer will constitute a binding
agreement between the tendering holder and the Issuer upon the terms and subject
to the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit a properly completed
and duly executed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to Citibank, N.A. (the "Exchange Agent") at the
address set forth below under "Exchange Agent" on or prior to the Expiration
Date. In addition, (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if
such procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date or (iii) the holder must comply with the guaranteed
delivery procedures described below. THE METHOD OF DELIVERY OF OLD NOTES,
LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT RE-
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<PAGE> 49
QUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of such Old Notes and
the certificates for New Notes to be issued in exchange therefor are to be
issued (or any untendered amount of Old Notes are to be reissued) to the
registered holder or (ii) for the account of an Eligible Institution (as defined
below). In the event that signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by a firm which is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or by a
commercial bank or trust company having an office or correspondent in the United
States (collectively, "Eligible Institutions"). If Old Notes are registered in
the name of a person other than the person signing the Letter of Transmittal,
the Old Notes surrendered for exchange must be endorsed by, or be accompanied
by, a written instrument or instruments of transfer or exchange, in satisfactory
form as determined by the Issuer in its sole discretion, duly executed by the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Issuer in its sole discretion, which determination shall be final and
binding. The Issuer reserves the absolute right to reject any and all tenders of
any particular Old Notes not properly tendered or to not accept any particular
Old Notes which acceptance might, in the judgment of the Issuer or its counsel,
be unlawful. The Issuer also reserves the absolute right in its sole discretion
to waive any defects or irregularities or conditions of the Exchange Offer as to
any particular Old Notes either before or after the Expiration Date (including
the right to waive the ineligibility of any holder who seeks to tender Old Notes
in the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Issuer shall be final and binding on all parties. Unless waived,
any defects or irregularities in connection with the tenders of Old Notes for
exchange must be cured within such reasonable period of time as the Issuer shall
determine. Neither the Issuer, the Exchange Agent nor any other person shall be
under any duty to give notification of any defect or irregularity with respect
to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
Each holder participating in the Exchange Offer shall be required to
represent to the Company that at the time of the consummation of the Exchange
Offer (i) any New Notes received by such holder will be acquired in the ordinary
course of business, (ii) such holder will have no arrangements or understanding
with any person to participate in the distribution of the Old Notes or the New
Notes within the meaning of the Securities Act, (iii) such holder is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company or if
it is an affiliate, such holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the New Notes and (v) if such holder is
a broker-dealer, that it will receive New Notes for its own account in exchange
for Old Notes that were acquired as a result of market-making activities or
other trading activities and that it will be required to acknowledge that it
will deliver a prospectus in connection with any resale of such New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Issuer will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "Certain Conditions to the Exchange Offer" below. For purposes of
the Exchange Offer, the Issuer shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Issuer has given oral or
written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer
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<PAGE> 50
Facility pursuant to the book-entry transfer procedures described below, a
properly completed and duly executed Letter of Transmittal and all other
required documents. If any tendered Old Notes are not accepted for any reason
set forth in the terms and conditions of the Exchange Offer or if certificates
representing Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfers into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from , payable on the 30th day
of each month (or the 28th day of February), accruing from the Interest Date.
Interest on each New Note will accrue from the latter of (i) the last interest
payment date on which interest was paid on the Old Note surrendered in exchange
therefor, or (ii) if the Old Note is surrendered for exchange to occur on a date
after the record date for the next succeeding interest payment date and prior to
such interest payment date, the date of such interest payment date.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer promptly after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Old Notes by causing the Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account in
accordance with the Book-Entry Transfer Facility's Automated Tender Offer
Program ("ATOP") procedures for transfer. However, the exchange for the Old
Notes so tendered will only be made after timely confirmation of such book-entry
transfer of Old Notes into the Exchange Agent's account, and timely receipt by
the Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility and received by the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that the Book-Entry Transfer Facility has received an
express acknowledgment from a participant tendering Old Notes that are the
subject of such Book-Entry Confirmation that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, and that the
Issuer may enforce such agreement against such participant.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Issuer (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates of all physically tendered Old Notes,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
48
<PAGE> 51
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent". Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any note of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Issuer, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder thereof without cost to such holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, the Issuer
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, such acceptance or issuance would violate applicable
law or any interpretation of the staff of the Commission.
The foregoing condition is for the sole benefit of the Issuer and may be
asserted by the Issuer regardless of the circumstances giving rise to such
condition or may be waived by the Issuer in whole or in part at any time and
from time to time in its sole discretion. The failure by the Issuer at any time
to exercise the foregoing rights shall not be deemed to be a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Issuer will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part, or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA").
EXCHANGE AGENT
Citibank, N.A. has been appointed as the Exchange Agent for the Exchange
Offer. All executed Letters of Transmittal should be directed to the Exchange
Agent at one of the addresses set forth below. Questions and
49
<PAGE> 52
requests for assistance, requests for additional copies of this Prospectus or of
the Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the Exchange Agent, addressed as follows:
Deliver To:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
By Hand: By Mail: By Overnight Carrier:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data
Corporate Trust Window Distribution, Inc. Distribution, Inc.
111 Wall Street, 5th Floor P.O. Box 7072 404 Sette Drive
New York, New York 10043 Paramus, New Jersey 07653 Paramus, New Jersey 07652
</TABLE>
Facsimile for Eligible Institutions: (201) 262-3240
To confirm fax only: (800) 422-2077
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers and
regular employees of the Issuer and its affiliates. No additional compensation
will be paid to any such officers and employees who engage in soliciting
tenders. The Issuer will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Issuer, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Issuer and are estimated in the aggregate to be
$225,000.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Issuer to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer to be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon and, except in
certain limited circumstances, will no longer have any registration rights with
respect to the Old Notes. In general, the Old Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Issuer does not intend to register the Old Notes
under the Securities Act. The Issuer believes that, based upon interpretations
contained in letters issued to third parties by the staff of the Commission, New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold or otherwise transferred by each holder thereof
(other than a broker-dealer, as set forth below, and any such holder which is an
"affiliate" of the Issuer within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Notes are acquired in the ordinary
course of such holders' business and such holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. If any holder has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holder
50
<PAGE> 53
(i) could not rely on the applicable interpretation of the staff of the
Commission and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes must acknowledge that it will deliver a prospectus in connection with
any resale of such New Notes. See "Plan of Distribution". In addition, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered or sold unless they have been registered or qualified for
sale in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Issuer does not currently intend to take any
action to register or qualify the New Notes for resale in any jurisdiction.
51
<PAGE> 54
BUSINESS AND PROPERTIES
The operations of the Company involve the mining, milling and flotation of
copper ore to produce copper concentrates, the smelting of copper concentrates
to produce blister copper and the refining of blister copper to produce cathode
copper. Silver, molybdenum and small amounts of other metals are also contained
in copper ore as by-products. Silver is sold as an element of blister copper or
is recovered in the refining process. Molybdenum is recovered from copper
concentrate in a molybdenum by-product plant.
COPPER PRODUCTION PROCESS
Operations. The process of producing copper begins at the mine pit. Waste
rock and copper bearing ore are first drilled and blasted and then loaded onto
diesel-electric trucks by electric shovels. Waste is hauled to dump areas.
Copper ore is deposited in rail cars and transported to the crushing circuit
where gyratory crushers break the ore into sizes no larger than 3/4 inch. The
ore is then transported to the rod and ball mills which grind it to the
consistency of powder. This finely ground ore is agitated in a water and
chemical solution and pumped as a slurry to the flotation separator. The
solution is then aerated, causing a froth which carries the copper minerals to
the surface but not the waste rock. The froth is skimmed off and filtered to
produce copper concentrates. The waste rock, called tailings, is sent to the
tailings storage facility. The copper concentrates (which contain a copper grade
of approximately 26% to 28%) are then shipped by rail to the smelter.
At the smelter, the concentrates are blended with fluxes. The concentrates
are then fed into reverberatory furnaces or a Teniente converter where they are
melted, producing "matte" and "slag". Matte from the reverberatory furnaces
contains approximately 35% copper, and matte from the Teniente converter
contains approximately 73% copper. Slag is a residue of the smelting process
containing iron and other impurities. The matte is transferred by ladles to the
converters and is oxidized in two steps. First, the iron sulfides in the matte
are oxidized with silica, producing slag that is returned to the reverberatory
furnaces. Second, the copper in the matte sulfide is oxidized to produce blister
copper. The blister copper contains approximately 98.5% copper. Some of the
blister copper is sold to customers. The remainder is transferred to the Ilo
refinery.
After additional treatment in the anode furnace, the copper is cast into
880-pound anodes and then moved to the refinery's electrolytic tank house. Anode
copper is approximately 99.0% copper. In the electrolytic refinery, anodes are
suspended in tanks containing sulfuric acid and copper sulfate. An electrical
current is passed through the anodes and chemical solution to deposit clean
copper on pure copper plates. The resulting refined copper cathodes are 99.99%
copper. Silver and small amounts of other metals contained in the anodes settle
on the bottom of the tank and are separately recovered.
The Company is also producing copper cathodes at low cost using solvent
extraction/electrowinning technology at its SX/EW facility. In the SX/EW
process, ore is leached with sulfuric acid to extract the contained copper. At
Toquepala, the leachable material includes 495 million tons of previously mined
sulfides, oxides and waste rock which will be leached in place on existing dumps
and an additional 155 million tons of sulfides which will be mined over the next
15 years. At Cuajone, the leachable material includes 15 million tons of
previously mined oxides which will be crushed and placed on pads for heap
leaching. The dilute acid-copper solution from the leaching operation is
agitated vigorously with a solvent containing chemical additives that attract
copper ions. Because the solvent is lighter than water, it rises to the top,
carrying the copper with it. The solvent is then skimmed off and agitated with
an acid solution which releases the copper from the solvent. The resulting acid-
copper solution is transferred to electrowinning tanks where the copper is
plated out on cathodes, as in electrolytic refining. The SX/EW process produces
copper cathodes ready for shipment and sale without any milling, concentrating
or smelting of the ore.
TOQUEPALA MINE
The Toquepala mine is a porphyry copper deposit located at an altitude of
10,000 feet on the western flank of the Andes near the Peruvian-Chilean border.
The ore body has been known since the early part of the nineteenth century, but
the economic feasibility of mining this ore body was not proven until 1952.
Construction and mine development began in 1956 and Toquepala has been in
production since 1960.
52
<PAGE> 55
The Toquepala copper deposit occurs within the same northwest-trending
copper belt that is the host of the Cuajone deposit. The geology of the
Toquepala deposit consists of diorite bodies and adjacent volcanic rocks that
are intruded by stocks and dikes of dacite porphyry composition. This intrusive
activity was followed by a period of intense hydrothermal alteration and
mineralization accompanied by the formation of breccia pipes.
There have been several phases of copper mineralization associated with
successive periods of brecciation and hydrothermal activity. The result was
disseminated sulfide minerals being deposited in the altered rocks. There is no
close relationship between rock type and intensity of mineralization, although
the highest copper grades occur in the ore breccia regardless of the rock types
that make up the fragments in the breccia.
Within the breccia column, there are zones of relatively homogeneous,
high-grade copper mineralization. However, a north-south trending zone within
the breccia, known as the "jumbled zone", contains high but erratic copper
values. Predicting grades in this "jumbled zone" is difficult.
At December 31, 1996 proven and probable ore reserves were approximately
332 million tons at an average copper grade of 0.82%. Over the remaining life of
the mine, the waste-to-ore ratio is estimated to be 0.9 to 1 although the actual
ratio varies depending on the location of the ore within the mine.
The Toquepala pit currently measures about 1.2 miles in diameter at its
surface perimeter and about 1,300 feet in depth. Operations are conducted in
three eight-hour shifts per day, six days per week. Blast hole drilling is
accomplished with five rotary drills. Over 95% of explosives consumption is in
the form of ammonium nitrate. The mine has 4 shovels of 15 yard capacity, one
shovel of 56 yard capacity and 20 trucks of 120-ton capacity and five 240-ton
capacity trucks. Toquepala also utilizes some rail haulage. The mine is planned
in sequential 35-meter wide push-backs, which is a standard porphyry copper
mining method. Roads are designed at 8% grades and 25 meter widths.
Acquisition of new equipment and technology has been underway at Toquepala
to improve operations since 1991. The Toquepala concentrator was built in
1956-1958 to process 30,000 tons of ore per day and expanded to 43,500 tons per
day. Ore crushing capacity was increased in 1996, and the original 600 small
flotation cells were replaced with 20 large cells, each with 1,500 cubic feet
capacity. The mill incorporates electronic process controls and two ball mills
recently added in 1995 and 1996. Secondary and tertiary crushers have been
upgraded. In 1996, 478,400 tons of concentrate were produced, containing 126,464
tons of copper. In 1995, 481,600 tons of concentrate were produced, containing
128,064 tons of copper.
A molybdenum recovery plant was constructed in 1962. The plant produced
concentrate containing 4.5 and 3.7 million pounds of molybdenum in 1996 and
1995, respectively. In 1996, Toquepala produced approximately 1.4 million ounces
of silver contained in copper concentrates which are sold in copper blister or
recovered in the refining process and subsequently sold. In 1995, Toquepala
produced approximately 1.6 million ounces of silver contained in copper
concentrates.
In addition to an open pit mine, crushers and concentrator, the Toquepala
mine includes maintenance facilities capable of repairing equipment currently in
use. The equipment used at Toquepala is generally in good condition. Toquepala
is connected to Cuajone and Ilo by rail and by road and power is supplied from a
power plant at Ilo via a 66-mile transmission line.
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<PAGE> 56
Set forth below are certain operating data for the periods indicated for
the Toquepala mine.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MINING OPERATIONS:
Ore mined (in tons)........ 9,302,000 8,984,000 18,609,000 16,937,000 15,907,000 16,044,000 15,559,000
Average copper grade....... 0.74% 0.87% 0.81% 0.86% 0.80% 0.83% 0.85%
PRODUCTION:
Copper (in tons) contained
in concentrates.......... 60,067 63,780 126,464 128,064 111,797 115,047 113,232
Silver (in troy ounces).... 624,485 669,171 1,493,529 1,556,417 1,400,561 1,400,561 1,190,726
Molybdenum contained in
concentrates (in
pounds).................. 2,858,000 1,568,000 4,483,431 3,674,399 3,057,568 2,570,606 3,616,242
</TABLE>
SX/EW FACILITY
Since the 1960s, the Company has stored low grade material at its
properties that is capable of being processed into cathode copper through an
SX/EW process. Of the 665 million tons of stored material averaging 0.22%
copper, at the two mines, 650 million tons of this material are stored at
Toquepala. The SX/EW facility commenced operations in late 1995. In 1996, the
facility produced 46,585 tons of copper cathode at a cash cost below $0.35 cents
per pound.
Set forth below are certain operating data for the periods indicated for
the SX/EW facility.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30. DECEMBER 31,
------------------ -----------------
1997 1996 1996 1995
------- ------- ------- ------
<S> <C> <C> <C> <C>
Copper (in tons)................................. 24,029 22,658 46,585 5,006
</TABLE>
CUAJONE MINE
The Cuajone mine is located 15 miles northwest of the Toquepala mine and is
also a porphyry copper deposit. Construction and development began in 1969 and
the mine has been in production since 1976.
The Cuajone porphyry copper deposit consists of mineralized stocks of
latite porphyry and intrusive andesite which cut volcanic rocks of andesitic and
rhyolitic composition. A central breccia body consists of altered and
mineralized fragments of volcanic and intrusive rocks, contained in a relatively
fresh latite porphyry matrix.
The dominant fracturing found within the pre-ore and intrusive rocks is a
stockwork cross-fracturing caused by the intrusion of the latite stock.
Superimposed on this stockwork fracturing is the intense faulting, fracturing
and shearing along the northwest-southeast direction. The zone of economic
copper mineralization at Cuajone is typified by its regular shape, homogeneity
of grade, and simple mineralogy. Only the central breccia zone, with its
inclusions of barren latite porphyry, represents major zones of internal waste.
At December 31, 1996, current proven and probable ore reserves were
approximately 1,400 million tons of sulfide ore averaging 0.65% copper. The
average waste-to-ore ratio is estimated to be 1.3 to 1, although the actual
ratio varies depending on the location of the ore within the mine.
The mine is currently roughly circular, about 1.2 miles in diameter, and is
generally about 1,600 feet deep. Operations are conducted in three eight-hour
shifts per day, six days per week. Blast hole drilling is accomplished with four
rotary drills.
Loading is carried out by a fleet of mine shovels ranging in size from 15
to 56-cubic yards capacity. Use of truck and rail transport combines the
flexibility and grade-climbing abilities of trucks with the long-haul efficiency
of rail. There are twelve 240-ton trucks and six 120-ton trucks in the mine. As
part of the capital spending program, a large shovel with a 42-cubic yard
capacity was purchased for the mine in 1994 to work with the 240-ton haul
trucks. Recently, the Company purchased a new 56-cubic yard shovel. It is about
the size of a
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<PAGE> 57
three-story building and makes three passes to load a truck for the haul to the
rail line. The mine is planned and operated in sequential 35-meter wide
push-backs. Roads are currently at 8% and 10% gradients and are 25 meters wide.
Ore from the mine is transported by rail to the Cuajone mill and
concentrator, located four miles from the mine. The concentrator's original
capacity of 48,000 tons per day was increased in 1995 to its current capacity of
64,000 tons per day.
In 1996, 613,722 tons of concentrates were produced, containing 166,006
tons of copper. In 1995, 535,046 tons of concentrates were produced, containing
145,491 tons of copper.
Molybdenum is a significant by-product at Cuajone. The distribution of
molybdenite differs from that of copper in that the molybdenum distribution is
erratic in terms of grade, though concentrations of high-grade molybdenum are
found in the northeast and southwest sides of the ore zone. A molybdenum
recovery plant was built in 1980. Production was 4.3 million pounds of
molybdenum in concentrates annually in 1996 and 1995.
In 1996, Cuajone produced approximately 1.7 million ounces of silver
contained in copper concentrates, and sold in copper blister or recovered in the
refining process. During 1995, 1.4 million ounces of silver contained in copper
concentrates were produced.
In addition to an open pit mine, crushers and concentrator, the Cuajone
mine includes facilities for maintaining mining and milling equipment. The
equipment used at Cuajone is generally in good condition. Cuajone is connected
to Toquepala and Ilo by rail and by road and power is supplied from a power
plant at Ilo via a 53-mile transmission line.
Set forth below are certain operating data for the periods indicated for
the Cuajone mine.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
MINING OPERATIONS:
Ore mined (in tons)...... 10,499,000 10,321,000 21,249,000 21,378,000 21,785,000 21,409,000 21,471,000
Average copper grade..... 0.93% 0.95% 0.96% 0.79% 0.84% 0.83% 0.86%
PRODUCTION:
Copper contained in
concentrates (in
tons).................. 83,180 80,922 166,006 145,491 156,037 150,410 157,946
Silver (in troy
ounces)................ 744,662 765,024 1,602,977 1,401,253 1,578,638 1,412,979 1,484,368
Molybdenum contained in
concentrates (in
pounds)................ 1,539,000 2,259,000 4,256,808 4,334,215 3,061,821 3,741,738 3,467,786
</TABLE>
ILO SMELTER
The Company's Ilo smelter began operations in 1960. It is located
approximately 10 miles north of the port town of Ilo and is accessible by road.
The smelter was expanded in 1977 to accommodate production from the Cuajone
mine. At the time of the expansion, two new reverberatory furnaces and three
converters were added. In 1996, the smelter processed over one million tons of
concentrate for the fifth successive year. The smelter is of conventional design
and uses two reverberatory furnaces to produce a copper matte which is then
blown in seven Pierce-Smith converters to produce copper metal. The smelter
currently has a nominal blister copper production capacity of 320,000 tons per
year. In 1996, blister copper production was 316,804 tons which was produced
from 294,997 tons of copper in concentrates from the Toquepala and Cuajone mines
and 21,807 tons of purchased copper in concentrates. In 1995, blister copper
production was 317,228 tons, of which 268,761 tons was produced from Toquepala
and Cuajone copper in concentrates, and 48,467 tons was produced from purchased
copper in concentrates. In 1995, the Company installed a Teniente converter to
replace a reverberatory furnace and an oxygen plant to supply oxygen-enriched
air to the new converter.
In 1995, the Company installed a sulfuric acid plant capable of producing
200,000 tons of sulfuric acid per year from partial capture of air emissions of
sulfur dioxide at the Ilo smelter. In 1996, the Company produced
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<PAGE> 58
214,000 tons of sulfuric acid. The Company uses a portion of the sulfuric acid
in its SX/EW operation and sells the remainder on the open market.
The following table sets forth the amount of blister copper produced at the
Ilo smelter for the periods indicated.
<TABLE>
<CAPTION>
BLISTER COPPER PRODUCTION
-------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- -----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(IN TONS)
<S> <C> <C> <C> <C> <C> <C> <C>
From SPCC concentrates.......... 124,984 137,643 294,997 268,761 268,432 265,046 268,407
From purchased concentrates..... 13,700 8,255 21,807 48,467 53,671 47,749 35,482
-------- -------- -------- -------- -------- -------- --------
Total smelter
production.......... 138,684 145,898 316,804 317,228 322,103 312,795 303,889
</TABLE>
ILO REFINERY
The Ilo refinery is located 4 miles north of Ilo and was constructed in
1975. The refinery is connected to the Ilo smelter by 6 miles of rail lines.
Recently, the Company completed an expansion of the refinery, which increased
annual capacity to 247,000 tons of copper, all of which is supplied by the
Company's smelter.
The refinery consists of an anode plant, an electrolytic plant and a
precious metals refinery. There are also a number of ancillary installations,
including a desalination plant and a small diesel powered electric generating
station. The refinery produces high quality (Grade A) copper cathode which has a
registered trademark on the LME. The refinery also produces gold, silver,
selenium and nickel sulfate as by-products.
In May 1994, the Company acquired the Ilo refinery from a government-owned
entity through a process of competitive bidding in connection with the
privatization of the Ilo refinery. Substantially all of the revenues of the Ilo
refinery prior to its acquisition by the Company were toll-refining fees under a
contract between the government-owned entity and the Company, the terms of which
were determined by such entity. The Company was required by law to supply all of
the requirements of the refinery, as determined by the government-owned entity,
before the Company could ship to other customers. Because the refinery was
government-owned, access to the financial results of the Ilo refinery prior to
May 1994 is limited and the Company has tried to obtain and has not been
successful in obtaining any reliable financial information regarding such
operations. Revenues of the Company have not been increased due to the
acquisition since the Company's sales continue to represent the invoiced value
of refined copper, however, the Company's refining costs have been reduced.
The Company's costs of operating the Ilo refinery are less than the
refining fee that the Company was previously required to pay for the refining of
its blister copper into copper cathodes. The acquisition of the Ilo refinery has
allowed the Company to integrate its operations from the mining of copper ore
through production of refined copper and to reduce its cash costs.
The following table sets forth the amount of SPCC copper refined at the Ilo
refinery for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Tons of copper.... 125,715 101,871 219,800 216,207 210,671 198,375 197,059
</TABLE>
EXPANSION AND MODERNIZATION PROGRAM
In September 1996, the Company announced its plan for the expansion of the
Cuajone copper mine and commencement of engineering studies for the
modernization and expansion of its copper smelter at Ilo. The Cuajone mine
expansion represents the beginning of a multi-year expansion and modernization
plan.
Stage I, the expansion of the Cuajone mine, is expected to require a
capital investment of approximately $245 million (including cost escalation) and
is expected to be completed in early 1999. The expansion is designed
56
<PAGE> 59
to increase ore production at Cuajone by 50% to 96,000 tons per day from the
current 64,000 tons per day and to increase copper production by the Company by
130 million pounds annually or 19%. The project will include upgrading Cuajone's
ore conveying system and installing an additional secondary and tertiary
crushing line, two ball mills, additional flotation capacity and an additional
tailings thickener. The Company also expects to purchase one new 56-cubic yard
shovel and 11 new 240-ton haul trucks.
Stage II, the modernization of the Ilo smelter, is expected to cost
approximately $787 million (including cost escalation and contingencies) based
on the Company's engineering studies, and to be completed in 2003. The Company
is undertaking the smelter project in order to increase smelter production
capacity and to modernize the smelter in accordance with the PAMA. See
"Regulatory Framework -- Regulations, Permitting and Environmental Matters". The
modernization of the Ilo smelter will be completed in phases. A new smelting
furnace utilizing flash furnace technology and associated support and
environmental control facilities will be installed by 2001, which would increase
the capture of sulfur dioxide emissions to 70%. The converter operations will be
modernized by installing either flash technology or conventional Peirce-Smith
converter technology. This choice of converter technology is expected to be made
before 2000 and new converter operations are planned to be in service by 2003.
The time frame allowed to select the converter technology will allow the Company
to evaluate the operation by others of the new flash converting technology. The
Company's modernization plan for the Ilo smelter is designed to avoid
significant disruptions in smelter production of blister copper during
construction and startup. Plans call for the smelter to continue to operate its
existing furnaces and converters until the new installations prove capable of
operating reliably at designed rates. Upon completion of the smelter
modernization, management expects that 95% or more of smelter sulfur emissions
will be captured.
ELECTRICAL POWER
Electrical power for the Company's operating facilities is generated by a
thermal electric plant owned and operated by a subsidiary of Tractebel and
located adjacent to the Ilo smelter. Power generation capacity is currently 110
megawatts. In addition, the Company has 30 megawatts of power generation
capacity from waste heat boilers in the smelter and two small hydro-generating
installations at Cuajone. In July 1997, the installation of a new gas turbine
owned by the subsidiary of Tractebel was completed. This new turbine will
increase capacity to approximately 180 megawatts. Power is distributed over a
139-mile, closed loop transmission circuit. The power generation plant consumes
approximately two million barrels of Number 6 fuel oil per year. Fuel is
purchased from a variety of sources on a spot purchase basis and there are no
government related restrictions on purchase sources. There have been no
significant reductions or interruptions of any operations because of energy
shortages.
In February 1997, the Company entered into agreements with Tractebel for
the sale of the new turbine at the power plant and a 20-year power purchase
agreement for its copper operations in Peru. In April 1997, the Company sold its
power generation facilities at Ilo, Peru. The power purchase agreement contains
provisions obligating Tractebel to construct additional capacity upon notice to
meet the Company's increased electricity requirements from the planned expansion
and modernization. The parties also entered into an agreement for the sharing of
certain services between the power plant and the Company's smelter at Ilo. Under
this agreement, the Company's cost of power will increase somewhat from its
current level, while the Company will benefit by avoiding significant capital
expenditures that would be required to meet the needs of the expanded
operations.
OTHER FACILITIES AND WATER RESOURCES
The Company owns and operates a standard gauge railroad connecting the
mines at Cuajone and Toquepala with the smelting and refining facilities at Ilo
which is used to transport industrial machinery and copper concentrates. The
rail line is over 134 miles in length and includes 16 miles of tunnels between
Toquepala and Cuajone. The Company's rail equipment includes 32 locomotives and
approximately 600 rail cars and self-propelled utility cars.
The Company owns and operates port facilities in Ilo, where it receives
supplies and equipment and from where it ships refined and blister copper.
57
<PAGE> 60
The Company provides housing for approximately 4,000 employees and their
families at townsites in Toquepala, Cuajone and Ilo. The Company also provides a
full range of social services including modern hospitals and schools for
employees and their families.
Water sources for operations at Toquepala and Cuajone are in the high
sierra at elevations of approximately 13,000 feet. SPCC has government water
concessions for well fields at Huaitiri and Titijones and surface water rights
from Lake Suches. Water flows from the fields through a distribution system to
reservoirs at Pampa de Vaca and Vina Blanca and on to Toquepala and Cuajone.
Water is used primarily for milling operations and population support. Average
water consumption for operations at Toquepala and Cuajone is 16,000 gallons per
minute.
The Company operates desalination plants at Ilo capable of producing 1,000
gallons per minute of water for industrial and domestic use.
RESERVES
The Company calculates its ore reserves by methods generally applied within
the mining industry and in accordance with the regulation of the Commission. All
mineral reserves are estimated quantities of proven and probable ore that under
present and anticipated conditions may be economically mined and processed by
the extraction of their mineral content.
The term "proven reserves" means ore reserves for which (a) quantity is
computed from dimensions revealed in outcrops, trenches, workings or drill
holes; grade and/or quality are computed from the results of detailed sampling;
and (b) the sites for inspection, sampling and measurement are spaced so closely
and the geologic character is so well defined that size, shape, depth and
mineral content of reserves are well established. The term "probable reserves"
means ore reserves for which quantity and grade and/or quality are computed from
information similar to that used for proven reserves, but the sites for
inspection, sampling and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower than that for proven
reserves, is high enough to assume continuity between points of observation.
The following table lists the Company's proven and probable sulfide ore
reserves as well as the average grade of such ore:
<TABLE>
<CAPTION>
ORE RESERVES AT
DECEMBER 31, 1996
-----------------
<S> <C>
TOQUEPALA MINE(1):
Ore reserves (in millions of tons):............................... 332
Grade-copper...................................................... 0.82%
Grade-molybdenum.................................................. 0.039%
CUAJONE MINE(2):
Ore reserves (in millions of tons):............................... 1,400
Grade-copper...................................................... 0.65%
Grade-molybdenum.................................................. 0.023%
</TABLE>
- ---------------
(1) The average mill recovery rate at Toquepala in 1996 was 84.2%. The grade of
copper at Toquepala adjusted for the copper equivalent value of the
molybdenum and silver content using the Company's realized price for copper,
silver and molybdenum oxide for 1996 would be 0.91% copper.
(2) The average mill recovery rate at Cuajone in 1996 was 81.7%. The grade of
copper at Cuajone adjusted for the copper equivalent value of the molybdenum
and silver content using the Company's realized price for copper, silver and
molybdenum oxide for 1996 would be 0.72% copper.
58
<PAGE> 61
The Company also has leachable reserves at Toquepala and Cuajone. The
following table lists the Company's leachable reserves and the average grade of
the leachable material:
<TABLE>
<CAPTION>
LEACHABLE RESERVES
AT DECEMBER 31, 1996
--------------------
<S> <C>
TOQUEPALA MINE:
Ore reserves (in millions of tons):.............................. 650
Grade-copper..................................................... 0.20%
CUAJONE MINE:
Ore reserves (in millions of tons):.............................. 15
Grade-copper..................................................... 0.98%
</TABLE>
In addition, results of drilling at Toquepala and Cuajone have identified
mineralized material consisting of 200 million tons grading 0.71% copper at
Toquepala and 180 million tons grading 0.56% copper at Cuajone. This mineralized
material will not qualify as proven and probable reserves until such time as a
final and comprehensive economic and technical feasibility study has been
completed demonstrating that such additional material can be economically mined.
PRODUCTION COSTS OF COPPER
Presented below is a table summarizing the Company's production costs for
copper sold during each period indicated below. The Company's production costs
for copper sold include all operating, administrative and overhead costs net of
margin realized on the sale of copper produced from purchased concentrates. Also
included as freight, refining and other sales costs are certain costs
representing allowances or costs incurred on the sale of blister copper that are
reported as deductions from net sales or in cost of products sold on the
financial statements. By-product credits include the net realized value of
silver and molybdenum sales. This calculation excludes the effects of exchange
gains or losses, workers' participation, interest income and expenses and other
income or expense.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------
1997 1996 1996 1995 1994 1993
---- ---- ---- ----- ---- ----
(PER POUND OF COPPER)
<S> <C> <C> <C> <C> <C> <C>
Cost of products sold......................... 52.1c 45.3c 47.6c 49.7c 54.2c 47.7c
Freight, refining fees and allowances and
other sales costs........................... 5.1 5.1 5.1 5.9 10.5 15.3
By-product credits............................ (6.7) (5.3) (5.7) (11.6) (6.3) (5.1)
Administrative expenses....................... 7.5 7.0 6.9 8.3 8.0 9.0
---- ---- ---- ---- ---- ----
Total cash cost of products sold............ 58.0 52.1 53.9 52.3 66.4 66.9
Depreciation, amortization and depletion.... 7.5 6.6 6.9 6.6 7.3 6.8
---- ---- ---- ---- ---- ----
Total.................................... 65.5c 58.7c 60.8c 58.9c 73.7c 73.7c
==== ==== ==== ==== ==== ====
</TABLE>
SALES OF METALS AND HEDGING
In 1994, SPCC entered into two long-term copper sales contracts for periods
of seven and ten years covering approximately 72,750 tons of copper.
Substantially all of the remaining copper produced by the Company is sold under
annual contracts. For annual and long-term contracts, pricing is based on
prevailing monthly average copper prices quoted on the LME for a quotational
period, generally being the month of, the month prior, or the month following
the scheduled month of shipment or delivery according to the terms of the
contract. To the extent not sold under annual or long term contracts, copper may
be sold on commodity exchanges or on a spot sale basis to merchants and
consumers.
The Company's smelter currently has a nominal capacity of 300,000 tons of
blister copper per year while the Ilo refinery has the capacity to refine
approximately 247,000 tons of copper cathodes. Therefore, the Company
59
<PAGE> 62
sells approximately one-fifth of its copper to other refiners in the form of
blister. Blister copper is typically sold by reference to the LME market price
of copper at the time of shipment less a refining allowance that the Company
negotiates with its customers on an annual basis. During the past several years,
the amount of the refining allowance has varied widely from time to time
depending on world market conditions for blister copper at such time.
Silver is sold under annual contracts or in spot sales and molybdenum is
sold in concentrate form to roasting plants and merchants and other refiners
under annual contracts. Sales prices are based on prevailing monthly averages of
molybdenum dealer oxide high/low prices as quoted in "Metals Week" for a
quotational period generally being the month of, the month prior to, or the
month following the scheduled month of shipment or delivery according to the
terms of the contract.
Depending on metal markets and other conditions, the Company may enter into
forward sales, purchase put options or establish synthetic put options to reduce
or eliminate the risk of copper price declines on its anticipated future
production. Put options purchased by the Company establish a minimum price for
the production covered by such put options and permit the Company to participate
in price increases above the strike price of such put options. Forward sales
establish a selling price for future production at the time they are entered
into, thereby eliminating the risk of declining prices but also eliminating
potential gains on price increases if not bought back. Synthetic put options are
established by entering into a forward sale and purchasing a call option for the
same quantity of the relevant metal and for the time period relating to such
forward sale. The forward sale establishes a minimum price that will be
realized, while the call option permits the Company to participate in price
increases.
EMPLOYEES
At June 30, 1997 the Company employed approximately 4,800 persons,
approximately 60% of whom were covered by labor agreements with nine labor
unions. During 1994 and 1995, the Company reduced its workforce by some 1,100
employees as part of a cost reduction effort. In connection with its purchase of
the Ilo refinery in May 1994, the Company added approximately 475 employees to
its workforce, of whom 300 were represented by two unions. The Company
experienced significant work stoppages prior to 1991; thereafter the Company
experienced no work stoppages in 1991 and 1993 and only limited work stoppages
in 1992. The Company experienced only one work stoppage in 1994, a three-day
strike at the smelter, which was declared illegal by the Ministry of Labor. No
work stoppages occurred during 1995 and 1996.
The Company has completed negotiations for new five-year labor agreements
with all nine of its unions as of December 31, 1996. Management believes the new
agreements allow for more flexible work practices and increases in productivity.
In addition, the Company continues to sign individual one-year no strike
agreements with its employees.
SPCC's employees largely reside in the town sites of Toquepala, Cuajone and
Ilo and more than 5,100 houses and apartments have been built by the Company for
its employees. This housing together with maintenance and utility services
(including water and electricity) are provided without cost to the majority of
SPCC's employees. These town site communities include educational and medical
facilities, churches, social clubs, shopping, banking and other needed services.
SPCC supports an on-site school system for almost 4,000 of its employees'
children. Textbooks, uniforms, transportation and school supplies are provided
free of charge. Educational subsidies are also made to approximately 1,700
students attending private schools and universities outside the Company's
operating areas. SPCC maintains a total of 19 separate school facilities. Adult
education is sponsored in all three areas and includes continuing technical
training for workers in their areas of specialty and adult academic programs.
Health care is provided free of charge to employees and family members at
three hospitals in Toquepala, Cuajone and Ilo.
LEGAL PROCEEDINGS
In February 1993, the Mayor of Tacna brought a lawsuit against SP Limited
seeking $100 million in damages from alleged harmful deposition of tailings,
slag and smelter emissions. On May 3, 1996, the Superior
60
<PAGE> 63
Court of Tacna, Peru affirmed the lower court's dismissal. In May 1996, the
plaintiff appealed, and the case presently is before the Peruvian Supreme Court.
There is generally no further right of appeal; however, the Peruvian Supreme
Court may grant discretionary review on limited issues in exceptional cases.
In April 1996, SP Limited was served with a complaint filed in Peru by
approximately 800 former employees challenging the accounting of the Company's
Peruvian Branch and its allocation of financial results to the Mining Community,
the former legal entity representing workers in Peruvian mining companies, in
the 1970s. The complaint seeks the delivery of a substantial number of labor
shares of the Peruvian Branch plus dividends and contains similar allegations to
those made in a prior lawsuit dismissed in September 1995. Subsequently, 127
additional former employees filed a similar lawsuit. During the second quarter
of 1997, SP Limited was served with an adverse opinion by the lower court.
Peruvian outside counsel has informed SP Limited that the lower court decision
is not supported by facts or the law and that the possibility that it will not
be reversed or nullified by Peruvian courts following appeal is remote. An
appeal was filed during the second quarter of 1997.
SP Limited, Asarco, other present and former corporate shareholders of SP
Limited and certain other companies are defendants in a lawsuit in federal
district court in Corpus Christi, Texas brought in September 1995 by 698
Peruvian plaintiffs seeking damages for personal injury and property damage
allegedly caused by the operations of SP Limited in Peru. On May 19, 1997, the
appellate court affirmed the district court's orders dismissing the complaint
and from an earlier order of that court denying plaintiffs' motion to remand the
case to state court. The time for filing a petition for certiorari with the
Supreme Court of the United States has expired with no petition having been
filed. The case is therefore concluded.
It is the opinion of management that the outcome of the legal proceedings
mentioned, as well as other miscellaneous litigation and proceedings now
pending, will not materially adversely affect the financial position or results
of operations of the Company and its consolidated subsidiaries. However, it is
possible that the outcome of the legal proceedings mentioned could have a
material effect on quarterly or annual operating results, when they are resolved
in future periods.
SUBSIDIARIES AND JOINT VENTURES
The Company owns 99.5% of Fomenta S.A., a construction company and 99.99%
of Recursos e Inversiones Andinas S.A., a holding company and office supply
distributor. In addition, certain of the Company's exploration and development
activities are carried out through Compania Minera Los Tolmos, S.A. in
association with other Peruvian companies. The Company conducts much of its
purchasing and logistical operations through its wholly-owned subsidiary,
Logistics Services Incorporated. The Company does not believe the subsidiaries
or joint ventures to be material to its business. Furthermore the Company
believes the services these entities provide could be obtained from third
parties at reasonable cost.
COMPETITION
The Company believes that competition in the copper market is based upon
price, quality of product and timing of delivery. The Company competes with
other mining companies and private individuals in connection with the
acquisition of mining claims and mineral leases and in connection with the
recruitment and retention of qualified employees.
SECURITY
SPCC's operations and headquarters are in two distinct regions of Peru.
Mining, smelting and refining operations are in the southern part of Peru and
the headquarters of the Branch are in the capital city of Lima. Terrorist
activity has not had an adverse impact on the Company's operations.
61
<PAGE> 64
OVERVIEW OF COPPER MARKET
Copper is an internationally traded commodity the price of which is
effectively established on terminal markets including the LME and COMEX. The
following table sets forth quarterly average prices for refined copper since
1993 on the LME.
AVERAGE COPPER PRICE(1)
($/POUND)
<TABLE>
<S> <C>
1994
First Quarter............................................................... $0.846
Second Quarter.............................................................. 0.972
Third Quarter............................................................... 1.114
Fourth Quarter.............................................................. 1.259
1995
First Quarter............................................................... $1.332
Second Quarter.............................................................. 1.311
Third Quarter............................................................... 1.365
Fourth Quarter.............................................................. 1.318
1996
First Quarter............................................................... $1.167
Second Quarter.............................................................. 1.123
Third Quarter............................................................... 0.897
Fourth Quarter.............................................................. 0.977
1997
First Quarter............................................................... $1.098
Second Quarter.............................................................. $1.137
Third Quarter (through August 15)........................................... $1.091
</TABLE>
- ---------------
(1) Source: LME, Monthly Average Settlement.
Historically, the price of copper has been affected primarily by levels of
production and consumption, prevailing trends of inventory levels and, to a
lesser degree, inventory carrying costs (primarily interest rates),
international exchange rates and the actions of participants in the commodity
markets. These factors have been of varying importance in influencing the
prevailing price of copper and often have had divergent impacts on such price.
The primary uses of copper are in the building and construction industry,
electrical and electronic products and, to a lesser extent, industrial machinery
and equipment, consumer and general products and transportation. The consumption
of copper for these purposes is affected by various factors, including trends in
the world economy and market competition with other metals and materials.
62
<PAGE> 65
The following table sets forth western world refined copper production
(excluding imports to the western world), consumption, inventories and average
annual prices for the past five years. Inventories shown are stocks of refined
copper held by western world refiners, consumers and those carried on the LME
and the COMEX.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------------
1996 1995 1994 1993 1992
------- ------ ------ ------ ------
(THOUSANDS OF TONS EXCEPT FOR AVERAGE PRICE)
<S> <C> <C> <C> <C> <C>
Production(1).............................. 11,072 10,278 9,915 10,054 9,916
Consumption(1)............................. 11,757 11,412 11,257 10,314 10,038
Inventories (at end of period)(1).......... 547 771 897 1,230 918
Average price (per pound)(2)............... $ 1.04 $ 1.33 $ 1.05 $ 0.87 $ 1.04
</TABLE>
- ---------------
(1) Source: World Bureau of Metal Statistics
(2) Source: LME, Monthly Average Settlement
Refined copper inventories held by consumers, refiners and commodity
exchanges at December 31, 1996, as reported by the World Bureau of Metal
Statistics, were 547,000 tons, consisting of 189,000 tons held by consumers,
231,000 tons at western world refiners and 166,000 tons held in warehouses of
commodity exchanges in New York and London.
DESCRIPTION OF EXPORT RECEIVABLES
EXPORT RECEIVABLES
Sales Process
SP Limited sells substantially all of its copper production directly to
customers pursuant to Dollar-denominated annual and long-term sales contracts.
The majority of its copper production is sold to customers in Europe, Asia and
the United States. In general, SP Limited seeks each year to sell 100% of its
forecast mine production pursuant to long-term or annual sales contracts. Any
excess is generally sold on a spot basis to entities with whom SP Limited has
commercial relationships.
SP Limited's principal copper customers include Union Miniere, Mitsui,
Pechiney Group, BICC Group, Asarco, Cerro Sales Corporation, MG Metal &
Commodity Co. Ltd., Delta Enfield Metals, Ltd., AB Electrokoppar and Colata
Continua Italiana SpA. These customers are expected to account for approximately
60% of SP Limited's total sales in 1997. SP Limited has a long-term commitment
to sell 46,300 tons of copper annually to Union Miniere. This contract expires
in 2003. SP Limited also has a long-term commitment to sell 26,500 tons of
copper annually to Mitsui, which expires in 2000. The receivables under the
Mitsui copper sales contract are Excluded Receivables.
The remaining 40% of SP Limited's total sales that is not accounted for by
the customers described above is accounted for by other customers around the
world. SP Limited has long-standing relationships with the majority of its
customers and relatively stable sales volumes to its customers.
SP Limited anticipates that approximately 6% of its copper sales in 1997
will be to domestic purchasers. In 1996, approximately 2% of copper sales were
sold domestically.
SP Limited's electrolytic copper cathodes are registered on the LME. All of
SP Limited's copper sales, including domestic sales, are denominated in U.S.
dollars (except in certain limited circumstances), and use LME prices as a
reference. Domestic sales are denominated in U.S. dollars, but are payable in
Soles at the prevailing exchange rate. Most customers receive shipments on a
monthly basis at a constant volume throughout the year. As a result, there is
little seasonality in SP Limited's sales volumes.
SP Limited generally invoices its customers for copper sales on the basis
of market prices for refined metals and the amounts of metal contained in
unrefined products. Provisional invoices are issued upon shipment to customers.
Adjusted final invoices are issued following determination of the average LME
price for the month of
63
<PAGE> 66
final pricing as established by the contract, which is generally the month
following delivery of the copper. In the case of blister copper sales, the
invoice reflects a deduction for third party refining charges. Copper is shipped
from the port of Ilo and title and risk of loss of the shipment pass to the
customer upon the loading of copper onto the ship at Ilo.
SP Limited's sales contracts provide for cash payment upon delivery of
documents, which entitle the customers to take possession of the copper at the
port of arrival. Blister copper contracts provide for payment of 90% of the
estimated amount due upon delivery of documents, with the remaining 10% due
following receipt of final assays to determine the actual amount of contained
copper and other metals. Contracts for sales to European customers call for cash
payment and delivery of documents upon delivery of copper to the port of
arrival. Contracts for sales to Asian customers call for cash payment and
delivery of documents twenty days after shipment, which is usually two or more
weeks before the copper's arrival at its Asian destination. As an accommodation
to certain long-standing customers, SP Limited provides documents prior to
payment in accordance with industry practice.
SP Limited's internal credit group evaluates the creditworthiness of each
potential customer by reviewing financial records and external credit reports.
SP Limited monitors its outstanding receivables and takes appropriate actions to
collect full payment for all of its sales. SP Limited has experienced two
uncollected debts during the past fifteen years totaling US$410,000.
MAJOR EXPORT CUSTOMERS
The following is a brief description of the Company's principal export
customers. These customers represent approximately 60% of SPCC's total expected
sales in 1997. The remaining 40% of sales is accounted for by other clients
around the world. As discussed above, most of these customers receive shipments
on a monthly basis. Consequently, SPCC's sales volume is relatively consistent
throughout the year. Sales information for 1997 for SPCC's principal export
customers is provided in the table following this discussion.
Union Miniere. Headquartered in Brussels, Belgium, the Union Miniere Group
is a subsidiary of Societe Generale de Belgique and is engaged in extractive
metallurgy and the refining of non-ferrous metals including lead, copper, gold
and silver. Through one of its subsidiaries, Union Miniere is involved in metals
sales, trading and brokerage in the futures market. Union Miniere is also
affiliated with Sogem and Sogem Afrimet.
Mitsui. Mitsui is an international trading company handling a wide range
of products, including non-ferrous metals.
Pechiney Group ("Pechiney"). Pechiney, headquartered in France, produces a
wide range of metal and chemical products. Within the Pechiney Group, the
Company sells mainly to Pechiney World Trade USA ("PWT"), a subsidiary of
Pechiney Metals Corporation. PWT, directly and through its subsidiaries, imports
and exports non-ferrous metals, aluminum products, stainless steel, carbon
materials, industrial machinery, ferro alloys and chemicals.
BICC Group ("BICC"). BICC manufactures cables and provides construction
and engineering services. The cable business is managed through regional
operations based in Europe, North America, Australia and Asia-Pacific.
ASARCO. Headquartered in New York, NY, Asarco is one of the world's
largest producers of non-ferrous metals, principally copper, lead, zinc, silver
and molybdenum. In addition, Asarco produces construction aggregates and
specialty chemicals. Asarco holds 54.1% of the outstanding capital stock of the
Company.
MG Metal & Commodity Co. Ltd. ("MCC"). MCC is a broker and dealer in
non-ferrous metals.
Delta Enfield Metals Ltd. ("Enfield"). Enfield is engaged in the business
of copper rolling and extruding, non-ferrous metal recovery and non-ferrous
metals extruding and rolling.
Cerro Sales Corporation ("Cerro Sales"). Cerro Sales sold to MCC the
business and most of the assets of Cerro Sales. Metallgesellschaft's MG Handel
unit owns approximately 85% of MCC and is a leading worldwide
64
<PAGE> 67
copper merchant, which deals in refined and unrefined copper, scrap copper and
other non-ferrous and precious metals. Cerro Sales is a member of COMEX.
AB Electrokoppar ("Elektrokoppar"). Elektrokoppar is one of the major
Scandinavian copper converters and CCR producers. Its shareholders include ABB
Norden Holding, Vasteras and Asea Brown Boveri.
Colata Continua Italiana SpA ("Colata"). Colata's main business line is
the continuous casting of copper into various copper products.
1997 SALES QUOTAS TO PRINCIPAL EXPORT CUSTOMERS
(SHORT TONS)
<TABLE>
<CAPTION>
PRODUCTS
--------------------------------
ILO SX/EW BLISTER
CUSTOMER CATHODES CATHODES COPPER
- ----------------------------------------------------------------- -------- -------- ------
<S> <C> <C> <C>
Union Miniere (Belgium).......................................... 6,600 660 46,300
Mitsui (Japan)................................................... 16,100 20,400
Pechiney Group (France).......................................... 27,800 550
BICC (England)................................................... 18,500 1,300
Asarco (U.S.).................................................... 18,600
MG Metals (England).............................................. 12,600
Enfield (England)................................................ 10,400 220
Cerro Sales (U.S.)............................................... 7,550 2,800
Electrokoppar (Sweden)........................................... 9,900
Colata (Italy)................................................... 9,900
------ ------ ------
Total.................................................. 137,950 25,930 46,300
====== ====== ======
</TABLE>
REGULATORY FRAMEWORK
MINING AND PROCESSING CONCESSIONS
The Company has concessions from the Peruvian government for its
exploration, exploitation, extraction and/or production operations. The
concessions are in full force and effect under applicable Peruvian laws and the
Company is in compliance with all material terms and requirements applicable to
the concessions and is not under any condition, occurrence or event that would
cause the revocation, cancellation, lapsing, expiration or termination thereof
except that the Company may, from time to time, let lapse, revoke, cancel or
terminate concessions that are not material to the conduct of its business. The
principal concessions are (i) the mining concessions at Toquepala and Cuajone,
(ii) the processing concessions of the concentrators located at Cuajone and
Toquepala and the processing concessions of the smelter and refinery located
near Ilo. The concessions have an indefinite term, subject to payment by SPCC of
concession fees of up to $2 per hectare annually for the mining concessions and
a fee based on nominal capacity for the processing concessions. Fees paid in
1996 were approximately $183,300.
REGULATIONS, PERMITTING AND ENVIRONMENTAL MATTERS
The Company's rights to mine and process copper and other metals are
derived from mining and processing concessions, which terms are indefinite and
may be maintained by relatively small periodic payments. In 1969, the military
government of Peru required concession holders to develop their concessions in
accordance with a timetable or forfeit them. This requirement was discontinued
in 1981. There has been no such development requirement under more recent
Peruvian governments. The rights and obligations of mining and processing
concession holders are currently set forth in the General Mining Law (Single
Unified Text, Supreme Decree No. 014-92-EM) that is administered by the Ministry
of Energy and Mines. The principal changes in the current
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General Mining Law relate to the abolition of governmental monopolies and the
expansion of availability and scope of agreements for tax stability and foreign
exchange stability.
The Cuajone mine, the Toquepala mine, the Ilo smelter and the Ilo refinery
have all necessary operating permits. All future exploration and development
projects require or will require a variety of permits. Although the Company
believes the permits for these projects can be obtained in a timely fashion,
permitting procedures are complex, time-consuming and subject to potential
regulatory delay. The Company does not believe that existing permitting
requirements or other environmental protection laws and regulations will have a
material adverse effect on its business, financial condition or results of
operations. However, the Company cannot be certain that future changes in laws
and regulations would not result in significant additional expense, capital
expenditures, restrictions or delays associated with the development and
operation of the Company's properties. The Company cannot predict whether it
will be able to renew its existing permits or whether material changes in
existing permit conditions will be imposed. Non-renewal of existing permits or
the imposition of additional conditions could have a material adverse effect on
the Company's financial condition or result of operations.
The Company's exploration, mining, milling, smelting and refining
activities are subject to Peruvian laws and regulations, including environmental
laws and regulations, which change from time to time. The Company's recently
approved PAMA sets forth the investment to be made by the Company to comply with
Peruvian environmental regulations applicable to its operations. To implement
the PAMA, the Company is required to make a minimum annual investment of 1% of
net annual sales until compliance is met. The PAMA will require the Company to
make significant additional capital expenditures to achieve compliance with the
maximum permissible levels for its emission and waste discharges within a period
of five years, except for environmental controls applicable to its smelter
operation which must be put in place within ten years. Upon completion of the
smelter modernization, management expects that 95% or more of smelter emissions
will be captured. The PAMA contemplates a number of environmental projects, the
largest and most capital intensive of which is the planned modernization of the
Ilo smelter. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Expansion and Modernization Project". Management
believes that under current Peruvian law and regulations, compliance with the
PAMA will satisfy the MPL requirements pertaining to the Company's operations
during the applicable five or ten year implementation period. The Company
remains, however, subject to other environmental requirements applicable to its
operations.
The Company incurred capital expenditures for environmental projects of
approximately $29.8 million in 1996. During the first six months of 1997, the
Company's capital expenditures in respect of environmental projects (including
expenditures under the PAMA) were $13.9 million and it estimates that it will
incur expenditures of approximately $19.4 million during the remainder of 1997.
The development in the future of more stringent environmental protection
programs in Peru could impose constraints and additional costs on the Company's
operations, which might require the Company to make significant additional
capital expenditures.
Although the Company believes that it is in substantial compliance with all
applicable laws, the effect of any future regulatory changes on the Company's
operations cannot presently be determined.
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<PAGE> 69
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the current directors and executive officers
of the Company, their ages as of June 30, 1997, and their positions. In each
case where an officer's or director's service to SPCC predates the formation of
SPCC in September 1995, it includes services rendered by such persons in their
former capacities as officers and/or directors of SPCC's predecessor, SP
Limited, which is now a wholly-owned operating subsidiary of SPCC.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- ----------------------------------------------------------------
<S> <C> <C>
Richard de J. Osborne(1)..... 63 Chairman of the Board and Director
Charles G. Preble(1)(2)(3)... 64 President, Chief Executive Officer and Director
Charles B. Smith(2).......... 59 Executive Vice President and General Manager (Operations, Peru)
Ronald J. O'Keefe(2)(3)...... 54 Executive Vice President and Chief Financial Officer
Kevin R. Morano(1)(2)(3)..... 44 Vice President and Director
Winston Cundiff, III(2)...... 50 Vice President (Human Resources, Peru)
Hans A. Flury(2)(3).......... 46 Vice President (Legal, Peru)
Guillermo D. Payet(2)........ 58 Vice President (Finance, Peru)
Eduardo Santistevan(2)....... 56 Vice President (Logistics, Peru)
Frank H. Tweddle(2).......... 38 Vice President (Commercial, Peru)
Augustus B. 57 Secretary, General Counsel and Director
Kinsolving(2)(3)...........
Brendan M. O'Grady(2)........ 53 Comptroller
Thomas J. Findley, Jr.(2).... 49 Treasurer
Amb. Everett E. Briggs....... 63 Director
Jaime Claro.................. 61 Director
Francis R. McAllister........ 54 Director
John F. McGillicuddy......... 66 Director
Robert J. Muth............... 64 Director
Robert M. Novotny............ 48 Director
Robert A. Pritzker(1)........ 71 Director
Michael O. Varner............ 56 Director
J. Steven Whisler............ 42 Director
David B. Woodbury............ 57 Director
Douglas C. Yearley(1)........ 61 Director
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Officer of SP Limited.
(3) Director of SP Limited.
For a discussion of certain agreements among the Class A common
stockholders relating to the election of directors, see "Certain
Transactions -- Stockholders' Agreement".
Richard de J. Osborne, Chairman of the Board and Director. Mr. Osborne has
been Chairman of the Board since February 1996 and a Director since 1976. He has
been Chairman of the Board, Chief Executive Officer and President of Asarco
since 1985 and a director of Asarco since 1976. He is also a director of
Schering-Plough Corporation, The BFGoodrich Company, Grupo Mexico, S.A. de C.V.
and The Tinker Foundation Incorporated.
Charles G. Preble, President, Chief Executive Officer and Director. Mr.
Preble has been President and Chief Executive Officer since 1985 and a director
since 1984. He is also a director of InterBanc, Lima.
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<PAGE> 70
Charles B. Smith, Executive Vice President and General Manager (Operations,
Peru). Mr. Smith has been Executive Vice President since 1996. He was Vice
President from 1992 to 1996. From 1988 to 1992, he served as Vice President-U.S.
Operations for ARCO Coal Company (coal production and marketing). He is a
director of Sociedad Nacional de Minera y Petroleo.
Ronald J. O'Keefe, Executive Vice President and Chief Financial
Officer. Mr. O'Keefe has been Executive Vice President and Chief Financial
Officer of the Company since April 1995. Previously, he was Controller of Asarco
from 1982 through March 1995.
Kevin R. Morano, Vice President and Director. Mr. Morano has been Vice
President and a director since 1993. He has served as Vice President-Finance and
Chief Financial Officer of Asarco since 1993. Prior to that he was general
manager of Asarco's Ray Complex from 1991 to 1993. From 1989 to 1991 he served
as Asarco's Treasurer. He is an alternate director of Grupo Mexico, S.A. de C.V.
Winston Cundiff, III, Vice President (Human Resources, Peru). Mr. Cundiff
has been Vice President (Human Resources, Peru) since September 1996. From 1995
to August 1996 he served as General Director of Human Resources for the Company.
From 1991 to 1994, he served as Director, Human Resources Training and Quality
for Liquid Air Corporation.
Hans A. Flury, Vice President (Legal, Peru). Mr. Flury has been Vice
President (Legal, Peru) since 1989. He is a director of Sociedad Nacional de
Minera y Petroleo.
Guillermo D. Payet, Vice President (Finance, Peru). Mr. Payet has been
Vice President (Finance, Peru) since 1991. Prior to that, he was Vice President,
Finance and Logistics (Peru) from 1987 to 1991.
Eduardo Santistevan, Vice President (Logistics, Peru). Mr. Santistevan has
been Vice President (Logistics, Peru) since 1991. From 1988 to 1990, he served
as General Maintenance Superintendent.
Frank H. Tweddle, Vice President (Commercial, Peru). Mr. Tweddle was
elected Vice President on May 1, 1997. From May 1994 to April 1997, Mr. Tweddle
was Assistant Director of Marketing for the Company. From 1988 to April 1994 he
was Vice President Trading for Minpeco USA.
Augustus B. Kinsolving, Secretary, General Counsel and Director. Mr.
Kinsolving has been Secretary since May 1994, General Counsel since October 1994
and a director since 1989. He has been Vice President of Asarco since 1983, has
served as Asarco's General Counsel since 1986 and its Secretary from 1987 to
1995. He is also an alternate director of Grupo Mexico, S.A. de C.V.
Brendan M. O'Grady, Comptroller. Mr. O'Grady was appointed Comptroller in
1992. Previously, Mr. O'Grady served as Assistant Comptroller from 1981 to 1992.
Thomas J. Findley, Jr., Treasurer. Mr. Findley has been Treasurer since
1996. He is also Treasurer of Asarco and has served in that position since 1991.
Ambassador Everett E. Briggs, Director. Ambassador Briggs has been a
director since 1996. He has served as President of The Americas Society and the
Council of the Americas since October 1993. Prior to that he served as U.S.
Ambassador to Portugal from 1990 to 1993. During 1989, he was Special Assistant
to the President for National Security Affairs and Senior Director for Latin
America and the Caribbean at the National Security Council. He has also served
as U.S. Ambassador to Honduras and Panama.
Jaime Claro, Director. Mr. Claro has been a director since September 1996.
He has been President and a director of Cerro Sales Corporation since prior to
1991. Mr. Claro is also Vice Chairman of Cia. Electro Metalurgica S.A. and
Quemchi S.A., Chairman of Chilean Line Inc., a director of Cristalerias de Chile
S.A. and Navarino S.A., and a director of Sud Americana de Vapores, S.A. and a
director of Vina Los Vascos S.A.
Francis R. McAllister, Director. Mr. McAllister has been a director since
1986 and was Vice President from 1992 to 1993. He has been Executive Vice
President, Copper Operations of Asarco since 1993. Prior to that he was Asarco's
Executive Vice President and Chief Financial Officer from 1992 to 1993. From
1986 to 1992 he served as Vice President, Finance and Administration and Chief
Financial Officer. He has been a director of Asarco since 1988. He is also a
director of Grupo Mexico, S.A. de C.V. and of Cleveland Cliffs Inc.
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<PAGE> 71
John F. McGillicuddy, Director. Mr. McGillicuddy has been a director since
1996. He is a director of UAL Corporation, USX Corporation, Kelso & Company,
Inc. and Empire Blue Cross and Blue Shield. From December 1991 to December 1993
he was Chairman of the Board and Chief Executive Officer of Chemical Banking
Corporation and Chemical Bank. Prior to that, he was Chairman of the Board and
Chief Executive Officer of Manufacturers Hanover Trust Company from 1979 to
1991.
Robert J. Muth, Director. Mr. Muth has been a director since 1984. He has
been Vice President, Government and Public Affairs of Asarco since prior to
1991.
Robert M. Novotny, Director. Mr. Novotny has been a director since 1995.
He has been Vice President, Lead, Zinc, Silver and Mineral Operations of Asarco
since 1993. From 1990 to 1993 he was Vice President, Operations of Asarco.
Robert A. Pritzker, Director. Mr. Pritzker has been a director since 1983.
He is President and Chief Executive Officer of The Marmon Corporation and has
served in that position for over five years. Mr. Pritzker is also President and
Chief Executive Officer of The Marmon Group, Inc. and holds executive positions
in its more than sixty autonomous member companies. He is a director of Acxiom
Corporation.
Michael O. Varner, Director. Mr. Varner has been a director since 1995. He
has been Vice President, Environmental Operations of Asarco since October 1993.
Previously, he served as General Manager of Asarco's Western Metals Division
from April 1992 to September 1993 and was Director of Asarco's Technical
Services Center from 1986 to March 1992.
J. Steven Whisler, Director. Mr. Whisler has been a director since 1995.
He has been Senior Vice President of Phelps Dodge Corporation since 1988 and
President of Phelps Dodge Mining Company since 1991. He is a director of Phelps
Dodge Corporation, UNOCAL Corporation and Burlington Northern Santa Fe
Corporation.
David B. Woodbury, Director. Mr. Woodbury has been a director since 1996.
He has been Vice President, Human Resources of Asarco since March 1993. From
1984 to March 1993, Mr. Woodbury was Vice President, Human Resources of Ferro
Corporation, a specialty metals producer.
Douglas C. Yearley, Director. Mr. Yearley has been a director since 1991.
He has been Chairman of the Board and Chief Executive Officer of Phelps Dodge
Corporation since 1991. Mr. Yearley is a director of Lockheed Martin
Corporation, USX Corporation and J.P. Morgan & Co. Incorporated and Morgan
Guaranty Trust Company of New York.
The Company's Board of Directors is composed of 15 members. Two directors
are elected by the holders of Common Stock, voting as a separate class, and 13
directors are elected by the holders of Class A Common Stock, voting as a
separate class, one of whom is the President.
Certain of the Company's officers are also officers of Asarco. They are
compensated by Asarco and receive no compensation from the Company.
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CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
Asarco provides various support services to the Company. In 1996, these
activities were principally related to legal, tax, accounting and treasury
support services. Asarco is reimbursed for those support services at cost. The
total amount paid by the Company to Asarco in 1996 for such services was $0.8
million for 1996 and $0.3 million for 1995. Additionally, in 1997 the Company
paid Asarco a fee of $500,000 for services of Asarco's senior management in
connection with the arranging of financings for the Company's expansion and
modernization program.
The Class A common stockholders and/or their affiliates purchase copper
products from the Company from time to time at prices determined on an
arm's-length basis by reference to the LME market price for copper at such time.
The Company expects that its policy of determining prices for related party
transactions on an arm's-length basis by reference to the LME market price for
copper at the time of any such transaction will be continued. Sales of copper to
the Class A common stockholders amounted to $71.8 million for 1996 and $85.0
million for 1995, which are more fully described below.
Asarco purchased copper products from SPCC in amounts of $46.5 million in
1996 and $46.1 million in 1995. Richard de J. Osborne, Francis R. McAllister,
Kevin R. Morano, Augustus B. Kinsolving, Robert J. Muth, Robert M. Novotny,
Michael O. Varner and David B. Woodbury are executive officers of Asarco. Each
is a director of the Company.
Cerro Sales, an entity related to Cerro, purchased copper products from the
Company during 1996 in the amount of $14.4 million. Their purchases from the
Company during 1995 amounted to $23.9 million. Robert A. Pritzker is Chairman of
the Board and a director of Cerro Sales and Jaime Claro is a director of Cerro
Sales and its President. Messrs. Pritzker and Claro are directors of the
Company.
Phelps Dodge Refining Corporation, an affiliate of Phelps Dodge and Phelps
Dodge Corporation, purchased copper products from the Company in the amount of
$10.8 million in 1996. In 1995, its purchases amounted to $15.0 million. Douglas
C. Yearley is Chairman of the Board and Chief Executive Officer of Phelps Dodge
Corporation. J. Steven Whisler is Senior Vice President of Phelps Dodge
Corporation. Messrs. Yearley and Whisler are directors of the Company.
During 1996, the Company purchased steel castings and grinding balls at an
aggregate price of approximately $134,000 from Cia. Electro Metalurgica S.A.
("Electro") and a subsidiary company. In addition, the Company contracted an
aggregate of $9.9 million for shipping services to and from Peru by Cia. Sud
Americana de Vapores, S.A. ("CSAV"), a company indirectly controlled by Quemchi,
S.A. ("Quemchi"). Mr. Jaime Claro is Vice Chairman of Electro and Quemchi, and
his direct and indirect family interests in both companies exceed 10%. Mr. Claro
is also a director of CSAV and is Chairman of Chilean Line Inc., which is the
agent for and is owned by CSAV. Mr. Claro is a director of the Company.
The Company believes that the foregoing transactions were entered into on
arm's-length bases on terms as favorable as could be obtained from other third
parties. It is anticipated that in the future the Company will enter into
similar transactions with the same parties.
STOCKHOLDERS' AGREEMENT
Each of the Class A common stockholders, in connection with the exchange
offer for labor shares, has entered into the Stockholders' Agreement. The
Stockholders' Agreement provides, among other things, that the Class A common
stockholders elect 12 of the Company's 15 directors and elect the President of
the Company as a thirteenth director. Upon termination of the Stockholders'
Agreement, each share of Class A common stock will automatically convert into
one share of common stock (voting share for share as a single class on all
matters including election of directors), if at any time the number of shares of
Class A common stock owned by the Class A common stockholders (or affiliates of
the Class A common stockholders) shall be less than 35% of the outstanding
shares of Class A common stock and common stock of the Company. In addition, the
rights and obligations of each Class A common stockholder under the
Stockholders' Agreement will terminate in the event such Class A common
stockholder (or its affiliates) shall cease to own shares of Class A common
stock.
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DESCRIPTION OF NOTES
The New Notes will be issued pursuant to an indenture (the "Original
Indenture") dated as of May 30, 1997 among the Issuer, the Guarantor and
Citibank, N.A., as trustee (the "Trustee"), principal paying agent and registrar
and a Supplemental Indenture thereto pertaining to the Notes dated as of May 30,
1997 among the Issuer, the Guarantor and the Trustee (collectively referred to
herein as the "Indenture"). The Indenture has been filed as an exhibit to the
Registration Statement, of which the Prospectus constitutes a part. The Notes
will be direct obligations of SP Limited and its Branch. Payments of interest
and principal and Additional Amounts, if any, will be made by SP Limited or its
Branch.
The following summary of certain provisions of the Notes, the Guarantee,
the Indenture and the Amended and Restated Collateral Trust Agreement does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the Notes, the Guarantee, the Indenture, the Supplemental
Indenture and the Amended and Restated Collateral Trust Agreement. Wherever
particular sections, articles or defined terms of the Indenture are referred to
herein, such sections, articles or defined terms shall be as specified in the
Indenture. Capitalized terms not otherwise defined below or elsewhere in this
Prospectus shall have the respective meanings given to such terms in the
Indenture. Copies of the Indenture and the Amended and Restated Collateral Trust
Agreement will be available for inspection and copying by the Holders during
normal business hours at the offices of the Trustee. The holders will be bound
by, and will be deemed to have notice of, all the provisions of the Notes, the
Guarantee, the Indenture and the Amended and Restated Collateral Trust
Agreement.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except for certain transfer restrictions and
registration rights relating to the Old Notes and except that, if the Exchange
Offer is not consummated by 180 days following the Issue Date, holders that have
complied with their obligations under the Registration Rights Agreement will be
entitled, subject to certain exceptions, to special interest at a rate per annum
equal to 0.5% of the principal amount of Old Notes held by such holder.
GENERAL
The Notes will be limited to $150,000,000 aggregate principal amount and
will mature on May 30, 2007. The Notes are part of the SENs Program established
by SP Limited under the Original Indenture, providing for the issuance of up to
$750 million of SENs in series from time to time. Subsequent series of SENS up
to an additional $600 million principal amount in the aggregate may be offered
but are not being offered pursuant to this Prospectus. The Notes are the direct,
unconditional, unsubordinated general obligations of the Issuer and will be
secured by the pledge and grant of a continuing lien and security interest from
the Issuer to the Collateral Trustee as described under "The Collateral Trust
and Security Agreement" below and from the Issuer to the Trustee, in trust for
the benefit and security of the holders of Notes in the Note Collateral. Payment
of principal and interest on the Notes will be fully and unconditionally
guaranteed by SPCC. SP Limited has also entered into the Credit Facility which
will rank pari passu with the Notes and will also be guaranteed, on a pari passu
basis with the Notes, by SPCC. The Notes will rank pari passu among themselves
and each other series of SENs, without any preference of one over the other by
reason of priority of date of issuance or otherwise. See "-- The Amended and
Restated Collateral Trust Agreement", "-- Guarantee by SPCC" and "Description of
Credit Facility".
Each of the Notes will bear interest at the rate per annum shown on the
cover page of this Prospectus. Interest on the Notes will be calculated on the
basis of a 360-day year consisting of twelve 30-day months and will be payable
monthly, on the 30th day of each month (or the 28th day of February), commencing
June 30, 1997 (each, a "Payment Date") to the persons in whose names such Notes
are registered at the close of business on the 15th day of such month (unless
such day is not a Business Day, in which case the following Business Day).
Principal on the Notes will be payable on each Payment Date, commencing June 30,
2000, as described below. The Notes will have a final maturity of May 30, 2007.
Unless a Retention Trigger Event or Debt Service Retention Event has occurred
and is continuing, the Issuer will make direct payments on the Notes from its
own funds. If a Retention Trigger Event or a Debt Service Retention Event has
occurred and is continuing, payments on the Notes will be made from funds on
deposit in the Note Collateral Account or the Note Reserve Account. Any payment
of principal or interest otherwise required to be made in respect of a Note on a
date that is not a Business Day need not be made on such date, but may be made
on the next succeeding Business Day with the
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<PAGE> 74
same force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment.
PAYMENTS
Payments of principal, interest and premium, if any, in respect of each
Note will be made by the Trustee or a Paying Agent by Dollar check drawn on a
bank in the United States, and mailed to the holder of such Note at its address
appearing in the Register; provided, that upon application by the holder of a
Note to the Trustee or a Paying Agent not less than 10 days before each Payment
Date, such payment shall be made by wire transfer to a Dollar account maintained
by the payee with a bank in the United States.
Interest shall be payable at a rate of 7.90% per annum on the outstanding
principal amount of the Notes monthly in arrears on each Payment Date. The
principal amount of the Notes will be payable in monthly installments on each
Payment Date commencing June 30, 2000, pursuant to a level debt service schedule
or such earlier date as may be established by acceleration following either an
Accelerated Amortization Event or an Event of Default.
Unless a Retention Trigger Event or a Debt Service Retention Event has
occurred and is continuing, the Issuer will, no later than each Payment Date,
deposit with the Paying Agent a sum (in Dollars) sufficient to pay the principal
(and premium, if any) and interest due on such Payment Date (collectively, the
"Due Amount"), such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Issuer will promptly notify the Trustee of its action or
failure so to act. If a Retention Trigger Event or a Debt Service Retention
Event has occurred and is continuing, no later than 10:00 a.m. on the third
Business Day prior to each Payment Date, the Trustee will give the Issuer
written notice of the amount on deposit in the Note Collateral Account and the
Issuer will, no later than the Business Day prior to each Payment Date, deposit
in the Note Collateral Account the excess, if any, of the Due Amount for such
Payment Date over the amount on deposit in the Note Collateral Account on the
Business Day prior to each Payment Date, and the Issuer will promptly notify the
Trustee of its action or failure so to act. In the event that the Issuer fails
to make the required payments or there are insufficient funds on deposit in the
Note Collateral Account to make the required payment, amounts on deposit in the
Note Reserve Account will be used to make the payments.
Whenever in this Prospectus there is a reference, in any context, to the
payment of the principal of or interest on, or in respect of, any Note, such
payment shall be deemed to include the payment of Additional Amounts provided
for hereunder to the extent that, in such context, Additional Amounts are, were
or would be payable in respect of such payment pursuant to the provisions
hereunder and express mention of the payment of Additional Amounts (if
applicable) in any provision hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not
made.
OPTIONAL REDEMPTIONS
The Issuer may redeem the Notes in whole or in part at any time at a
Redemption Price equal to (i) the outstanding principal amount of the Notes so
redeemed plus (ii) accrued and unpaid interest to the date of redemption plus
(iii) the Make-Whole Premium; provided that the Note Reserve Account (as defined
herein) contains funds in an amount equal to the Required Balance on the date of
such redemption after giving effect to all payments to be made on such date.
Each such redemption must be in a minimum amount of $5,000,000 (or such lesser
amount of the Notes as is then outstanding). Upon any optional redemption of the
Notes by the Issuer, the Issuer or the Trustee shall provide notice to each
holder of the Notes subject to such optional redemption not less than 30 days
nor more than 60 days prior to the scheduled date of such redemption.
OPTIONAL REDEMPTIONS FOR TAX REASONS
If at any time, the Issuer or Guarantor is or will become obligated for any
reason to pay (i) any Additional Amounts in excess of those attributed to the
Peruvian Tax of 1% imposed on interest payments to holders of Notes that are not
domiciled in Peru for Peruvian tax purposes ("Excess Additional Amounts") or
(ii) a tax in excess of 1% on payments of interest to holders of Notes that are
not domiciled in Peru for Peruvian tax purposes
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<PAGE> 75
directly to the applicable Peruvian taxing authority (an "Interest Tax"; and any
such excess Interest Tax, "Excess Interest Tax"), and such obligation cannot be
avoided by the Issuer or the Guarantor taking reasonable measures available to
it, then, subject to the discussion below, the Notes will be redeemable in whole
(or in part, as provided below), at the option of the Issuer or the Guarantor,
at any time upon not less than 30 days nor more than 60 days' notice given to
the holders in an amount equal to the sum of (i) the principal amount
outstanding at the time, plus (ii) accrued interest to the date of prepayment,
plus (iii) any Additional Amounts. The Issuer or the Guarantor, as the case may
be, will be considered to be obligated to pay such excess Additional Amounts
despite the fact that the Issuer or the Guarantor, as the case may be, could
have, in lieu of withholding from payments of interest and paying Additional
Amounts, paid the tax directly to the applicable Peruvian taxing authority.
In order to effect a redemption of the Notes for tax reasons, the Issuer
shall deliver to the Trustee an opinion of Peruvian outside counsel reasonably
acceptable to the Trustee confirming the tax obligation at least 45 days prior
to redemption. No notice of redemption for tax reasons may be given earlier than
90 days prior to the earliest date on which the Issuer or the Guarantor would be
obligated to pay such Excess Additional Amounts or Excess Interest Tax in
respect of the Notes.
If the holders of two-thirds or more of the aggregate principal amount of
the outstanding Notes waive their rights, if any, to Excess Additional Amounts
payable by the Issuer or the Guarantor, then (i) the Issuer or the Guarantor
shall not be obligated to pay Excess Additional Amounts to any holders of Notes
and (ii) the Issuer or the Guarantor may not redeem the Notes except as
otherwise provided pursuant to the Indenture. In the case of an Excess Interest
Tax, if the holders of two-thirds or more of the aggregate principal amount of
the outstanding Notes agree to receive payments net of Excess Interest Tax, then
(i) payments of interest to all holders will be reduced by the Excess Interest
Tax and (ii) the Issuer or the Guarantor may not redeem the Notes except as
otherwise provided pursuant to the Indenture.
Subject to the following paragraph, the Notes may be redeemed in part at
the option of the Issuer or the Guarantor if the Issuer or the Guarantor would
be obligated to pay Excess Additional Amounts or Excess Interest Tax aggregating
at least $1,000,000 per annum. Except as provided in the following paragraph,
any partial redemption of Notes for tax reasons shall be limited to no more than
the aggregate principal amount of such Notes necessary to be redeemed in order
to reduce the Issuer's or the Guarantor's payment of Additional Amounts or
Interest Tax in respect of Notes to an amount equal to the Additional Amounts,
or Interest Tax, as the case may be, payable with respect to the 1% Peruvian Tax
imposed on interest payments on such Notes (calculated without giving effect to
such partial redemption).
If the Issuer or Guarantor is or will become obligated to pay Excess
Additional Amounts or Excess Interest Tax only with respect to Notes held by a
certain type (or types) of holders (the "Affected Holders"), the Issuer or
Guarantor may not effect a redemption for tax reasons of the Notes held by
holders who are not Affected Holders, but at the option of the Issuer or
Guarantor, the Notes held by Affected Holders may be redeemed for tax reasons.
If the Issuer or the Guarantor, as the case may be, seeks to redeem the Notes
held by any Affected Holders as provided by this paragraph, such Affected
Holders will cooperate with the Issuer or the Guarantor, as the case may be, to
effect such a redemption. Furthermore, if the Notes are held in a global Note,
the Issuer or the Guarantor, as the case may be, may, to the extent necessary,
exchange the Notes for certificated Notes in order to effect a redemption
pursuant to this paragraph, provided that the Issuer or the Guarantor, as the
case may be, will as promptly as practicable subsequently exchange such
certificated Notes for Notes held in a global Note, except for the Notes held by
the Affected Holders.
If any certificated Note is to be redeemed in part as set forth under
"Optional Redemption" or "-- Optional Redemption for Tax Reasons", a new
certificated Note will be issued for surrender of the original Note. Upon
redemption of a portion of any global Note, such global Note will be marked to
reflect the appropriate reduction of its principal amount.
RATINGS
Moody's, Standard & Poor's and Duff & Phelps have assigned the Notes and
the SENs Program the securities ratings of "Baa3", "BBB-" and "BBB-",
respectively. Each such rating reflects only the view of the applicable rating
agency at the time the rating was issued, and any explanation of the
significance of such rating may only be obtained from such rating agency. There
is no assurance that any such credit rating will remain in
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effect for any given period of time or that such rating will not be lowered,
suspended or withdrawn entirely by the applicable rating agency, if, in such
rating agency's judgment, circumstances so warrant. Any such lowering,
suspension or withdrawal of any rating may have an adverse effect on the market
price or marketability of the Notes.
THE AMENDED AND RESTATED COLLATERAL TRUST AND SECURITY AGREEMENT
In connection with the Program, SP Limited has pledged and granted a
continuing lien and security interest in favor of the Collateral Trustee,
pursuant to the Collateral Trust and Security Agreement between the Issuer and
Deutsche Bank AG, New York Branch, as Collateral Trustee, dated as of May 30,
1997, (the "Amended and Restated Collateral Trust Agreement") in trust for the
security and benefit of the Secured Parties, in the Export Contracts and Export
Receivables arising from future copper sales by SP Limited to customers located
outside of Peru, covering up to a maximum aggregate amount of 320,000 short tons
annually. Collections in respect of Export Receivables will be deposited to the
Collection Account, a New York segregated trust bank account held by the
Collateral Trustee for the benefit of the Secured Parties.
The individual Secured Parties will not have a separate security interest
in any specific Export Contract or Export Receivable but, through the Collateral
Trustee, will have an undivided percentage security interest in the Collateral
as a whole on the terms and conditions of the Amended and Restated Collateral
Trust Agreement, consisting of (i) in the case of the holders of any series of
SENs, a percentage of the Collateral, including the right to receive a
percentage of all Collections, in each case equal to the SENs Total Collateral
Percentage for such series, (ii) in the case of the lenders and the agents for
the Credit Facility, a percentage of the Collateral, including the right to
receive a percentage of the Collections, in each case equal to the Credit
Facility Total Collateral Percentage, and (iii) in the case of any Additional
Secured Obligations, a percentage of the Collateral, including the right to
receive a percentage of Collections, in each case equal to the Designated Total
Collateral Percentage for such Additional Secured Obligations.
Initially, (i) the holders of each series of SENs shall have rights in the
Collateral equal to the SENs Basic Collateral Percentage for such series, (ii)
the lenders shall have rights in the Collateral equal to the Credit Facility
Basic Collateral Percentage, and (iii) the holders of any Additional Secured
Obligations shall have rights in the Collateral equal to the Designated Basic
Collateral Percentage for such Additional Secured Obligations. The Issuer may
designate an additional percentage interest in the Collateral for the benefit of
the holders of any series of SENs, the lenders or the holders of Additional
Secured Obligations, as the case may be; provided that after giving effect to
such designation, the sum of (a) the SENs Total Collateral Percentage, (b) the
Credit Facility Total Collateral Percentage and (c) the aggregate Designated
Total Collateral Percentages for all Additional Secured Obligations shall not
exceed 100%. The Issuer, subject to certain conditions, may eliminate any
Additional Percentages that have been designated as described above.
To the extent that the aggregate percentage interest of all Secured Parties
is less than 100%, the Issuer will be entitled to receive the remaining
percentage of Collections on a daily basis in all circumstances, whether or not
a default or any other event has occurred.
Second Amended and Restated Collateral Trust Agreement
The Issuer and the Collateral Trustee have entered into a new Amended and
Restated Collateral Trust Agreement dated as of July 15, 1997 and effective as
of (the "Second Amended and Restated Collateral Trust Agreement"),
which is identical to the Amended and Restated Collateral Trust Agreement,
except that (i) the Collateral Trustee is directed to transfer funds on deposit
in the Collection Account at 3:00 P.M. on each Business Day rather than at 9:00
A.M. on each Business Day, (ii) the Collateral Trustee is authorized to make
overnight investments of funds on deposit in the Collection Account in
investments that are authorized under the Indenture and (iii) the Amended and
Restated Collateral Trust Agreement may be amended without the consent of the
holders of the Notes in circumstances which would not require the consent of the
holders of the Notes under the Indenture, so long as the interests of the
holders are not adversely affected in any material respect.
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By tendering their Old Notes, each holder participating in the Exchange
Offer will be deemed to have consented, under the Registration Rights Agreement
and the Amended and Restated Collateral Trust Agreement, to the changes made in
the Second Amended and Restated Collateral Trust Agreement.
Representations and Warranties
The Issuer represented and warranted to the Collateral Trustee on the date
of the execution of the Amended and Restated Collateral Trust Agreement that (i)
assuming compliance by the Collateral Trustee with the terms thereof, the
Amended and Restated Collateral Trust Agreement creates a valid and binding lien
in favor of the Collateral Trustee in the Collection Account and all cash
deposited therein, prior to all other liens except Permitted Liens (as defined
in the Amended and Restated Collateral Trust Agreement); (ii) the Amended and
Restated Collateral Trust Agreement creates a valid and binding lien and
security interest in favor of the Collateral Trustee in the Export Contracts and
Export Receivables, prior to all other Liens except Permitted Liens (as defined
in the Amended and Restated Collateral Trust Agreement); (iii) each Export
Contract is in full force and effect and constitutes a valid and legally
enforceable obligation of the Issuer, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing; and (iv) all obligations of the
Issuer under the Amended and Restated Collateral Trust Agreement are obligations
of the Branch and such obligations, and the security interest created under the
Amended and Restated Collateral Trust Agreement are enforceable against the
Branch, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
Export Receivables and Export Contracts
In connection with the granting of a security interest in the Export
Contracts and the Export Receivables to the Collateral Trustee, SP Limited will
(i) notify in writing each of its Export Customers (as defined in the Amended
and Restated Collateral Trust Agreement) that is a party to a contract in
respect of Export Receivables and (ii) authorize and direct in writing each such
customer to pay all amounts owed by it under or in respect of the Export
Receivables directly into the Collection Account. SP Limited will request each
Export Customer party to an Export Contract to execute an Acknowledgment to pay
in accordance with such notice. SP Limited has filed UCC-1 financing statements
with respect to the Collateral.
Excluded Receivables
Excluded from the lien and security interest granted by the Issuer in the
Amended and Restated Collateral Trust Agreement are specified export contracts
(Excluded Export Contracts) covering up to 40,000 tons annually which secure
other debt arrangements of the Issuer. The Issuer may exclude, on an annual
basis, additional export contracts providing for sales of copper up to an
aggregate annual amount (expressed in short tons) equal to the sum of (I) 10% of
Net Certified Export Sales (as defined below) and (II) the Excess Certified
Export Sales (as defined below) if any, in each case for such calendar year;
provided that the maximum amount of copper to be sold under contracts which may
be so excluded after the commencement of a calendar year shall be reduced by a
fraction, the numerator of which is the number of days elapsed since the
beginning of such calendar year and the denominator of which is 365; and
provided further that the Issuer shall not be permitted to exclude contracts
pursuant to clause (x) above in an amount that would cause the Program Amount to
be reduced (as described in the following paragraph) below an amount equal to
the sum of (i) the Outstanding Principal Amount at such time and (ii) the
product of (a) the Designated Total Collateral Percentage for Additional Secured
Obligations then outstanding times (b) the Program Amount then in effect. The
"Net Certified Export Sales", for any calendar year, is equal to (A) the lesser
of (i) 320,000 short tons and (ii) the budgeted level of sales of copper by the
Issuer to be sold to customers located outside of Peru, as certified by the
Issuer (the "Certified Export Sales") for such calendar year minus (B) the
aggregate annual amount of short tons of copper to be sold under Excluded Export
Contracts. "Excess Certified Export Sales" means the excess, if any, of the
Certified Export Sales for such
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calendar year over the sum of (i) 320,000 short tons and (2) the annual amount
of short tons of copper in respect of Excluded Export Contracts for such
calendar year.
If the Issuer identifies additional Excluded Export Contracts as described
above in clause I, the Program Amount shall be reduced, during the period in
which such contracts are so excluded, by an amount equal to the product of (x)
the Program Amount prior to such reduction and (y) a fraction, the numerator of
which is equal to the annual amount of copper sales arising under such Excluded
Export Contracts (expressed in short tons) and the denominator of which is equal
to the Net Certified Export Sales.
Export Sales
On or prior to January 15 of each calendar year, the Issuer shall deliver
to the Collateral Trustee and the Trustee a certificate of a responsible officer
(the "Annual Sales Certificate") certifying for such calendar year (i) the
budgeted amount of short tons of copper to be sold to customers located within
Peru (which shall not include sales effected through any Peruvian Governmental
Authority to customers located outside Peru) ("Domestic Sales"), (ii) the
Certified Export Sales for such year and (iii) the aggregate budgeted amount of
short tons of copper to be sold pursuant to Excluded Export Contracts (the sum
of clauses (i), (ii) and (iii) (the "Total Sales"). If, in any calendar year
when the Certified Export Sales are less than 320,000 short tons, the ratio of
Domestic Sales to Total Sales, expressed as a percentage (the "Domestic
Percentage") exceeds 20% (such percentage, to the extent exceeding 20%, shall
hereinafter be referred to as the "Excess Domestic Percentage"), then the
Program Amount in effect for such year shall be reduced for such year by an
amount equal to the product of the Excess Domestic Percentage and the Program
Amount which would otherwise have been in effect on the first day of such year
(after giving effect to the application of Section 2.02 of the Amended and
Restated Collateral Trust Agreement). If during any calendar year the Issuer
becomes aware that the Domestic Percentage will be increased as a result of an
increase in Domestic Sales in excess of the budgeted amount set forth on the
Annual Sales Certificate previously delivered for such calendar year (calculated
on a pro rata basis for the portion of the calendar year remaining) and the
Domestic Percentage will, as a result thereof, exceed 20% (or increase further
above 20%), then, within five Business Days of becoming so aware, the Issuer
shall deliver to the Collateral Trustee a certificate of a responsible officer
in replacement for the Annual Sales Certificate previously delivered and the
Program Amount shall be recalculated as set forth in the preceding sentence on a
pro rata basis for the remainder of the calendar year; provided, however, that
for purposes of this sentence the increase in Domestic Sales shall be deemed to
equal the amount by which the increase in the Domestic Sales exceeds the
increase, if any, in the amount of the Total Sales, each as set forth in the
Annual Sales Certificate previously delivered for such calendar year.
Collection Account
As described above, all Collections on the Export Receivables will be
deposited on a daily basis in the Collection Account. On a daily basis, the
Collateral Trustee will allocate the Collections in accordance with the
applicable total collateral percentage to (i) the SENs Collateral Account for
each series of SENs, (ii) the Credit Facility Collateral Account, (iii) to such
accounts, if any, established in connection with any Additional Secured
Obligations, and (iv) to accounts designated by the Issuer in each case in
accordance with such party's respective interests in the Collections on that
day. Without the consent of the other Secured Parties, the Issuer may designate
a percentage in the Collateral to secure any Additional Secured Obligations,
provided, however that after giving effect to such designation, the sum of (a)
the SENs Total Collateral Percentage, (b) the Credit Facility Total Collateral
Percentage and (c) the aggregate Designated Total Collateral Percentages of all
Additional Secured Obligations shall not exceed 100%.
Remedies Subject to Intercreditor Arrangements
No Realization Event with respect to the Collateral (as defined in the
Amended and Restated Collateral Trust Agreement) or the direction of Collections
to any account other than the Collection Account may be effected by the
Collateral Trustee or by or on behalf of any Secured Party except in accordance
with the intercreditor arrangements set forth in the Amended and Restated
Collateral Trust Agreement. The Required Secured Parties shall not effect any
Realization Event with respect to the Collateral or direct the Collections to an
account other
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than the Collection Account unless (a) any Senior Secured Obligations shall have
been declared due and payable prior to the stated maturity thereof in accordance
with the related agreement (an "Acceleration Event") or (b) there shall have
occurred and be continuing an event of default with respect to a Senior Secured
Obligation resulting from (i) a failure to make a payment of principal or
interest and such event of default shall remain unremedied for a period of at
least 5 days (a "Payment Event of Default") or (ii) a bankruptcy proceeding or
similar event shall be commenced by or against the Issuer, the Guarantor or the
Branch (a "Bankruptcy Event of Default").
Subordination
Pursuant to the Amended and Restated Collateral Trust Agreement, the Issuer
may grant a subordinated interest in the Collateral for the benefit of certain
parties providing credit enhancement in connection with the Senior Secured
Obligations. So long as any Senior Secured Obligations have not been paid in
full, no Subordinated Creditor (as defined in the Amended and Restated
Collateral Trust Agreement) will exercise any remedies with respect to the
Collateral, institute any foreclosure proceedings or object to any foreclosure
action brought by any holder of Senior Secured Obligations. The holders of the
Senior Secured Obligations have the rights to exercise rights and remedies with
respect to the Collateral in accordance with the Amended and Restated Collateral
Trust Agreements.
THE INDENTURE
Accounts
Note Collateral Account. Concurrently with the execution and delivery of
the Indenture, the Trustee shall establish the Note Collateral Account, a
segregated trust account denominated in Dollars, created and maintained by the
Trustee and entitled the "Citibank, N.A. Southern Peru Limited Note Collateral
Trust Account" into which monies will be deposited and from which monies will be
withdrawn as provided in the Indenture and the Amended and Restated Collateral
Trust Agreement. As described above, on each Business Day, the Collateral
Trustee will transfer a percentage of the funds on deposit in the Collection
Account equal to the Note Total Collateral Percentage to the Note Collateral
Account.
On each Business Day the Trustee will apply the funds deposited in the Note
Collateral Account in the following order of priority:
first, an amount equal to the fees and expenses of the Trustee payable
under the Indenture which are due and owing on such Business Day shall be
paid to the Trustee;
second, if the amount on deposit on such Business Day in the Note
Reserve Account (after giving effect to all transfers to be made on such
day) is less than an amount equal to the aggregate Scheduled Debt Service
for the Notes with respect to the three next succeeding Payment Dates (the
"Required Balance"), an amount equal to the amount necessary to cause the
amount on deposit in the Note Reserve Account to equal the Required
Balance; and
third, (i) so long as no Retention Trigger Event or Debt Service
Retention Event has occurred and is continuing, the remainder of such funds
will be transferred to the Issuer; or (ii) if a Retention Trigger Event or
Debt Service Retention Event has occurred and is continuing, an amount
equal to the amount of such funds as is necessary to cause the amount on
deposit in the Note Collateral Account to equal the past due interest and
principal on the Notes and interest and principal due on the Notes on the
immediately succeeding Payment Date shall remain on deposit in the Note
Collateral Account until applied in accordance with the third paragraph of
"Payments" above; and the remainder of such funds in the Note Collateral
Account, if any (the "Excess Collections"), shall be transferred to the
Issuer so long as a Trigger Event requiring the Trustee to block Excess
Collections or an Event of Default which results in the acceleration of the
maturity of the Notes shall not have occurred.
If at 11:00 a.m. (New York City time) on a Payment Date, the Note
Collateral Account does not have on deposit or the Paying Agent has not received
from the Issuer immediately available funds in Dollars sufficient to make the
payments required to be made on such Payment Date, the Trustee shall transfer
from the Note Reserve
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Account (or make a draw under a Qualified Letter of Credit) to the Note
Collateral Account or the Paying Agent on such Payment Date immediately
available funds in Dollars in an amount which, when added to the amounts of
immediately available funds in Dollars held in the Note Collateral Account or
held by such Paying Agent, will be sufficient to enable the Trustee or the
Paying Agent to make such required payments on such Payment Date. If any amounts
are transferred from the Note Reserve Account pursuant to the immediately
preceding sentence, the Issuer shall, no later than the next Business Day after
receipt of notice from the Trustee that such amounts were transferred, deposit
immediately available funds in Dollars in the Note Reserve Account in an amount
sufficient to cause the amount on deposit in the Note Reserve Account at such
time to be equal to the Required Balance at such time.
During the occurrence and continuance of a Retention Trigger Event, an
Accelerated Amortization Event or a Debt Service Retention Event, on each
Payment Date the Trustee will apply the amounts credited to the Note Collateral
Account in the following order of priority:
first, to the payment of interest on the Notes which is past due;
second, to the payment of scheduled payments of interest on the Notes
then due and payable;
third, to the payment of any principal of the Notes which is then past
due;
fourth, to the payment of scheduled payments of principal of the Notes
then due and payable; and
fifth to the payment of the amount of principal of the Notes, if any,
required to be prepaid pursuant to the provisions described in "Accelerated
Amortization Event; Application of Funds" together with any Make-Whole
Premium due on the amount of such prepayment.
Note Reserve Account. Concurrently with the execution and delivery of the
Supplemental Indenture, the Trustee shall establish a segregated note reserve
trust account denominated in Dollars (the "Note Reserve Account") into which
monies will be deposited and from which monies will be withdrawn as provided
herein and in the Indenture.
In the event that on any Payment Date there are insufficient funds to make
the scheduled principal and interest payment for any reason, the Trustee will
use funds in the Note Reserve Account to make up such payment. The Note Reserve
Account will be funded initially by the Issuer at the time of the closing of the
offering of the Old Notes in an amount equal to $2,962,500 (the "Initial
Deposit"). The Note Reserve Account will thereafter be funded with (i) amounts
to be transferred from the Note Collateral Account pursuant to clause (ii) under
the second paragraph of " -- Note Collateral Account" and (ii) amounts
transferred to the Trustee from the Issuer specifically for deposit into the
Note Reserve Account so that funds on deposit in the Note Reserve Account will
be at least equal to the Required Balance. The Trustee shall transfer funds from
the Note Reserve Account to the Note Collateral Account as provided under the
third paragraph of " -- Note Collateral Account".
Upon the Notes becoming or being declared due and payable, all amounts on
deposit in the Note Reserve Account shall be applied in accordance with the
provisions described under "Events of Default".
The Issuer may deliver, or cause to be delivered, to the Trustee a
Qualified Letter of Credit in satisfaction of its obligations to fund the Note
Reserve Account and the amount available to be drawn under such letter of credit
shall be deemed to constitute funds on deposit in Note Reserve Account.
Statements; Investment of Funds
On or before the tenth day of each calendar month the Trustee shall provide
the Issuer with a written statement of the balances in, amount deposited in and
application of amounts withdrawn from the Note Collateral Account and the Note
Reserve Account at the end of the immediately preceding calendar month. To the
extent not applied, funds remaining on deposit in the Note Collateral Account or
the Note Reserve Account shall be invested by the Trustee, as specified in
investment instructions given by the Issuer in Eligible Investments, provided
that after the occurrence and during the continuance of a Trigger Event or an
Event of Default, such investments shall be invested by the Trustee in Eligible
Investments selected by the Trustee. All investments of amounts on deposit in
the Note Collateral Account shall mature on the next Payment Date for the Notes
and all
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amounts invested in the Note Reserve Account shall have maturities such that an
amount at least equal to the Scheduled Debt Service due on the next Payment Date
for the Notes shall mature on such Payment Date.
Payments of Additional Amounts
All payments in respect of the Notes, including, without limitation,
payments of principal, interest, and premium, if any, shall be made by the
Issuer without withholding or deduction for or on account of any present or
future taxes, duties, levies, or other governmental charges of whatever nature
(collectively "Taxes") now or hereafter imposed or established by or on behalf
of Peru or any political subdivision thereof or taxing authority therein (any
such tax, a "Peruvian Tax"), unless the Issuer is required to withhold or deduct
a Peruvian Tax by law (or, if the Issuer may by law elect to withhold or deduct
a Peruvian Tax or to pay such Peruvian Tax directly, the Issuer has elected to
withhold such Peruvian Tax). In the event any Peruvian Taxes are so imposed or
established, the Issuer shall pay such Additional Amounts as may be necessary in
order that the net amounts receivable by the holders after any withholding or
deduction in respect of such Peruvian Tax shall equal the respective amounts of
principal, interest and premium, if any, which would have been receivable in
respect of the Notes in the absence of such withholding or deduction; provided,
however, that no such Additional Amounts shall be payable (i) to, or on behalf
of, a holder who is not (a) a corporation, partnership or trust organized under
the laws of the United States or a State thereof or (b) a corporation or other
entity organized or established under the laws of any other jurisdiction outside
Peru, (ii) to, or on behalf of, a holder for or on account of any such Peruvian
Taxes that have been imposed by reason of the holder (or a fiduciary or settlor
of, or possessor of a power over, such holder, if such holder is an estate or a
trust), having some present or former connection with Peru, any political
subdivision of Peru or any territory or possession of Peru or area subject to
its jurisdiction other than the mere holding or owning of such Note or the
receipt of principal or interest or premium, if any, in respect thereof,
including, without limitation, such holder (or such fiduciary, settlor or
possessor of power over) being or having been a citizen or resident thereof, or
being or having been present therein, or being or having been engaged in trade
or business therein, or having had a permanent establishment therein, (iii) to,
or on behalf of, a holder for or on account of any such Peruvian Taxes that
would not have been imposed but for the presentation by the holder of a Note for
payment (where presentation is required) on a date more than 30 days after the
date on which such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later, except to the extent that
the holder would have been entitled to such Additional Amounts on presenting
such Note for payment on the last date of such period of 30 days, (iv) with
respect to any estate, inheritance, gift, sales, transfer, asset or personal
property tax or any similar tax, assessment or governmental charge, (v) to, or
on behalf of, a holder for or on account of any such Peruvian Taxes which are
actually paid otherwise than by withholding or deduction from payments on or in
respect of any Note, (vi) to, or on behalf of, a holder of any Note to the
extent that such holder is liable for such Peruvian Taxes that would not have
been imposed but for the failure of such holder to comply with any
certification, identification, information, documentation or other reporting
requirements if (a) such compliance is required by Peruvian law, regulation or
administrative practice or any applicable treaty as a precondition to relief or
exemption from, or reduction in the rate of, deduction or withholding of, such
Peruvian Taxes, (b) at least 30 days prior to the first Payment Date with
respect to which such requirements shall apply, the Issuer notifies or causes
the Paying Agent to notify all holders of the Notes or their nominees that such
holders will be required to comply with such requirements and (c) such
requirements are not materially more onerous to such holders (in form, in
procedure or in the substance of information disclosed) than comparable
information or other reporting requirements imposed under United States tax law,
regulation and administrative practice (such as IRS Forms 1001, W-8 and W-9),
(vii) to, or on behalf of, a holder for or on account of any such Peruvian Taxes
imposed because the holder is a significant stockholder of the Issuer or the
Guarantor, or (viii) with respect to any combination of items (i), (ii), (iii),
(iv), (v), (vi) and (vii) above. Furthermore, no Additional Amounts shall be
paid with respect to any payment on a Note to a holder that is a fiduciary or
partnership or other than the sole beneficial owner of such payment to the
extent that a beneficiary or settlor with respect to such fiduciary or a member
of such partnership or beneficial owner would not have been entitled to receive
the Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder.
If the holders of two-thirds or more of the aggregate principal amount of
the outstanding Notes waive their rights to Additional Amounts or agree to
receive payments net of Interest Tax payable by the Issuer or the
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Guarantor at a rate exceeding 1% then (i) the Issuer shall not be obligated to
pay excess Additional Amounts, or payments of interest to holders will be
reduced by the excess Interest Tax and (ii) the Issuer may not redeem the Notes
except as otherwise provided in the Indenture. See "-- Optional Redemptions for
Tax Reasons" and "Taxation -- Peruvian Taxation".
Guarantee by SPCC
The Guarantor will unconditionally guarantee the due and punctual payment
of the principal of (and premium, if any) and interest on the Notes including
all Additional Amounts payable, when and as the same shall become due and
payable, whether at maturity, upon redemption, by declaration of acceleration or
otherwise. Holders of Notes need not exhaust their recourse against the Issuer
prior to proceeding against the Guarantor. The Guarantee will be a direct senior
obligation of the Guarantor which will rank pari passu with the guarantee by
SPCC of borrowings under the Credit Facility.
Covenants
Under the terms of the Notes, the Issuer and/or the Guarantor, as the case
may be, will covenant and agree that as long as any of the Notes remain
outstanding:
Payment of Principal and Interest. The Issuer will duly and punctually pay
the principal of, interest and Additional Amounts, if any, and premium, if any,
on the Notes in accordance with the terms of the Notes and the Indenture.
Maintenance of Office or Agency. The Issuer will maintain in the Borough
of Manhattan, New York City, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Issuer in
respect of the Notes and the Indenture may be served.
Consolidated Tangible Net Worth. The Guarantor shall not permit or cause
its Consolidated Tangible Net Worth at any time to be less than US$750,000,000.
Capitalization Ratio. The Guarantor shall not permit or cause its
Capitalization Ratio at any time to be greater than 0.50 to 1.00.
Compliance with Laws and PAMA. Each of the Issuer and the Guarantor shall
comply with all requirements of law (other than Environmental Laws, as defined
in the Indenture) except where (i) the failure to comply therewith would not
result in a Material Adverse Effect or (ii) the need to comply is being
contested in good faith by appropriate proceedings.
Each of the Issuer and the Guarantor shall comply with all applicable
Environmental Laws and obtain and comply with and maintain any and all licenses,
authorizations, approvals, notifications, registrations or permits required by
applicable environmental laws, except where (i) the failure to do so would not
result in a Material Adverse Effect or (ii) the need to comply therewith is
being contested in good faith by appropriate proceedings.
Conduct of Business and Maintenance of Existence. Each of the Issuer and
the Guarantor shall continue to engage in business of the same general type as
now conducted by it and preserve, renew and keep in full force and effect its
corporate existence and maintain all material rights, privileges, concessions
and franchises necessary or desirable in the normal conduct of its business
except as otherwise permitted pursuant to the covenants described under
" -- Merger, Consolidation, etc." and as set forth in the Indenture and except
to the extent that the failure to maintain any such rights, privileges,
concessions and franchises would not, individually or in the aggregate, result
in a Material Adverse Effect.
Maintenance of Property; Insurance. Each of the Issuer and the Guarantor
shall keep all material property necessary for the conduct of its business in
good working order and condition (ordinary wear and tear excepted); shall
maintain such insurance with respect to its general business and properties with
financially sound and reputable insurance companies (including captive or
affiliated insurance companies) or, to the extent consistent with prudent
business practice, through programs of self insurance, as the Issuer and the
Guarantor shall
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determine to be adequate (taking into account both the commercial availability
and cost of such insurance); and shall furnish to the Trustee, upon written
request, full information as to the insurance carried.
Limitation on Certain Sales of Assets. Neither the Issuer nor the
Guarantor shall convey, sell, lease, assign, transfer or otherwise dispose of
(a) any Principal Property to any party (other than to the Guarantor or the
Issuer, as the case may be, provided that no Principal Property may be conveyed,
sold, assigned, transferred or otherwise disposed of to the Guarantor, unless
the Guarantor shall have executed and delivered such amendments and supplements
to the Transaction Documents and such other agreements and documents as the
Trustee may reasonably require in connection with the assumption by the
Guarantor of all or a portion of the obligations of the Issuer (including in
respect of Liens on any Export Receivables generated by the operation of such
Principal Property) under the Indenture and the other Transaction Documents with
respect to such Principal Property (all such amendments, supplements and other
agreements and documents to be in form and substance satisfactory to the
Trustee)), if such asset disposition would have a Material Adverse Effect or (b)
except as otherwise permitted under the Amended and Restated Collateral Trust
Agreement, any Export Receivables.
Merger, Consolidation, etc. Neither the Issuer nor the Guarantor shall
enter into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets (including, in the case of the Guarantor, the
capital stock of the Issuer) except that (a) so long as no Default, Potential
Trigger Event, Trigger Event or Event of Default would result therefrom, the
Guarantor and the Issuer may merge, consolidate or amalgamate with or into each
other, provided that, if the Guarantor is the surviving entity in such merger
consolidation or amalgamation, the Guarantor shall have complied with the
applicable requirements of clause (b)(ii) below, and (b) the Guarantor or the
Issuer may merge, consolidate or amalgamate with another Person if (i) no
Default, Potential Trigger Event, Trigger Event or Event of Default shall have
then occurred and be continuing or would result therefrom, (ii) the Guarantor or
the Issuer, as the case may be, is the surviving entity in such consolidation or
merger, or, if such other Person is the surviving entity in such consolidation
or merger, such other Person (the "Successor Corporation") shall (A) be
organized under the laws of the United States of America or any State thereof
and shall expressly assume by a supplemental indenture satisfactory in form to
the Trustee executed and delivered to the Trustee by the Successor Corporation
the due and punctual payment of the principal of, premium, if any, and interest
and Additional Amounts, if any, on all of the SENs according to their terms,
and, in the case of a Successor Corporation to the Issuer, the due and punctual
performance of all of the covenants and obligations of the Issuer under the SENs
and the Indenture, and in the case of a Successor Corporation to the Guarantor,
the due and punctual performance of all of the covenants and obligations of the
Guarantor under the Guarantees and the Indenture and (B) the Successor
Corporation, if any, succeeds to and becomes substituted for the Issuer or the
Guarantor, as the case may be, with the same effect as if it had been named in
the SENs as the Issuer or in the Guarantees as the Guarantor and (iii) the
Trustee shall have received a certificate of a responsible officer of the
Guarantor or the Issuer, as the case may be, to the effect that each of the
conditions set forth in clauses (i) and (ii) above have been satisfied.
Liens
(i) Neither the Issuer nor the Guarantor shall create, incur, assume, or
permit to exist any Liens on any Principal Property, except for Permitted Liens.
(ii) Neither the Issuer nor the Guarantor shall create, incur, assume or
permit to exist any Liens on the Export Receivables, other than Liens in favor
of the Collateral Trustee pursuant to the Amended and Restated Collateral Trust
Agreement and Liens of the type set forth in clauses (iii), (viii) and (ix) of
the definition of "Permitted Liens".
(iii) Neither the Issuer nor the Guarantor shall create, incur, assume or
permit to exist any Liens on its copper inventory, other than (a) liens securing
working capital financings or similar obligations (provided that the aggregate
principal amount of Debt secured by such Lien shall not exceed $100 million) and
(b) Liens of the type set forth in clauses (iii), (viii) and (ix) of the
definition of "Permitted Liens".
Maintenance of Books and Records. The Guarantor shall maintain books,
accounts and records in accordance with U.S. GAAP and the applicable rules and
regulations of the Commission.
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Designation and Termination of Designation of Additional Percentages under
the Amended and Restated Collateral Trust Agreement. At any time after the
occurrence and during the continuation of a Trigger Event, Default or Event of
Default with respect to the Notes, the Issuer shall not designate any Additional
Percentage for the benefit of any Secured Parties (other than for the Notes)
unless the Issuer shall designate a ratable (calculated on the basis of the
Basic Collateral Percentages of the Secured Parties) Additional Percentage for
the benefit of the Notes pursuant to such Section. See " -- The Collateral Trust
and Security Agreement".
If the Issuer shall designate any Additional Percentage for the benefit of
the Notes, the Issuer shall not notify the Collateral Trustee that such
Additional Percentage shall no longer be designated for the benefit of the Notes
unless (a) at least five Business Days prior to the delivery of such notice, the
Issuer shall have delivered a certificate of a responsible officer to the
Trustee and the Collateral Trustee demonstrating that, as of the last day of the
immediately preceding month, the ratio of (x) aggregate Collections transferred
to the Note Collateral Account during the three month period ending on such day
to (y) the sum of all scheduled payments of principal of, and interest
(including Additional Amounts) on, the Notes for such three month period
(calculated after giving effect to the removal of such additional percentage)
would have been at least 3.00 to 1.00, and such a certificate of a responsible
officer shall include a certification of such calculations and (b) no Event of
Default shall have then occurred and be continuing.
Limitation on Additional Debt Secured by Export Receivables
Neither the Issuer nor the Guarantor shall issue any Debt secured by Export
Receivables which would cause the aggregate outstanding principal amount of Debt
issued after the Issue Date secured by Export Receivables to exceed $750 million
(not including the aggregate principal amount of Debt secured by Export
Receivables arising under Export Contracts covering an aggregate annual amount
up to 10,000 short tons of copper) unless prior to the issuance of such Debt
each of the rating agencies then rating the Notes confirms that such issuance
shall not cause a downgrading in their respective then current ratings of the
Notes.
Reports; Notices
The Issuer and the Guarantor will provide the following documents to the
Trustee:
(1) within 30 days after the Issuer and the Guarantor are required to
file the same with the Commission, copies of the annual reports and other
information pursuant to Section 13 or Section 15(d) of the Exchange Act;
or, if the Issuer and the Guarantor are not required to file information
pursuant to either of such Sections, then they shall file with the Trustee
and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a security
listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations (whether or not
the Notes are so listed);
(2) any additional information, documents and reports with respect to
compliance by the Issuer and the Guarantor with the conditions and
covenants of the Indenture as may be required from time to time by the
rules and regulations of the Commission, but only to the extent the same
are not satisfied by delivery of the certificate required by clause (5)
below;
(3) any summaries of any information, documents and reports, if any,
required to be filed by the Issuer and the Guarantor pursuant to paragraphs
(1) and (2) above as may be required by rules and regulations prescribed
from time to time by the Commission and the Issuer and the Guarantor will
transmit or cause the Trustee to transmit such summaries to the holders;
(4) written notice of the occurrence of any Trigger Event, Accelerated
Amortization Event or Event of Default or any event which after notice or
lapse of time or both would become a Trigger Event, Accelerated
Amortization Event or Event of Default and a description of the nature and
period of existence thereof and the action, if any, the Issuer is taking or
proposes to take with respect thereto within five Business Days of a
Responsible Officer of the Issuer becoming aware of any such event; and
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(5) concurrently with the delivery of quarterly and annual financial
statements referred to in (1) above, a certificate of a responsible officer
of the Guarantor (i) stating that, to the best of such responsible
officers' knowledge, during such period (A) neither the Guarantor nor the
Issuer has changed its name, its principal place of business or its chief
executive office without complying with the requirements of this Indenture
and the Transaction Documents with respect thereto and (B) no Default,
Potential Trigger Event, Trigger Event or Event of Default has occurred
which is then continuing except as specified in such certificate and (ii)
setting forth in reasonable detail the calculations required to determine
compliance with the financial covenants described above under
" -- Consolidated Tangible Net Worth" and " -- Capitalization Ratio".
Immediately after (and in no event later than 90 days after) the Trustee
obtains actual knowledge of the occurrence of any Potential Trigger Event,
Trigger Event, Accelerated Amortization Event or Default with respect to the
Notes, the Trustee will transmit notice of such event to the holders of the
Notes; provided, however, that except in the case of a default in the payment of
principal, interest or Additional Amounts on the Notes, the Trustee may withhold
giving such notice if it is in the interest of the holders. Immediately upon
receipt of notice (and no later than 15 days after such receipt of notice) of a
Trigger Event (other than a Trigger Event which becomes a Blocking Event without
any action by the holders) the Trustee shall either call a meeting of the
holders or solicit votes of the holders for purposes of deciding whether the
Trustee will retain Blocked Collections as described under "-- Trigger Events"
below; provided that the Issuer may call such a meeting or solicit votes on its
own in the time period set forth above.
Trigger Events
Each of the following events will be trigger events pursuant to the
Indenture ("Trigger Events"):
(i) as of the last day of any month falling at least three months
after the Issue Date for the Old Notes, the ratio (the "Three Month Ratio")
of (x) aggregate Collections transferred to the Note Collateral Account
during the three calendar months ending on such date to (y) the sum of all
scheduled payments of principal of, and interest (including Additional
Amounts) on, such Notes for the three calendar months ending on such date
shall be less than the Three Month Debt Service Coverage Ratio;
(ii) as of the last day of any month falling at least six months after
the Issue Date for the Old Notes, the ratio (the "Six Month Ratio") of (x)
aggregate Collections transferred to the Note Collateral Account during the
six calendar months ending on such date to (y) the sum of all scheduled
payments of principal of, and interest (including Additional Amounts) on,
such Notes for the six calendar months ending on such date shall be less
than the applicable Six Month Debt Service Coverage Ratio;
(iii) an Event of Default described in clauses (i) or (xi) of "Events
of Default" shall have occurred and be continuing;
(iv) the Guarantor shall fail to comply with the financial covenants
described under " -- Consolidated Tangible Net Worth" and
" -- Capitalization Ratio";
(v) the Guarantor or the Issuer shall fail to comply with the
covenants described under " -- Limitation on Certain Sales of Assets" and
" -- Merger, Consolidation, etc.";
(vi) the Guarantor or the Issuer shall fail to comply with the
covenant described under "Covenants -- Liens" and such failure shall
continue unremedied (a) for a period of 10 days, if the Issuer or the
Guarantor shall create, incur or assume any Lien in violation of such
covenant, or (b) for a period of 45 days, if the Issuer or the Guarantor
shall permit to exist any Liens in violation of such covenant, in each case
after the earlier of (x) the date a Company Notice shall have been given or
(y) the date a responsible officer of the Issuer shall have acquired actual
knowledge of such failure;
(vii) any Event of Default described under clause (viii) of "Events of
Default" shall have occurred and be continuing;
(viii) the Collateral Trustee ceases for any reason to have a
perfected first priority security interest in the Collateral, other than
Liens of the type set forth in clauses (iii), (viii) and (ix) of the
definition of "Permitted Liens", or the Trustee ceases for any reason to
have a perfected first priority security interest in
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the Note Collateral, other than Liens in favor of the Collateral Trustee
pursuant to the Amended and Restated Collateral Trust Agreement and Liens
of the type set forth in clauses (iii), (viii) and (ix) of the definition
of "Permitted Liens", and any such cessation is not cured, or Adequate
Substitute Collateral (as described below) is not provided, within 5 days
after the earlier of (x) the date a Company Notice shall have been given or
(y) the date a responsible officer of the Issuer shall have acquired actual
knowledge of such default; the requirement to provide "Adequate Substitute
Collateral" shall be deemed satisfied if (i) the Issuer designates, in
accordance with Section 2.04 of the Amended and Restated Collateral Trust
Agreement, an Additional Percentage interest in the Export Receivables for
the benefit of the Notes (thereby increasing the Note Total Collateral
Percentage) equal to such percentage as may be necessary to ensure that the
Notes will maintain the same interest (on a contracted tonnage basis) in
the Export Receivables (calculated without including the Export Receivables
as to which priority or perfection has ceased) as Notes would have had but
for the cessation of perfection or priority or (ii) the Issuer shall
provide such other additional collateral to the holders as may be in an
amount and form satisfactory to holders of 51% or more of the aggregate
principal amount of the outstanding Notes;
(ix) an Event of Default described in clause (x) of "Events of
Default" shall have occurred and be continuing;
(x) On any date the Collateral Trustee shall fail to have received
fully executed Acknowledgments from the Issuer's customers party to Export
Contracts representing customers obligated to purchase at least 80% of the
aggregate amount of the copper measured on a tonnage basis, subject to all
such Export Contracts on such date and such failure shall continue for a
period of 180 days (as measured on the same basis during such 180 day
period except the foregoing calculation on each day during such period
shall be made based on the contracts in effect on such day).
(xi) Any Governmental Authority of the Republic of Peru shall have
enacted any rule, regulation or law or taken any other action which imposes
restrictions on the free access to foreign exchange affecting SPCC, SP
Limited or the Branch or which prohibits the payment of Export Receivables
into the Collection Account and such rule, regulation, law or action shall
have a Material Adverse Effect.
A Trigger Event may be rescinded or waived by the affirmative vote of
holders of 51% or more of the aggregate principal amount of the Outstanding
Notes.
Blocked Collections. Upon the occurrence and during the continuance of any
of the Trigger Events specified in clauses (i), (ii) or (iii) above, the Trustee
on each Business Day shall retain in the Note Collateral Account the applicable
Blocked Percentage of the Excess Collections on such Business Day (the "Blocked
Collections") as additional collateral.
Upon the occurrence and during the continuance of any of the Trigger Events
specified in clauses (iv), (v), (vi), (vii), (ix), (x) or (xi) above, the
Trustee, if so directed by holders of 51% or more of the aggregate principal
amount of the outstanding Notes, shall retain the Blocked Collections in the
Note Collateral Account as additional collateral for the Notes. Upon the
occurrence and during the continuance of any Trigger Event specified in clause
(viii) above, the Trustee may and, if directed by holders of 51% or more of the
aggregate principal amount of the Outstanding Notes, shall, retain the Blocked
Collections in the Note Collateral Account as additional collateral.
Cure of Trigger Events. Except as otherwise provided in this paragraph, a
Trigger Event shall be deemed cured and not continuing if the event giving rise
to such Trigger Event is no longer continuing and the Issuer or the Guarantor
has provided the Trustee with a certificate of a responsible officer to such
effect. A Trigger Event under clause (i) or (ii) above shall be deemed cured and
not continuing if on the last day of any month (x) the Three Month Ratio for the
Notes with respect to the immediately preceding period of three months is at
least equal to the applicable Three Month Debt Service Coverage Ratio and (y)
the Six Month Ratio for the Notes with respect to the immediately preceding
period of six months is at least equal to the applicable Six Month Debt Service
Coverage Ratio and the Issuer or the Guarantor has provided the Trustee with a
certificate of a responsible officer to such effect. A Trigger Event specified
in clause (iv) above shall be deemed cured on the later of (x) the last day of a
period of six months during which Blocked Collections are retained in the Note
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Collateral Account if on such day such Note Collateral Account contains an
amount at least equal to the principal and interest due for the next six Payment
Dates under the Notes (the "Six Month Debt Reserve Amount") and (y) the day on
which the Note Collateral Account contains at least the Six Month Debt Reserve
Amount and the Issuer or the Guarantor has provided the Trustee with a
certificate of a responsible officer to such effect; provided that in the case
of a Trigger Event specified in clause (iv) above, if the holders have elected
the action set forth in clause (ii) or (iii) of " -- Application or Release of
Funds" below, a Trigger Event shall be deemed to be continuing and not cured
until the Guarantor is in compliance with the covenants described under "--
Consolidated Tangible Net Worth" or " -- Capitalization Ratio".
Application or Release of Funds. Within 20 days of the day on which a
Trigger Event under clause (iv) above is deemed cured, the Trustee shall call a
meeting of holders of the Notes at which the holders of 51% or more of the
aggregate principal amount of the outstanding Notes shall direct the Trustee as
follows: (i) to apply the Six Month Debt Reserve Amount to the ratable
prepayment of the Notes at the redemption price or (ii) to declare that such
Trigger Event constitutes an Accelerated Amortization Event or (iii) to declare
that such Trigger Event constitutes an Event of Default or (iv) to release all
Blocked Collections in the Note Collateral Account to the Issuer. Following the
application or release of funds under clause (i) or (iv) of the preceding
sentence, no further breaches of the covenants described under " -- Consolidated
Tangible Net Worth" and " -- Capitalization Ratio" shall form the basis of
another Trigger Event until such time as the Consolidated Tangible Net Worth of
the Guarantor is at least equal to US$875,000,000 or the Capitalization Ratio of
the Guarantor is no greater than 50% following the breach of the covenant that
gave rise to the Trigger Event, as the case may be. On the date on which a
Trigger Event is cured as specified in " -- Cure of Trigger Events" (other than
a Trigger Event set forth in clause (iv) of "Trigger Events" in which case the
provisions of this paragraph shall apply) the amounts of Blocked Collections in
the Note Collateral Account shall be paid to the Issuer.
Accelerated Amortization Event; Application of Funds. If (1) a Trigger
Event set forth in clauses (i) or (ii) of "Trigger Events" shall occur and not
be cured within 12 months of the occurrence thereof, an accelerated amortization
event shall automatically occur or (2) a Trigger Event as set forth in clause
(vii) of "Trigger Events" shall occur and be continuing and holders of 51% or
more of the aggregate principal amount of the outstanding Notes have
affirmatively voted (in a vote conducted separately from the vote taken to
direct the Trustee to retain Blocked Collections pursuant to clause (ii) of
" -- Blocked Collections") to declare that such event constitutes an accelerated
amortization event (in each case, together with any Accelerated Amortization
Event declared pursuant to clause (ii) of " -- Application or Release of Funds,"
an "Accelerated Amortization Event"), on each Payment Date following the
occurrence and continuance of an Accelerated Amortization Event, the Issuer or
the Guarantor shall be obligated to redeem the Notes, together with a Make-Whole
Premium on the amount redeemed, in an amount equal to the amount on deposit in
the Note Collateral Account on the day immediately preceding such Payment Date,
after giving effect to the payments set forth in clauses (i) and (ii) of "Note
Collateral Account" and clauses (i) through (iv) of "Application of Funds",
minus the amount of the Make-Whole Premium with respect to such redemption. An
Accelerated Amortization Event with respect to the Notes may be rescinded or
waived by affirmative vote of the holders of 51% or more of the aggregate
principal amount of the outstanding Notes. Following the cure of the Trigger
Event which gave rise to such Accelerated Amortization Event, the resulting
Accelerated Amortization Event shall be deemed cured and there shall be no
further redemption of Notes resulting from such Trigger Event.
Events of Default
Each of the following will be Events of Default:
(i) default in the payment of any principal or premium, if any, due on
the Notes, whether at maturity, redemption or otherwise, or default by the
Issuer in the payment of any interest or any Additional Amounts due on any
Note within five business days of its scheduled payment date; or
(ii) default in the performance or breach by the Guarantor of the
covenants described under "-- Consolidated Tangible Net Worth" and
" -- Capitalization Ratio", and such default is declared an Event of
Default by the holders of at least 51% of the aggregate principal amount of
the outstanding Notes; or
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(iii) default by the Issuer or the Guarantor in the performance or
observance of (a) the covenant described under "-- Limitation on Certain
Sales of Assets" or (b) the covenant described under " -- Merger,
Consolidation, etc."; or
(iv) default in the performance or breach by the Issuer or the
Guarantor of: (a) any covenant set forth under " -- Compliance with Laws
and PAMA", " -- Conduct of Business and Maintenance of Existence",
" -- Reports; Notices", or " -- Maintenance of Property; Insurance", and
such failure shall continue unremedied for a period of 45 days following
the date a Company Notice shall have been given (except that in the case of
a failure to comply with the covenant set forth in paragraph 4 under
" -- Reports; Notices" as a result of a failure to deliver notices of
Trigger Events, Accelerated Amortization Events, Events of Defaults or
Defaults, such failure need only continue for a period of 10 days after the
earlier of (x) the date a Company Notice shall have been given or (y) the
date a responsible officer of the Issuer shall have acquired actual
knowledge of such default); (b) the covenant set forth under " -- Liens"
and such failure shall continue unremedied (A) for a period of 10 days, if
the Issuer shall create, incur or assume any Lien in violation of such
covenant, or (B) for a period of 45 days, if the Issuer shall permit to
exist any Lien in violation of such covenant, in each case after the
earlier of (x) the date a Company Notice shall have been given or (y) the
date a responsible officer of the Issuer shall have acquired actual
knowledge of such default; (c) the covenant described under
" -- Preservation of Security Interest" and such failure shall continue
unremedied (A) for a period of 15 days, with respect to the failure to take
any action required to be taken within the United States, or (B) for a
period of 45 days, with respect to the failure to take any action required
to be taken outside of the United States, after the earlier of (x) the date
a Company Notice shall have been given or (y) the date a responsible
officer of the Issuer shall have acquired actual knowledge of such default;
or (d) any other term, covenant or obligation of the Issuer or the
Guarantor in the Amended and Restated Collateral Trust Agreement, the
Indenture, the Notes and the Guarantee endorsed thereon not otherwise
expressly defined as an Event of Default in (i), (ii), (iii), or (iv)(a)(b)
or (c) above for a period of more than 60 days after the earlier of (x) the
date a Company Notice shall have been given or (y) the date a responsible
officer of the Issuer shall have acquired actual knowledge of such default;
or
(v) any of the representations and warranties of the Issuer or the
Guarantor in any Transaction Document to which it is a party is untrue or
incorrect in any material respect on the date when made or deemed made and
shall not have been remedied within 45 days after a Company Notice shall
have been given; or
(vi) (a) there shall be commenced against the Guarantor, the Issuer or
any of their respective Material Subsidiaries, or the Branch, any case,
proceeding or other action of a nature referred to in clause (vii)(a) below
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days, or (b) there shall be commenced against
the Guarantor, the Issuer or any of their Material Subsidiaries (as defined
in the Indenture), or the Branch, any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (c) the Guarantor, the Issuer or any of their
respective Material Subsidiaries, or the Branch, shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (a) or (b) above; or (d) the
Guarantor, the Issuer or any of their respective Material Subsidiaries, or
the Branch, shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(vii) the Guarantor, the Issuer or any of their respective Material
Subsidiaries, or the Branch, shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Guarantor, the Issuer or any of
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their respective Material Subsidiaries, or the Branch, shall make a general
assignment for the benefit of its creditors; or
(viii) the Issuer or the Guarantor shall fail to deliver notice and an
acknowledgment to any customers located outside of Peru under Export
Contracts for the purchase of copper if such failure is attributable to an
intention by the Issuer or the Guarantor to avoid the security arrangements
described therein and in the Amended and Restated Collateral Trust
Agreement and such failure shall continue unremedied for a period of 10
days after the earlier of (x) the date a Company Notice shall have been
given or (y) the date a responsible officer of the Issuer shall have
acquired actual knowledge of such default; or
(ix) the Collateral Trustee ceases for any reason to have a perfected
first priority security interest in the Collateral, other than Liens of the
type set forth in clauses (iii), (viii) and (ix) of the definition of
"Permitted Liens", or the Trustee ceases for any reason to have a perfected
first priority security interest in the Note Collateral, other than Liens
of the type set forth in clauses (iii), (viii) and (ix) of the definition
of "Permitted Liens", and any such cessation is not cured, or Adequate
Substitute Collateral (as defined in clause (viii) of "Trigger Events") is
not provided, within 30 days after the earlier of (x) the date a Company
Notice shall have been given or (y) the date a responsible officer of the
Issuer shall have acquired actual knowledge of such default; or
(x) the Issuer or the Guarantor shall (a) default in the payment of
the principal of or interest on, any note, bond, or other instrument
evidencing Debt aggregating (without duplication) $30 million in excess,
other than the Notes, issued, assumed or guaranteed by it, when and as the
same shall become due and payable, if such default shall continue for more
than the period of grace, if any, originally applicable thereto, or (b)
default in the observance of any other terms and conditions relating to any
such Debt, if the effect of such default is to cause such Debt to become
due prior to its stated maturity other than as a result of a Mandatory
Prepayment Event; or
(xi) any Governmental Authority of the Republic of Peru shall have
condemned, nationalized, seized, or otherwise expropriated (for a period
greater than 60 days) all or substantially all of the property of the
Issuer or the Guarantor; or
(xii) it becomes unlawful for the Issuer or the Guarantor to perform
any of its obligations under the Indenture, the Notes or the Guarantee
endorsed thereon, if the failure to so perform would result in a Material
Adverse Effect; the Notes, or the Guarantee endorsed thereon, cease to be
valid, binding and enforceable in accordance with their terms or the
binding effect or enforceability thereof shall be contested by the Issuer
or the Guarantor; or the Issuer or the Guarantor shall deny in writing or
by public announcement that it has any further liability or obligation
thereunder or in respect thereof.
Remedies
If such Event of Default (other than an Event of Default specified in
subparagraph (vi) and (vii) above) occurs and is continuing then and in every
such case the holders of not less than 51% in aggregate principal amount of the
outstanding Notes may declare the principal amount of all the Notes to be due
and payable immediately, by a notice in writing to the Issuer, the Guarantor and
to the Trustee, and upon any such declaration such principal amount and any
accrued interest shall become immediately due and payable; provided, however,
that if any of the foregoing Events of Default constituted a Trigger Event, the
holders of the Notes shall conduct a vote (separate from the vote taken to
direct the Trustee to retain Blocked Collections, unless no vote was taken in
connection with a Trigger Event described in clause (ix) of " -- Trigger
Events") to so declare the Notes due and payable. If an Event of Default
specified in subparagraph (vi) or (vii) above occurs, the principal of and any
accrued interest on all the Notes then outstanding shall become immediately due
and payable, and without presentment, demand, protest or notice of any kind all
of which are hereby expressly waived by the Issuer. In addition, immediately
upon the Notes becoming or being declared due and payable, 100% of all
Collections deposited in the Note Collateral Account shall be retained therein
and applied as described below.
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The remedies described above are without prejudice to the rights of each
individual holder to initiate an action against the Issuer or the Guarantor for
the payment of any principal, premium, if any, Additional Amounts and/or
interest past due on any Notes.
Any money collected by the Trustee on behalf of holders of Notes after the
occurrence of an Event of Default as described above shall be applied in the
following order:
First: To the payment of all amounts due the Trustee pursuant to the
Indenture;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the Notes in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal (and premium, if any)
and interest, respectively; and
Third: The balance, if any, to the persons entitled thereto.
Representations and Warranties
In addition to the representations and warranties as to the Collateral
contained in the Amended and Restated Collateral Trust Agreement, the Issuer and
the Guarantor will each represent and warrant (as to itself) as of the issue
date of the Notes with respect to the following matters: due organization;
corporate authority; due execution and delivery of the Transaction Documents; no
contravention of laws or material contractual obligations; receipt of necessary
consents; no material litigation except as disclosed; financial statements;
payment of taxes; compliance with environmental laws; rights to use or operate
the Principal Properties.
REPLACEMENT OF NOTES
If any Notes shall at any time become mutilated, defaced, destroyed, stolen
or lost, such Notes may be replaced at the cost of the applicant at the
specified office of the Trustee, upon provision of evidence satisfactory to the
Trustee and the Issuer that such Note was destroyed, stolen or lost, together
with such indemnity as the Trustee and the Issuer may require. Mutilated or
defaced Notes must be surrendered before replacements will be issued.
DEFEASANCE
The Issuer may at any time terminate all of its obligations with respect to
the Notes ("defeasance"), except for certain obligations, including those
regarding any trust established for a defeasance and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain agencies in respect of Notes. The Issuer may at any
time terminate its obligations under certain covenants set forth in the
Indenture, and any omission to comply with such obligations shall not constitute
a Default with respect to the Notes issued under the Indenture ("covenant
defeasance"). In order to exercise either defeasance or covenant defeasance, the
Company must irrevocably deposit in trust, for the benefit of the holders of the
Notes, with the Trustee money or U.S. government obligations, or a combination
thereof, in such amounts as will be sufficient to pay the principal of, and
interest on the Notes to redemption or maturity and comply with certain other
conditions, including the delivery of an opinion as to certain tax matters.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture, will upon the Issuer's request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Notes and except as otherwise specially provided in the Indenture),
and the Trustee will execute proper instruments acknowledging satisfaction and
discharge of the Indenture, when either (a) all Notes theretofore authenticated
and delivered (other than (i) Notes which have been destroyed, lost or stolen
and which have been replaced or paid and (ii) Notes for whose payment money has
theretofore been deposited in trust with the Trustee or any Paying Agent) have
been delivered to the Trustee for cancellation; or (b) all Notes not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable at their stated maturity within one year or (iii)
are to be called for redemption within one year and the Issuer or the Guarantor
in the case of any of the preceding clauses (i), (ii) or (iii) has irrevocably
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deposited or caused to be irrevocably deposited with the Trustee an amount
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal, premium,
if any, and Additional Amounts, if any, and interest to the date of such deposit
(in the case of Notes which have become due and payable) or to the stated
maturity or date of redemption, as the case may be.
MODIFICATION AND WAIVER
With the consent of the holders of not less than 51% in principal amount of
the outstanding Notes the Issuer and the Guarantor may enter into Supplemental
Indentures to modify the rights of the holders of the Notes; provided, however,
that no Supplemental Indenture shall, without the consent of the holder of each
outstanding Note, (i) change the stated maturity of the principal of or any
installment of interest on any Notes; (ii) reduce the principal amount of,
premium, if any, or interest on any Notes including discharge of repayment of
principal of, premium, if any, or interest on any Notes; (iii) reduce the
percentage in principal amount of outstanding Notes the consent of whose holders
is required for any waiver of compliance with certain provisions of the
Indenture or defaults thereunder; (iv) change in the percentage rules
established for holders which are entitled to request the calling of a holders'
meeting, adopting resolutions at meetings of holders or regarding the quorum
necessary to constitute a meeting; (v) modify the percentage in principal amount
of outstanding Notes necessary to waive a past Event of Default or any
modification of the provision described in this paragraph (except to increase
any such percentage); (vi) change the place of payment of principal of, or
premium or interest on, any Notes; (vii) impair the right to institute suit for
the enforcement of any such payment on or after the stated maturity thereof or
any redemption date or repayment date therefor; or (viii) change the requirement
to pay Additional Amounts. Except as provided above, any modifications,
amendments or waivers to the terms and conditions of the Notes will be
conclusive and binding on all holders, whether or not they were present at any
meeting, and whether or not notation of such modifications, amendments or
waivers is made upon the Notes. The holders of the Notes will receive prior
notice (as described under " -- Reports; Notices") of any proposed amendment to
the Notes or the Indenture described in this paragraph.
After an amendment described in the preceding paragraph becomes effective,
the Company is required to mail to the holders of Notes a notice briefly
describing such amendment. However, the failure to give such notice to all
holders of the Notes, or any defect therein, will impair or affect the validity
of the amendment.
The consent of the holders of the Notes is not necessary to approve the
particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
The Issuer, the Guarantor and the Trustee may, without the consent of any
holders, amend or supplement the Indenture as follows: to provide for the
assumption by another person of the obligations of the Issuer and the Guarantor
contained in the Indenture, the SENs, or in the Guarantee; to add to the
covenants of the Issuer or the Guarantor for the benefit of the holders of all
or any series of SENs; to surrender any right or power conferred upon the Issuer
or the Guarantor in the Indenture; to add any additional Trigger Events,
Accelerated Amortization Events or Events of Default; to secure the SENs or the
Guarantees; to establish the form or terms of SENs and the applicable accounts
of such SENs or of the related Guarantee as permitted by the Indenture; to
evidence and provide for the acceptance of appointment by a successor Trustee
and to add to or change any of the provisions of the Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
thereunder by more than one Trustee; to close the Indenture with respect to the
authentication and delivery of additional series of SENs, to cure any ambiguity;
to correct or supplement any provision therein which may be inconsistent with
any other provision therein; provided such action shall not adversely affect the
interests of the holders of the Notes or SENs of any other series in any
material respect; to comply with requirements of the Commission in order to
effect or maintain the qualification under the TIA; or to supplement any of the
provisions of the Indenture to such extent as shall be necessary to permit or
facilitate the defeasance and discharge of the notes or any other series of SENs
pursuant to the Indenture; provided that any such action shall not adversely
affect the interests of the Holders of the Notes or any other series of SENs in
any material respect.
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NOTICES
All notices regarding the Notes will be deemed to have been sufficiently
given (unless otherwise herein expressly provided), if in writing and mailed,
first-class postage prepaid to each such holder affected by such event, at his
address as it appears in the Notes Register. In any case where notice to holders
of Notes is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular holder shall affect the
sufficiency of such notice with respect to other holders of Notes given as
provided. Any notice mailed to a holder in the manner herein provided shall be
conclusively deemed to have been received by such holder whether or not such
holder actually receives such notice.
MEETINGS OF HOLDERS
The Trustee shall call, upon the request of the holders of at least 10% in
aggregate principal amount of the Notes at the time outstanding, or the Issuer,
the Guarantor or the Trustee, at its discretion, may call a meeting of the
holders at any time and from time to time, in each case to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided by the Notes to be made, given or taken by the holders. The
meetings shall be held at such time and at such place as the Trustee shall
determine. If a meeting is being held pursuant to a request of holders, the
agenda for the meeting shall be as determined in the request and such meeting
shall be conveyed within 40 days from the date such request is received by the
Trustee, the Issuer or the Guarantor, as the case may be. Notice of any meeting
of holders (which shall include the date, place and time of the meeting, the
agenda therefor and the requirements to attend) shall be given not less than 10
days nor more than 30 days prior to the date fixed for the meeting in the manner
provided above under "Notices".
Any holder may attend the meeting in person or by proxy. The quorum at any
meeting called to adopt a resolution will be persons holding or representing at
least 51% in aggregate principal amount of the Notes at the time outstanding;
provided, however, that at any such reconvened meeting adjourned for lack of the
requisite quorum, the quorum will be persons holding or representing 30% in
aggregate principal amount of the Notes at the time outstanding. Notwithstanding
the foregoing, any resolution with respect to any action to be taken by holders
of Notes requiring the affirmative vote of holders of at least 51% in aggregate
principal amount of the Notes at the time outstanding may be taken only by the
affirmative vote of the holders of Notes holding at least such required
percentage of aggregate outstanding principal amount of Notes.
TRUSTEE
The Indenture contains provisions for the indemnification of the Trustee
other than for losses, liability, damages, claims and expenses incurred due to
negligence or bad faith. The obligations of the Trustee to any holder of a Note
are subject to such immunities and rights as are set forth in the Indenture.
The Issuer, the Guarantor and its affiliates may from time to time enter
into normal banking and trustee relationships with the Trustee and its
affiliates. The Trustee and any of its affiliates may hold Notes in their own
respective names.
The Issuer (i) may remove the Trustee in certain circumstances set forth in
the Indenture and (ii) may, at its discretion, remove the Trustee at any time,
provided that in the case of a removal pursuant to clause (ii) the appointment
of a successor trustee with respect to the Notes will not be effective until the
Issuer has provided notice to the holders of Notes and solicits a vote of such
holders and the holders of 51% or more of the aggregate principal amount of the
outstanding Notes do not vote against the removal of the Trustee.
GOVERNING LAW
All matters in respect of the Indenture, the Notes, the Guarantee, the
Trustee and the Amended and Restated Collateral Trust Agreement will be governed
by, and construed in accordance with, the laws of the State of New York.
The Issuer and the Guarantor consent under the Indenture to the
non-exclusive jurisdiction of any court of the State of New York or any United
States federal court sitting in the Borough of Manhattan, New York City,
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New York, United States, and any appellate court from any thereof, and waive any
immunity from the jurisdiction of such courts over any suit, action or
proceeding that may be brought in connection with the Indenture or the SENs. The
Issuer and the Guarantor irrevocably waive, to the fullest extent permitted by
law, any objection to any suit, action, or proceeding that may be brought in
connection with this Indenture or the SENs in such courts whether on the grounds
of venue, residence or domicile or on the ground that any such suit, action or
proceeding has been brought in an inconvenient forum. The Issuer and the
Guarantor agree that final judgment in any such suit, action or proceeding
brought in such court shall be conclusive and binding upon the Issuer or the
Guarantor and may be enforced in any court to the jurisdiction of which the
Issuer or the Guarantor is subject by a suit upon such judgment; provided that
service of process is effected upon the Issuer or the Guarantor in the manner
provided by the Indenture.
Each of the Issuer and the Guarantor will appoint an agent in New York City
for service of process if the Issuer or the Guarantor ceases to have a place of
business in New York City and agree that service of all writs, process and
summonses in any suit, action or proceeding brought in connection with the
Indenture, the SENs or the Guarantees against the Issuer or the Guarantor in any
court of the State of New York or any United States federal court sitting in the
Borough of Manhattan, New York City may be made upon such process agent, whom
the Issuer and the Guarantor each appoint as its authorized agent for service of
process. With respect to any such action in any court of the State of New York
or any United States federal court in the Borough of Manhattan, New York City,
service of process upon such person, as the authorized agent of the Issuer or
the Guarantor for service of process, and written notice of such service to the
Issuer or the Guarantor, shall be deemed, in every respect, effective service of
process upon the Issuer or the Guarantor.
CURRENCY INDEMNITY
To the fullest extent permitted by applicable law, the obligation of the
Issuer and the Guarantor in respect of any amount due under the Indenture with
respect to the Notes shall, notwithstanding any payment in any other currency
(whether pursuant to a judgment or otherwise), be discharged only to the extent
of the amount in Dollars that the Person entitled to receive that payment may,
in accordance with normal banking procedures, purchase with the sum paid in such
other currency (after any premium and costs of exchange) on the Business Day
immediately following the day on which that Person receives that payment. If the
amount in Dollars that may be so purchased for any reason falls short of the
amount originally due, the Issuer or the Guarantor shall pay such additional
amounts, in Dollars, as may be necessary to compensate for the shortfall and if
the Dollars so purchased exceed the amount originally due, such excess shall be
remitted to the Issuer or the Guarantor, as the case may be. Any obligation of
the Issuer and the Guarantor not discharged by that payment shall, to the extent
permitted by applicable law, be due as a separate and independent obligation
and, until discharged as provided therein, shall continue in full force and
effect.
CERTAIN DEFINITIONS
The following is a summary of certain defined terms used in the Indenture
and the Amended and Restated Collateral Trust Agreement. Reference is made to
those documents for the full definition of all such terms as well as other
capitalized terms used herein for which no definition is provided.
"Acknowledgments" means written acknowledgments from customers under annual
Export Contracts pursuant to which such customers, among other things,
acknowledge the liens created pursuant to the terms of the Amended and Restated
Collateral Trust Agreement and agree to pay any amounts owing for copper
delivered under such contracts over to the Collateral Trustee for deposit in the
Collection Account.
"Additional Percentage" means, for any date, such additional percentage
interest in the Export Receivables and in the Collections therefrom to be
transferred from the Collection Account to the Note Collateral Account, as may
be designated by the Issuer in writing to the Collateral Trustee and the Trustee
pursuant to Section 2.04 of the Collateral Trust and Security Agreement.
"Additional Secured Obligations" means any debt issued by the Issuer or
loan made to the Issuer, after March 31, 1997 but prior to the termination of
the Amended and Restated Collateral Trust Agreement, secured by a security
interest in the Collateral pursuant to the Amended and Restated Collateral Trust
Agreement; provided
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that the SENs Secured Obligations and Credit Facility Secured Obligations may
not be designated as "Additional Secured Obligations" pursuant to the Amended
and Restated Collateral Trust Agreement.
"Blocked Percentage" means, on any date of determination (except as may be
otherwise set forth in the Supplemental Indenture), (a) if the Outstanding
Principal Amount is less than US$300 million, 100%; (b) if the Outstanding
Principal Amount is at least US$300 million but not in excess of US$500 million,
75%; and (c) if the Outstanding Principal Amount is more than US$500 million,
50%.
"Blocking Event" means any Trigger Event which results in the retention of
Collections in the Note Collateral Account.
"Business Day" means any day, other than a Saturday or Sunday, that is not
a day on which banking institutions are authorized or required by law or
executive order to be closed in New York City or Lima.
"Capitalization Ratio" means, at any date of determination, the ratio of
(i) Consolidated Net Debt at such date of determination to (ii) the sum of (a)
Consolidated Net Debt at such date of determination plus (b) Consolidated Net
Worth at such date of determination plus (c) Minority Interests at such date of
determination.
"Collections" means all collections and other proceeds received in respect
of the Export Contracts and Export Receivables (including as a result of the
exercise of any remedies under the Amended and Restated Collateral Trust
Agreement).
"Commitment Termination Date" means the date on which the lenders'
commitments under the Credit Facility shall terminate.
"Company Notice" means the giving of written notice by (i) the Trustee to
the Issuer and the Guarantor or (ii) by the holders of at least 10% of the
aggregate principal amount of the outstanding Notes to the Trustee, the Issuer
and the Guarantor specifying a default or break under the Indenture and stating
that such notice is a "Notice of Default."
"Consolidated Net Debt" means, at any date of determination, (a) all Debt
of the Guarantor and its Subsidiaries at such date of determination minus (b)
the aggregate amount of cash on deposit in funded escrow accounts at such date
of determination in which a Lien has been granted to secure the repayment of any
such Debt.
"Consolidated Net Worth" means, at any date of determination, all items
which would, in accordance with U.S. GAAP, be included under shareholders'
equity on a consolidated balance sheet of the Guarantor and its Subsidiaries at
such date of determination adjusted to exclude the effects of (i) any non-cash,
nonrecurring charges, (ii) any non-cash extraordinary charges and (iii) any
other non-cash charges required as a result of a change after March 31, 1997 of
accounting principles or in the application thereof under U.S. GAAP in the year
of such charge or in the year of adoption of any such change and without giving
effect to the future effects of such charge or change. In the case of clauses
(i) and (ii), "non-cash" refers to the portion of the charge which, at the time
of the charge, will not be required to be paid prior to the final maturity of
any outstanding SEN.
"Consolidated Tangible Net Worth" means, at any date of determination,
Consolidated Net Worth at such date of determination after deducting therefrom
the sum of deferred charges, goodwill, trademarks and other intangibles of the
Guarantor and its Subsidiaries reflected on the consolidated balance sheet of
the Guarantor at such date of determination.
"Copper" means anode copper, blister copper, cathodes, copper concentrates,
electrolytic cathodes, and electrowon cathodes.
"Credit Facility Basic Collateral Percentage" means, at any time, the
percentage equivalent of a fraction, the numerator of which shall be the
aggregate principal amount of loans outstanding under the Credit Facility at
such time and the denominator of which shall be the Program Amount then in
effect; provided that, from the Commitment Termination Date until the payment in
full of all Credit Facility Secured Obligations, the numerator of such fraction
shall be (a) the aggregate principal amount of loans outstanding under the
Credit Facility Agreement on the Commitment Termination Date minus (b) the
aggregate principal amount of such loans that
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have been permanently optionally prepaid or permanently mandatorily prepaid as a
result of the issuance of all series of SENs or Additional Secured Obligations
(to the extent that the sum of the aggregate principal amount so prepaid plus
the aggregate principal amount of all scheduled principal payments (after giving
effect to any reduction in such scheduled payments as a result of such
prepayment) made prior to such time exceeds the aggregate principal payments
originally scheduled to have been made by such time) subsequent to the
Commitment Termination Date.
"Credit Facility Secured Obligations" means the collective reference to the
unpaid principal of and interest on the loans under the Credit Facility and all
other obligations and liabilities of the Issuer (including, without limitation,
interest accruing at the then applicable rate provided in the Credit Facility
after the maturity of such loans and interest accruing at the then applicable
rate provided in the Credit Facility after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to the Issuer, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the Administrative
Agent, the Collateral Agent, any other Credit Facility Agent or any Credit
Facility Lender (such as defined in the Amended and Restated Collateral Trust
Agreement), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Facility, the other Loan Documents (as defined in
the Credit Facility) or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent, the Collateral Agent or any other Credit Facility Agent or
to the Credit Facility Lenders that are required to be paid by the Issuer
pursuant to the terms of any of the foregoing agreements).
"Credit Facility Total Collateral Percentage" means, at any time, the
percentage interest in the Collateral of the Credit Facility Lenders, which
shall be equal to the Credit Facility Basic Collateral Percentage at such time
plus the Additional Percentage applicable to the Credit Facility, if any, at
such time.
"Debt" means, of any person at any date, without duplication, (a) all
indebtedness of such person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) all obligations of such person under leases of real or personal
property which are required to be capitalized, (c) all guarantees or
endorsements (other than endorsements for collection or deposit in the ordinary
course of business) of such person of Debt of others and (d) all liabilities
secured by any Lien on any property owned by such person even though such person
has not assumed or otherwise become liable for the payment thereof.
"Debt Service Retention Event" means, at any date of determination, the Six
Month Ratio for the most recently ended six month period is less than 3.0 to
1.0.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Basic Collateral Percentage" means, at any time with respect to
any Additional Secured Obligations, the percentage interest in the Collateral of
the holders of such Additional Secured Obligations designated by the Issuer
pursuant to the Amended and Restated Collateral Trust Agreement in connection
with the issuance or incurrence of such Additional Secured Obligations, as such
percentage may, subject to the provisions of the Amended and Restated Collateral
Trust Agreement, be adjusted from time to time pursuant to the instruments under
which such Additional Secured Obligations were issued.
"Designated Total Collateral Percentage" means, at any time with respect to
any Additional Secured Obligations, the Designated Basic Collateral Percentage
for such Additional Secured Obligations at such time plus the Additional
Percentage applicable to such Additional Secured Obligations, if any, at such
time.
"Excess Collections" has the meaning set forth in "Accounts -- Note
Collateral Account".
"Excluded Export Contracts" means agreements relating to sales of Copper
(which is produced at any of the Principal Properties or the SX/EW facility from
copper mined or leached at any of the Principal Properties or from purchased
copper) by the Issuer, SPCC or any direct or indirect Subsidiary of either to
customers located outside Peru which are, from time to time, identified on a
certificate of a responsible officer of the Issuer, or in
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Exhibit 2.02 to the Collateral Trust and Security Agreement, in each case in
accordance with, and subject to the limitations set forth in, "The Amended and
Restated Collateral Trust Agreement -- Excluded Export Contracts".
"Excluded Export Receivables" means Receivables arising from Excluded
Export Contracts.
"Export Contract" means any agreement, other than Excluded Export
Contracts, relating to sales of Copper (which is produced at any of the
Principal Properties or the SX/EW facility from copper mined or leached at any
of the Principal Properties or from purchased copper) by the Issuer, SPCC or any
direct or indirect Subsidiary of either to customers located outside Peru.
"Export Receivables" means all Receivables, other than Excluded Export
Receivables, arising from (i) the sale of Copper (which is produced at any of
the Principal Properties or the SX/EW facility from copper mined or leached at
any of the Principal Properties or from purchased copper) to customers located
outside of Peru and (ii) the sale of Copper (which is produced at any of the
Principal Properties or the SX/EW facility from copper mined or leached at any
of the Principal Properties or from purchased copper) to customers located
outside of Peru which are effected through any Peruvian Governmental Authority,
including without limitation, in each case, all Receivables arising under Export
Contracts.
"Governmental Authority" means any nation or government, any state,
regional or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Initial Deposit" means $2,962,500.
"Lien" means any mortgage, pledge, hypothecation, assignment, lien
(statutory or other), charge or other security interest of any kind.
"Make-Whole Premium" means the amount, determined as of the Business Day
prior to the Applicable Date (as defined below) of the Notes (or the portion
thereof) to be redeemed or prepaid, as the case may be, equal to the amount (but
not less than zero) obtained by subtracting (a) the sum of the unpaid principal
amount of such Notes (or the portion thereof) being redeemed or prepaid and the
amount of interest thereon accrued to such date of redemption, from (b) the sum
of the Current Values (as defined below) of all amounts of principal and
interest on such Notes (or the portion thereof) being redeemed or prepaid that
would otherwise have become due after the date of such determination if such
Notes were not being redeemed (each such amount of principal or interest being
referred to herein as an "Amount Payable"). The "Current Value" of any Amount
Payable means such Amount Payable discounted (on a monthly basis) to its present
value on the date of determination, in accordance with the following formula:
Current Value = Amount Payable .
--------------
(1 + d/12)n
where "d" is in the sum of (i) 75 basis points plus (ii) the Treasury Yield (as
defined below) per annum expressed as a decimal and "n" is an exponent (which
need not be an integer) equal to the number of monthly periods and portions
thereof (any such portion of a period to be determined by dividing the number of
days in such portion of such period by the total number of days in such period,
both computed on the basis of twelve 30-day months in a 360-day year) between
the date of such determination and the due date of the Amount Payable. The
"Treasury Yield" shall be determined by reference to the yields for U.S.
Treasury securities as indicated (currently on page "500" thereof) on the
Telerate Screen for actively traded U.S. Treasury securities at approximately
10:00 a.m. (New York City time) on the Business Day next preceding such
Applicable Date or, if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable, by reference to the
most recent Federal Reserve Statistical Release H.15 (519) which has become
publicly available at least two Business Days prior to such Applicable Date (or,
if such Statistical Release is no longer published, any publicly available
source of similar market data acceptable to the Trustee), and shall be the most
recent weekly average yield on actively traded U.S. Treasury securities adjusted
to a constant maturity equal to the then remaining weighted average life of the
outstanding principal amount of such Notes (the "Remaining Life"), computed by
dividing (A) the sum of all remaining principal payments on such Notes into (B)
the total of the products obtained by multiplying (1) the amount of each
remaining principal payment on such Notes by (2) the number of years (calculated
to the nearest one-twelfth) which will elapse between the date as of which such
computation is made and the due date of each remaining principal payment on such
Notes. If the Remaining Life is not equal to the
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constant maturity of a U.S. Treasury security for which a weekly average yield
is given, the Treasury Yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of (x) the actively traded U.S. Treasury security with the average life closest
to and greater than the Remaining Life and (y) the actively traded U.S. Treasury
security with the average life closest to and less than the Remaining Life,
except that if the Remaining Life is less than one year, the weekly average
yield on actively traded U.S. Treasury securities adjusted to a constant
maturity of one year shall be used. The Treasury Yield shall be computed to the
fifth decimal place (one-thousandth of a percentage point) and then rounded to
the fourth decimal place (one hundredth of a percentage point). "Applicable
Date" means (i) with respect to any redemption of the Notes, the Business Day
preceding the day on which the notice of redemption is given pursuant to Section
1304 and (ii) with respect to any prepayment resulting from an Accelerated
Amortization Event, the Business Day preceding the date of such prepayment.
"Mandatory Prepayment Event" means any event (other than an event of
default or similar event) which requires the Issuer to make any mandatory
prepayment (including, without limitation, as a result of an accelerated
amortization event) in respect of the principal of any loans made pursuant to
the Credit Facility or Additional Secured Obligations (other than regularly
scheduled payments of principal) or to make any mandatory redemption, defeasance
or purchase of any such loans or Additional Secured Obligations.
"Material Adverse Effect" means a material adverse effect on (a) the
ability of the Issuer or the Guarantor, as the case may be, to meet its
obligations to pay interest on, principal of, or any premium on, the Notes or
any other payment obligation under the Indenture or (b) the validity or
enforceability of the Indenture or any of the other Transaction Documents.
"Minority Interests" means, at any date of determination, all amounts
reflected in respect of minority interests, in accordance with U.S. GAAP, on the
consolidated balance sheet of the Guarantor and its Subsidiaries at such date of
determination.
"Notice of Default of Amended and Restated Collateral Trust Agreement"
means a written notice delivered to the Collateral Trustee by (i) the holders of
51% or more of the outstanding principal amount of any series of SENs or (ii)
the Required Lenders (as defined under the Credit Facility) or (iii) the holders
of the requisite percentage of any Additional Secured Obligations (which are not
held by the Issuer or any affiliate thereof) for taking actions or giving
directions, following events of default, in each case stating that an event of
default has occurred under the applicable agreement and specifying such notice
as a "Notice of Default" under the Amended and Restated Collateral Trust
Agreement.
"Outstanding Principal Amount" means (a) on any date of determination prior
to the Commitment Termination Date, the sum of (x) (i) the aggregate original
principal amount of all SENs which have been issued prior to such date (other
than any series, together with any related subordinated secured obligations,
which have been paid in full prior to such date of determination) minus (ii) the
aggregate principal amount of such SENs which have been permanently optionally
redeemed as of such date (such (i) minus (ii) hereinafter referred to as the
"SENs Amount") and (y) the aggregate principal amount of loans outstanding under
the Credit Facility, and (b) on any date of determination thereafter, the sum of
(x) the SENs Amount on such date of determination and (y) (i) the aggregate
principal amount of loans outstanding under the Credit Facility on the
Commitment Termination Date minus (ii) the aggregate principal amount of such
loans permanently optionally prepaid or permanently mandatorily prepaid as a
result of the issuance of SENs or Additional Secured Obligations subsequent to
such date; provided that from and after the date that the loans under the Credit
Facility, together with all related subordinated secured obligations, have been
repaid in full, the amount under this clause (y) shall be equal to zero.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or Additional Amounts, if any, or interest on or premium, if any,
on any SENs on behalf of the Company.
"Payment Date" means the 30th day of each month (or the 28th day of
February), or if such day is not a Business Day, the next Business Day.
"Permitted Liens" means (i) Liens existing on the date of the Indenture;
(ii) Liens securing loans from or guaranteed or insured by export credit,
governmental, bilateral or multilateral agencies; (iii) Liens for taxes,
assessments, governmental charges, other governmental obligations or levies or
statutory Liens for sums not yet due or being contested in good faith; (iv)
Liens to secure the purchase price of property or assets acquired by the
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Issuer or the Guarantor or any of their Subsidiaries after the date of the
Indenture, or to secure Debt incurred solely to finance the acquisition of
property or assets acquired by the Guarantor or the Issuer or any of their
Subsidiaries after the date of the Indenture; provided, however, that such Lien
is limited to the property or assets financed, secures Debt in an amount not in
excess of the purchase price of such property or assets, and is created within
180 days of the acquisition of such property or assets; (v) any Lien on any
property or assets of an entity that becomes a Subsidiary of the Guarantor or
the Issuer, or on any property or assets acquired by the Guarantor, the Issuer
or any of their Subsidiaries that exists prior to such entity becoming a
Subsidiary or such acquisition and that was not created in contemplation
thereof; (vi) any Lien created to secure Debt incurred to finance the cost
(including capitalized interest) of construction, acquisition, improvement or
development of specific property or assets; provided that such Lien is
restricted solely to the specific property or assets constructed or acquired or
the specific improvement or development and secures Debt in an amount not in
excess of the financed cost of such property or assets; (vii) replacements,
renewals or extensions of the Liens permitted pursuant to clauses (i) through
(vi) above, so long as (A) the principal amount is not increased over the
original principal amount and (B) such Liens do not extend to any additional
property or assets; (viii) any Lien incurred in the ordinary course of business
in connection with social security, workers' compensation, unemployment
insurance and similar types of laws or regulations; (ix) any statutory Lien of a
landlord, carrier, warehouseman, mechanic or materialman incurred in the
ordinary course of business for a sum not yet due or the payment of which is
being contested in good faith; (x) Liens to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a similar nature, in each case
incurred in the ordinary course of business; (xi) other Liens securing Debt that
in the aggregate at any time does not exceed an amount equal to 10% of (A) the
total assets of the Guarantor as reported on the most recent quarterly financial
statements of the Guarantor minus (B) the aggregate amount of Debt secured by
Liens permitted under clauses (ii) and (vi) above; and (xii) any Lien securing a
judgment, unless (A) the judgment it secures shall not have been discharged
within 60 days after the entry thereof, or (B) execution of the judgment it
secures shall not have been discharged within 60 days after the expiration of
any stay thereof pending appeal.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
Governmental Authority.
"Potential Trigger Event" means any event which is, or after notice or
passage of time or both, would be, a Trigger Event other than an event specified
in clause (x) of "-- Trigger Events" which occurs prior to the 180th day after
the date of the Indenture.
"Principal Property" means, the collective reference to the Toquepala Mine,
the Cuajone Mine, the Ilo Smelter and the Ilo Refinery.
"Property" means any asset, revenue or any other property, whether tangible
or intangible, real or personal, including, without limitation, any right to
receive income.
"Qualified Letter of Credit" means an irrevocable letter of credit issued
in favor of the Trustee by a depository institution or trust company, which has
a credit rating with respect to its short-term U.S. dollar unsecured obligations
of at least "A-1" from Standard & Poor's and "P-1" from Moody's and at least
"D-1" from Duff & Phelps, if rated by Duff & Phelps, and allowing the Trustee,
upon presentation of a sight draft, to make drawings under such letter of
credit.
"Realization Event" means a foreclosure upon all or any portion of the
Collateral or a sale or other disposition of all or any portion of the
Collateral pursuant to the Amended and Restated Collateral Trust Agreement.
"Receivable" means the existing or future indebtedness and payment
obligations of a Person arising from the sale of Copper and shall include the
right to payments of any interest, taxes, finance charges or late charges and
other obligations of such Person with respect thereto.
"Required Balance" means, as of any date, an amount equal to the aggregate
Scheduled Debt Service for the Notes with respect to the three next succeeding
calendar months.
"Required Secured Parties" means the collective reference to (i) the
Required Lenders (as defined under the Credit Facility) and (ii) the holders of
at least 51% of the outstanding principal amount of all series of SENs and (iii)
the requisite percentage of holders of any Additional Secured Obligations (which
are not held by the
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Company or an affiliate thereof) for taking actions or giving directions
following events of default, provided that the term "Required Secured Parties"
shall not include any class of Secured Parties described in clauses (i), (ii) or
(iii) above if the aggregate outstanding principal amount of all Senior Secured
Obligations of such class of Secured Parties constitutes less than 10% of the
aggregate outstanding principal amount of all Senior Secured Obligations of all
such classes and provided further that following payment in full of all Senior
Secured Obligations, "Required Secured Parties" shall mean the holders of at
least 51% of the aggregate outstanding principal amount of all subordinated
secured obligations then outstanding.
"Retention Trigger Event" means the occurrence of a Trigger Event specified
in clauses (i), (ii), (iii), (iv), (ix) or (xi) of "Trigger Events" or any other
Trigger Event which has become a Blocking Event.
"Scheduled Debt Service" means, as of any date of determination and in
relation to any period of time, the sum of all interest and principal payments
scheduled to be made by the Issuer for such period of time based on the
principal amount of Notes outstanding on such date.
"Secured Parties" means:
(i) so long as any lender has any commitment to make loans or other
extensions of credit under the Credit Facility or any amount is payable by
the Issuer under the Credit Facility, the lenders and the agents under the
Credit Facility;
(ii) so long as any amount is payable by the Issuer under the
Indenture or any series of SENs, the Holders of such series of SENs and the
Trustee;
(iii) so long as any amount is payable by the Issuer under the
Collateral Trust and Security Agreement, the Collateral Trustee;
(iv) so long as any amount is payable by the Issuer in respect of any
Additional Secured Obligation, the holder or holders of such Additional
Secured Obligation; and
(v) so long as any amount is payable by the Issuer in respect of any
subordinated secured obligation, the holder or holders of such subordinated
secured obligation.
"SENs Basic Collateral Percentage" means, on any day, a percentage equal to
a fraction, the numerator of which shall be (a) the original principal amount of
SENs issued under such series of SENs minus (b) the aggregate principal amount
of SENs that have been permanently optionally redeemed (to the extent that the
sum of the aggregate principal amount so redeemed plus the aggregate principal
amount of all scheduled principal payments (after giving effect to any reduction
in such scheduled payments as a result of such redemption) made prior to such
time exceeds the aggregate principal payments originally scheduled to have been
made by such time) as of such date and the denominator of which shall be the
Program Amount then in effect.
"SENs Collateral" means, with respect to the SENs of any series, the
collateral in which a security interest is granted to the Trustee in favor of
the holders of such series pursuant to the Supplemental Indenture with respect
to the SENs of such series.
"SENs Collateral Account" means a segregated trust account denominated in
Dollars established and maintained by the Trustee for each series of SENs for
the benefit of the holders of such series of SENs into which monies will be
deposited and from which monies will be withdrawn as provided in the Indenture.
"SENs Secured Obligations" means any and all of the debts, obligations and
liabilities of the Issuer to the holders of SENs of any series or the Trustee
provided for or arising under the SENs or the Indenture, whether now existing or
hereafter arising, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred (including,
without limitation, interest accruing at the then applicable rate provided in a
Supplemental Indenture for any series of SENs and interest accruing at the then
applicable rate provided in such Supplemental Indenture after the filing of any
petition in bankruptcy, or the commencement of any insolvency reorganization or
like proceeding, relating to the Issuer, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) which may arise under,
out of, or in connection with the SENs, the Indenture or any other document
made, delivered or given in connection therewith, in each case whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel that are required to be paid by the Issuer pursuant to
the terms of any of the foregoing agreements).
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"SENs Total Collateral Percentage" means, at any time, the percentage
interest in the Collateral equal to the sum of all series Total Collateral
Percentages for all outstanding series of SENs at such time.
"Senior Secured Obligations" means the collective reference to the Credit
Facility Secured Obligations, the SENs Secured Obligations and the Additional
Secured Obligations.
"Series Total Collateral Percentage" means, at any time with respect to
each series of SENs, the percentage interest in the Collateral of the holders of
the Notes of such series, which percentage shall be equal to the SENs Basic
Collateral Percentage for such series at such time plus the Additional
Percentage applicable to such series, if any, at such time.
"Six Month Debt Reserve Amount" has the meaning set forth in " -- Cure of
Trigger Events".
"Six Month Debt Service Coverage Ratio" means (a) 1.75 to 1.00, with
respect to any six month period when the Outstanding Principal Amount is less
than or equal to $300 million on the last day of such six month period; (b) 2.00
to 1.00, with respect to any six month period when the Outstanding Principal
Amount is greater than $300 million but less than or equal to $500 million on
the last day of such six month period; or (c) 2.25 to 1.00, with respect to any
six month period when the Outstanding Principal Amount is greater than $500
million on the last day of such six month period.
"Six Month Ratio" has the meaning set forth in "--Trigger Events".
"Subsidiary" means, as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" herein shall refer to Subsidiaries of SPCC.
"Three Month Debt Service Coverage Ratio" means (a) 1.5 to 1.00, with
respect to any three month period when the Outstanding Principal Amount is less
than or equal to $300 million on the last day of such period; (b) 1.75 to 1.00,
with respect to any three month period when the Outstanding Principal Amount is
greater than $300 million but less than or equal to $500 million on the last day
of such period; or (c) 2.00 to 1.00, with respect to any three month period when
the Outstanding Principal Amount is greater than $500 million on the last day of
such period.
"Three Month Ratio" has the meaning set forth in "-- Trigger Events".
"Total Collateral Percentage" means any of the SENs Total Collateral
Percentage, the Credit Facility Total Collateral Percentage and the Designated
Total Collateral Percentage.
"Transaction Documents" means the Amended and Restated Collateral Trust
Agreement, the Indenture, including the Supplemental Indenture, the Notes and
the Guarantee endorsed thereon and any other document or agreement pursuant to
which a Lien is granted on any Collateral in connection with the Amended and
Restated Collateral Trust Agreement, the Indenture and the Supplemental
Indenture.
"Transfer Agent" means any Person authorized by the Company to effectuate
the exchange or transfer of any SEN on behalf of the Company.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which the Indenture was executed, except, as provided in
Section 1005 of the Original Indenture, if the TIA is amended hereafter, to the
extent required, TIA means the TIA as so amended.
CERTAIN BOOK-ENTRY PROCEDURES FOR GLOBAL NOTES
The descriptions of the operations and procedures of The Depository Trust
Company ("DTC") that follow are provided solely as a matter of convenience.
These operations and procedures are solely within the control of DTC and are
subject to changes by it from time to time. The Company takes no responsibility
for these operations and procedures and urges investors to contact DTC or its
Participants (as defined below) directly to discuss these matters.
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DTC has advised the Issuer as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for institutions
that have accounts with DTC or its nominee ("Participants") and facilitate the
clearance and settlement of securities transactions between Participants through
electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations. Indirect access to the DTC system
is available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly. Persons who are not participants may beneficially own
securities held by DTC only through Participants.
The New Notes will be represented by one or more notes in registered,
global form without interest coupons (collectively, the "Global New Notes"). The
Global New Notes will be deposited upon issuance with the Trustee as custodian
for DTC in New York, New York, and registered in the name of DTC, or its
nominee, in each case, for credit to an account of a direct or indirect
Participant in DTC as described below.
Upon issuance of a Global New Note, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of the New
Notes represented by such Global New Note to the accounts of Participants. The
accounts to be credited will be designated by the Initial Purchaser. Ownership
of beneficial interests in such Global New Note will be limited to Participants
or persons that may hold beneficial interests through Participants. Ownership of
beneficial interests in such Global New Note will be shown on, and the transfer
of those ownership interests will be effected only through, records maintained
by DTC (with respect to Participants' interests) and such Participants (with
respect to the owners of beneficial interests held through Participants in such
Global New Note, including Euroclear and Cedel).
So long as DTC, or its nominee, is the registered holder and owner of such
Global New Note, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the New Notes represented by such Global New Note for
all purposes of such New Notes and for all purposes under the Indenture. Except
as set forth below, owners of beneficial interests in a Global New Note will not
be entitled to have the New Notes represented by such Global New Note registered
in their names, will not receive or be entitled to receive delivery of New Notes
in certificated form and will not be considered to be the owners or holders
thereof under the Indenture or such Global New Note.
EXCHANGES OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
Beneficial interests in a Global Note will be exchangeable or transferable,
as the case may be, for New Notes in certificated form (collectively, the
"Certificated New Notes") if (i) DTC notifies the Issuer that it is unwilling or
unable to continue as depositary for such Global New Note, or (ii) DTC ceases to
be a "Clearing Agency" registered under the Exchange Act, and a successor
depositary is not appointed by the Issuer within 90 days, (iii) a Trigger Event,
Accelerated Amortization Event or Event of Default has occurred and is
continuing with respect to such Notes or (iv) such exchange is necessary as
provided under "Description of Notes -- Optional Redemption for Tax Reasons".
Upon the occurrence of any of the events described in the preceding sentence,
the Issuer will cause the appropriate Certificated New Notes to be delivered to
the owners of beneficial interests in the Global New Note. Persons exchanging
interests in a Global New Note for Certificated New Notes will be required to
provide the Trustee with written instruction and other information required by
the Issuer and the Trustee to complete, execute and deliver such Certificated
New Notes. In all cases, Certificated New Notes delivered in exchange for any
Global New Note or beneficial interests therein will be registered in the names,
and issued in any approved denominations, requested by DTC.
Certificated Notes will not be eligible for clearing and settlement through
Euroclear, Cedel or DTC.
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REGISTRATION RIGHTS AGREEMENT; SPECIAL INTEREST
The following description of the Registration Rights Agreement is qualified
in its entirety by reference to the Registration Rights Agreement.
Holders of New Notes are not entitled to any registration rights with
respect to the New Notes. Holders of Old Notes are entitled to certain
registration rights under the Registration Rights Agreement. Pursuant to the
Registration Rights Agreement, SP Limited and SPCC have agreed to file with the
Commission and have declared effective on or prior to November 26, 1997 a
registration statement (the "Exchange Offer Registration Statement") under the
Securities Act with respect to the Exchange Offer. The Issuer also agreed that,
after the effectiveness of the Exchange Offer Registration Statement, it would,
subject to certain conditions, offer to the holders of Old Notes who are able to
make certain representations the opportunity to exchange their Old Notes for New
Notes, which will be subject to restrictions on transferability. In the event
that applicable interpretations of the staff of the Commission do not permit the
Issuer to effect the Exchange Offer ("Commission Blockage") or do not permit any
holder of Old Notes, subject to certain limitations, to participate in such
Exchange Offer, the Issuer has agreed to file with the Commission a shelf
registration statement (the "Shelf Registration Statement") to cover resales of
the applicable Old Notes. The Registration Statement of which this Prospectus is
a part constitutes the Exchange Offer Registration Statement.
The Registration Rights Agreement provides that the Issuer will use its
reasonable best efforts to have the Exchange Offer Registration Statement (and,
if applicable, a Shelf Registration Statement) declared effective under the
Securities Act by the 180th day after the Issue Date. If neither the Exchange
Offer is consummated nor, if required in lieu thereof, the Shelf Registration
Statement is declared effective by December 30, 1997 (unless there exists a
Commission Blockage) (such event, a "Registration Default"), the Company will be
required to pay to each Holder of Old Notes, accruing from the date of the first
such Registration Default (or if such Registration Default has been cured, from
the date of the next Registration Default) to the date such Registration Default
has been cured, special interest ("Special Interest") at a rate per annum equal
to 0.5% of the principal amount of the Old Notes held by such holder. All
accrued Special Interest will be paid by the Company in arrears on each monthly
Payment Date in the same manner as regular monthly interest. Following the cure
of all Registration Defaults, the accrual of Special Interest will cease,
provided that if a registration statement or Shelf Registration Statement
referred to above has not been declared effective by the second anniversary of
the Issue Date, Special Interest will accrue until the Notes are repaid.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as a
result of market-making activities must acknowledge that it will deliver a
prospectus in connection with any resale of New Notes. Under the Registration
Rights Agreement, the Company is required to allow participating broker-dealers
and other persons, if any, subject to such prospectus delivery requirements to
use this Prospectus contained in the Exchange Offer Registration Statement in
connection with the resale of such New Notes; provided however that the Company
is only required to use its best efforts to maintain the effectiveness of the
Exchange Offer Registration Statement for a period of 90 days following the
closing of the Exchange Offer.
Each holder who wishes to exchange Old Notes for New Notes in the Exchange
Offer will be required to make certain representations, including that (i) it is
not an "affiliate", as defined in Rule 405 under the Securities Act of the
Company or if it is an "affiliate", such holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable, (ii) if such holder is not a broker-dealer, that it is not
engaged in, and does not intend to engage in, the distribution of the New Notes
and (iii) if such Holder is a broker-dealer, that it will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other ordinary course trading activities and that it
will be required to acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes, (iv) any New Notes to be received by it were
acquired in the ordinary course of its business and (v) at the time of
consummation of the Exchange Offer, it has no arrangements or understanding with
any Person to participate in the distribution of the New Notes in violation of
the provisions of the Securities Act.
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DESCRIPTION OF CREDIT FACILITY
The following summary of certain provisions of the Credit Facility is
qualified in its entirety by reference to the Credit and Guarantee Agreement
dated as of March 31, 1997, as amended by the First Amendment thereto, dated as
of July 14, 1997.
On March 31, 1997, the Company entered into a definitive credit agreement
for the Credit Facility with a syndicate of banks to provide up to $400 million
in term loans and $200 million in revolving loans. Under the terms of the Credit
Facility, the $400 million term loan portion will be available for drawdown for
a period of four years, and will be amortized in equal quarterly installments
over the following three years. The $200 million revolving loan portion will be
available for a period of four years on a fully revolving basis and will be
amortized in equal quarterly installments over the following three years. The
Credit Facility will be guaranteed on a pari passu basis with the Notes and any
other issuances of SENs by SPCC, and will be secured by a security interest in
favor of the Collateral Trustee in a percentage of the Export Receivables and
the Collections therefrom. The percentage of the Collateral assigned to secure
the Credit Facility will be equal to the Credit Facility Basic Collateral
Percentage at such time plus the Additional Percentage applicable to the Credit
Facility, if any, at such time. The Credit Facility is also secured by interests
in the Credit Facility Collateral Account and Credit Facility Reserve Account.
In the absence of an event of default under the Credit Facility or the
occurrence and continuance of a Blocking Event under the Notes or any subsequent
series of SENs, amounts remaining in the Credit Facility Collateral Account
after payment of overdue fees and expenses of the Collateral Agent and the
Administrative Agent and deposits to the Credit Facility Reserve Account will be
released daily to the Company.
Under the Credit Facility, SPCC has covenanted that it will not permit its
Consolidated Tangible Net Worth to be less than $750 million. Also, SPCC will
not permit its ratio of debt to equity (as defined in the Credit Facility loan
documentation) to exceed 0.50 to 1.00. At the end of any two consecutive fiscal
quarters, SPCC will not permit the ratio of EBITDA (earnings before interest,
taxes, depreciation and amortization, as defined in the Credit Facility loan
documentation) to interest coverage to be less than 1.50 to 1.00 for the most
recent four consecutive fiscal quarters. Neither SPCC nor SP Limited will permit
the aggregate Collections transferred to the Credit Facility Collateral Account
in any fiscal quarter to be less than the product of 1.5 and the scheduled
Credit Facility debt service for such fiscal quarter; provided that if aggregate
Collections are insufficient to meet the foregoing requirement, SP Limited may
(i) designate an additional percentage security interest in the Export
Receivables and the Collections therefrom to be thereafter transferred to the
Credit Facility Collateral Account in an amount sufficient to cure any shortfall
or (ii) prepay the loans under the Credit Facility.
The Credit Facility documentation provides that neither SPCC nor SP Limited
will permit liens, other than permitted liens (as defined in the Credit Facility
loan documentation), to exist on the Principal Properties, the Export
Receivables or the copper inventory. In addition, SPCC and SP Limited have
agreed that neither will dispose of the Principal Properties and have agreed to
a limitation on dividends.
Events of default under the Credit Facility are: failure to pay principal
when due or interest within five business days of the due date, material
incorrectness of a representation or warranty when made, covenant default and in
certain cases default after notice and applicable grace periods, entry of a
non-appealable judgment against SPCC or its Subsidiaries of more than $50
million, commencements of proceedings in bankruptcy by or against SPCC or a
Material Subsidiary or the Branch, default in payment, or the acceleration of
any indebtedness provided that the aggregate amount of indebtedness outstanding
shall be in excess of $30 million (other than the occurrence of an Accelerated
Amortization Event under the Notes), expropriation by a Peruvian Governmental
Authority of all or substantially all of the assets of SPCC or SP Limited
without adequate compensation, failure to deliver notices to customers in
respect of Export Receivables with the intent to avoid the security arrangements
relating to the Credit Facility, cessation of liens in respect of a material
portion of the collateral securing the Credit Facility and the failure of Asarco
to hold, directly or indirectly, more than 50% of the voting interests of SPCC
and SP Limited.
Upon the occurrence of an event of default under the Credit Facility, the
Required Lenders (representing 66 2/3% of the outstanding principal and
commitments under the Credit Facility) may terminate the commitments, accelerate
the loans and the Collateral Agent shall retain Blocked Collections in the
Credit Facility Collateral Account for a period of 30 days, after which the
Collateral Agent shall release such Blocked Collections and cease to retain any
further Collections unless directed by the Required Lenders to do so. The term
"Blocked
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Collections" is defined in the Credit Facility documentation as it is defined in
the Notes. See "Description of Notes -- Certain Definitions".
The Credit Facility also provides that, upon the occurrence of a Blocking
Event under the Notes, or any subsequent series of SENs, the Collateral Agent,
on behalf of the lenders, will retain Blocked Collections in the Credit Facility
Collateral Account during the pendency of such Blocking Event. Upon the cure of
the Blocking Event or the release or application, in accordance with the
Indenture, of the retained Blocked Collections, the Collateral Agent, so long as
no default or event of default under the Credit Facility then exists, will
release to the Company any Blocked Collections retained in the Credit Facility
Collateral Account and will cease retaining any Blocked Collections in that
account as a result of such Blocking Event.
Upon the issuance of SENs and any other debt in an amount exceeding in the
aggregate $150 million, the commitments under the Credit Facility will be
reduced by a corresponding amount and/or the Credit Facility loans will be
prepaid, with the term loan commitments being reduced first.
SP Limited has the option to prepay amounts drawn under the Credit Facility
at any time in amounts of at least $10 million and to specify whether repayments
will be applied to the term loan or the revolving loan portion of the Credit
Facility. In the event of a mandatory prepayment of amounts drawn under the
Credit Facility, which may arise as a result of either (i) an Accelerated
Amortization Event under the Notes or any subsequent series of SENs or (ii) an
acceleration of other indebtedness secured by a portion of the Export
Receivables, amounts drawn under the Credit Facility will be repaid, and, if
necessary, commitments will be reduced, to the extent necessary such that the
Outstanding Program Percentage (as defined under the Credit Facility), after
giving effect to any mandatory prepayment, is equal to the Outstanding Program
Percentage (as defined below) prior to giving effect to such mandatory
prepayment. "Outstanding Program Percentage" means, at any time, the percentage
which the aggregate principal amount of loans then outstanding under the Credit
Facility then constitutes of the sum of the principal amount outstanding under
the Credit Facility and all series of SENs and any other indebtedness secured by
the Export Receivables.
Funds drawn down under the Credit Facility will be used by the Company for
the expansion and modernization program and for general corporate purposes.
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EXCHANGE RATES
During the last two decades, the Peruvian government has imposed various
exchange controls ranging from strict control over exchange rates to market
determination of rates. Prior to early 1991, the Peruvian foreign exchange
market consisted of multiple exchange rates. Since early 1991, there have been
no exchange controls in Peru and all foreign exchange transactions are based on
free market exchange rates. Current Peruvian regulations on foreign investment
allow foreign investors to receive and repatriate all earnings and investments
in Peru. Investors are allowed to purchase foreign currency at free market
exchange rates through any member of the Peruvian banking system and transfer
such foreign currency outside Peru without restriction.
A portion of the Company's operating costs are denominated in Soles. Since
the revenues of the Company are primarily denominated in Dollars, when inflation
in Peru is not offset by a corresponding devaluation of the Sol versus the
Dollar, the financial position, results of operations and cash flows of the
Company will be affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview". The Company has not in the
past entered into, and does not currently contemplate entering into, any foreign
exchange hedging arrangements.
The following table sets forth the high and low month-end rates, the daily
average rates and the end-of-period rates for the sale of Soles for U.S. dollars
for the periods indicated.
EXCHANGE RATES
(SOLES PER US$)
<TABLE>
<CAPTION>
DAILY END OF
YEAR ENDED DECEMBER 31, HIGH(1) LOW(1) AVERAGE(2) PERIOD(3)
------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
1992....................................... S/.1.680 S/.0.950 S/.1.249 S/.1.640
1993....................................... 2.180 1.640 1.990 2.160
1994....................................... 2.270 2.050 2.196 2.190
1995....................................... 2.350 2.180 2.255 2.322
1996....................................... 2.603 2.322 2.454 2.603
1997 (through August 15)................... 2.675 2.603 2.651 2.649
</TABLE>
- ---------------
(1) Highest and lowest of the daily closing exchange rates for each year based
on the offered rate.
(2) Average of daily exchange rates based on the offered rate.
(3) End of period exchange rates based on the offered rate.
Source: Superintendencia de Banca y Seguros.
The average of the bid and offered exchange market rates published by the
Superintendencia de Banca y Seguros for August 15, 1997 was S/.2.647 per
US$1.00.
CERTAIN LEGAL MATTERS
Effects of U.S. Bankruptcy Law
The principal collateral for the Notes is the percentage security interest
in favor of the Collateral Trustee for the benefit of the holders of Notes in
the Export Contracts and Export Receivables to be generated in the future from
time to time. The amount of Export Receivables in existence at any time in which
the Notes will have a percentage security interest will only represent a small
portion of the Program Amount. In addition, under Section 552 of the Bankruptcy
Code, assets that are acquired by a debtor in a U.S. bankruptcy proceeding after
the commencement of bankruptcy proceedings are not subject to a security
interest created by such debtor before such commencement unless such assets
constitute "proceeds, product, offspring, or profits of such property," in which
case such assets would be subject to the security interest except to the extent
that the bankruptcy court, after notice and a hearing and based on the equities
of the case, orders otherwise. As a result, even if Export Receivables continue
to be generated after the commencement of U.S. bankruptcy proceedings involving
SP
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Limited, it is unlikely that such Export Receivables will be subject to the
security interest in favor of the Collateral Trustee on behalf of holders of
Notes or any other Secured Party.
Under the terms of the Amended and Restated Collateral Trust Agreement, the
Collateral Trustee would have the right, and would be required in certain
circumstances, to sell the Collateral in order to pay the principal of, and
accrued interest on, the Notes and debt held by other Secured Parties. However,
upon the commencement of bankruptcy proceedings in which SP Limited is a debtor,
the Collateral Trustee will be stayed from foreclosing upon and selling the
Collateral. Even if the Collateral Trustee were able to exercise its remedies,
in light of the foregoing discussion of the scope of the security interest, it
is likely the proceeds allocable to the Notes from the sale of the Collateral
would not be sufficient to pay the aggregate outstanding principal balance of
the Notes plus accrued interest. In any plan of reorganization or liquidation
under the Bankruptcy Code, secured creditors are entitled to receive their
collateral or other consideration that provides the equivalent thereof. However,
the Trustee's claim on behalf of the holders of Notes, to the extent not covered
by the Collateral, would be unsecured and would rank pari passu in priority of
payment with all other senior unsecured creditors of the Company (subject to
certain statutory preferences) and the amount, if any, recoverable in respect of
such claim, as with other unsecured debt obligations of SP Limited, would depend
upon the outcome of the U.S. bankruptcy proceeding.
Enforceability of Judgments under Peruvian Law
Substantially all of the assets of SP Limited are located in Peru and are
held by the Branch in Peru. In the event that the holders were to obtain a
judgment in the United States against SP Limited or SPCC and seek to enforce
such judgment in Peru, the holders' ability to enforce the judgment in Peru
would be subject to Peruvian laws regarding enforcement of foreign judgments. In
general, Peruvian law provides that a judgment of a competent court outside of
Peru rendered against SP Limited or SPCC in connection with an action arising
out of or relating to the Notes or the other Transaction Documents, would be
recognized and could be enforced against the assets of the Branch in Peru,
subject to the following statutory limitations set forth in the Peruvian civil
code: (i) the judgment must not resolve matters for which exclusive jurisdiction
of Peruvian courts applies (i.e., disputes relating to real estate located in
Peru); (ii) the competence of the foreign court which issued the judgment must
be recognized by Peruvian conflict of laws rules; (iii) the party against whom
the judgment was obtained must have been properly served in connection with the
foreign proceedings; (iv) the judgment of the foreign court must be a final
judgment, not subject to any further appeal; (v) no pending proceedings may
exist in Peru among the same parties and on the same subject; (vi) the judgment
by the foreign court cannot be in violation of public policy; and (vii) the
foreign court must grant reciprocal treatment to judgments issued by Peruvian
courts.
Moreover, there can be no assurance that a judgment rendered against SP
Limited or SPCC in the United States in a bankruptcy-related action would be
enforceable against the assets of the Branch in Peru or that a Peruvian court
would not assert jurisdiction in any bankruptcy proceeding relating to SP
Limited.
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TAXATION
UNITED STATES TAXATION
In the opinion of Davis Polk & Wardwell, tax counsel to the Company, the
following summary accurately describes certain principal United States federal
income and estate tax consequences of (i) the exchange of Old Notes for New
Notes pursuant to the Exchange Offer and (ii) the ownership and disposition of
the New Notes, to initial holders that will be exchanging Old Notes for New
Notes pursuant to the Exchange Offer and that purchased Old Notes at the first
price at which a substantial amount of the Old Notes was sold to the public (not
including bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers) for money. This
summary is based on the Internal Revenue Code of 1986, as amended to the date
hereof (the "Code"), administrative pronouncements, judicial decisions and
existing and proposed Treasury Regulations, changes to any of which subsequent
to the date of this Prospectus may affect the tax consequences described herein.
This summary discusses only New Notes held as capital assets within the meaning
of Section 1221 of the Code. It does not discuss all of the tax consequences
that may be relevant to a holder in light of his particular circumstances or to
holders subject to special rules, such as certain financial institutions,
insurance companies, dealers in securities or certain U.S. expatriates. Persons
considering the Exchange Offer should consult their tax advisers with regard to
the application of United States federal income and estate tax law to their
particular situations as well as any tax consequences arising under the laws of
any state, local or foreign taxing jurisdiction.
As used herein, the term "United States Holder" means an owner of a New
Note that is, for United States federal income tax purposes, (i) a citizen or
resident of the United States, (ii) a corporation or partnership created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of which is subject
to United States federal income taxation regardless of its source. The term also
includes certain former citizens and long-term residents of the United States.
As used herein, the term "United States Alien Holder" means an owner of a
New Note that is, for United States federal income tax purposes, (i) a
nonresident alien individual, (ii) a foreign corporation, (iii) a nonresident
alien fiduciary of a foreign estate or trust or (iv) a foreign partnership one
or more of the members of which is, for United States federal income tax
purposes, a nonresident alien individual, a foreign corporation or a nonresident
alien fiduciary of a foreign estate or trust.
Tax Consequences of the Exchange Offer
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not result in any federal income tax consequences to holders. When a holder
exchanges an Old Note for a New Note pursuant to the Exchange Offer, the holder
will have the same adjusted basis and holding period in the New Note as in the
Old Note immediately before the exchange.
Tax Consequences to United States Holders
Payments of Interest
Interest paid on a New Note will generally be taxable to a United States
Holder as ordinary interest income at the time it accrues or is received in
accordance with the United States Holder's method of accounting for federal
income tax purposes. Because the Old Notes were issued at par, the New Notes
will not generally be treated as bearing original issue discount for federal
income tax purposes.
Interest paid by a United States corporation that meets the requirements of
Section 861(c) of the Code is sourced outside the United States. To meet these
requirements, at least 80% of the domestic corporation's gross income from all
sources for the three-year period ending with the close of the taxable year
preceding the year of the payment of such interest must have been "active
foreign business income" for purposes of Section 861(c). Because substantially
all of the Company's income is attributable to its operations in Peru, the
Company believes that it has met the 80% threshold for the three-year period
immediately preceding the Company's current tax year. Although the Company
expects to continue to meet the 80% threshold in its current tax year and in the
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future, there can be no assurance that the Company will meet this threshold
throughout the term of the New Notes. If the Company continues to meet the 80%
threshold, interest paid on a New Note will constitute foreign source income.
With respect to amounts of Peruvian tax imposed on interest payments on a
New Note, it is likely that no foreign tax credit will be available with respect
to such tax to the extent the Company pays the tax directly to the Peruvian tax
authority. As the Company currently intends to pay such tax directly (in
circumstances where the Company would otherwise be required to withhold and pay
Additional Amounts in respect of such tax), it is likely that no foreign tax
credit will be available with respect to such tax.
Sale, Exchange or Retirement of the New Notes
Upon the sale, exchange or retirement of a New Note, a United States Holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such holder's adjusted tax
basis in the New Note. For these purposes, the amount realized does not include
any amount attributable to accrued interest on the New Note. Amounts
attributable to accrued interest are treated as interest as described under
"Payments of Interest" above. A United States Holder's adjusted tax basis in a
New Note will generally equal the cost of the Old Note to such holder, reduced
by any principal payments received by the holder. Gain or loss realized on the
sale, exchange or retirement of a New Note will be capital gain or loss.
Backup Withholding and Information Reporting
Certain noncorporate United States Holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and interest on,
and the proceeds of disposition of, a New Note. Backup withholding will apply
only if the holder (i) fails to furnish its Taxpayer Identification Number
("TIN") which, for an individual, would be his Social Security number, (ii)
furnishes an incorrect TIN, (iii) is notified by the Internal Revenue Service
that it has failed to properly report payments of interest and dividends or (iv)
under certain circumstances, fails to certify, under penalty of perjury, that it
has furnished a correct TIN and has not been notified by the Internal Revenue
Service that it is subject to backup withholding for failure to report interest
and dividend payments. United States Holders should consult their tax advisers
regarding their qualification for exemption from backup withholding and the
procedure for obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
Tax Consequences to United States Alien Holders
Under present United States federal income tax law, and subject to the
discussion below concerning backup withholding:
(a) payments of principal and interest on the New Notes by the Company
or any paying agent to any United States Alien Holder will not be subject
to United States federal withholding tax, provided that, in the case of
interest, (i) such holder does not own, actually or constructively, 10
percent or more of the total combined voting power of all classes of stock
of the Company entitled to vote, is not a controlled foreign corporation
related, directly or indirectly, to the Company through stock ownership,
and is not a bank receiving interest described in Section 881(c)(3)(A) of
the Code and (ii) the statement requirement set forth in Section 871(h) or
Section 881(c) of the Code has been fulfilled with respect to the
beneficial owner, as discussed below;
(b) a United States Alien Holder of a New Note will not be subject to
United States federal income tax on gain realized on the sale, exchange or
other disposition of such Note, unless (i) such holder is an individual who
is present in the United States for 183 days or more in the taxable year of
disposition, and either (a) such individual has a "tax home" (as defined in
Code Section 911(d)(3)) in the United States (unless such gain is
attributable to a fixed place of business in a foreign country maintained
by such individual and has been subject to foreign tax of at least 10%) or
(b) the gain is attributable to an office or
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other fixed place of business maintained by such individual in the United
States or (ii) such gain is effectively connected with the conduct by such
holder of a trade or business in the United States.
Sections 871(h) and 881(c) of the Code require that, in order to obtain the
portfolio interest exemption from withholding tax described in paragraph (a)
above, either the beneficial owner of the New Note, or a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution") and that is holding the New Note on behalf of such beneficial
owner, file a statement with the withholding agent to the effect that the
beneficial owner of the New Note is not a United States Holder. Under temporary
United States Treasury Regulations, such requirement will be fulfilled if the
beneficial owner of a New Note certifies on Internal Revenue Service Form W-8,
under penalties of perjury, that it is not a United States Holder and provides
its name and address, and any Financial Institution holding the New Note on
behalf of the beneficial owner files a statement with the withholding agent to
the effect that it has received such a statement from the holder (and furnishes
the withholding agent with a copy thereof).
If a United States Alien Holder of a New Note is engaged in a trade or
business in the United States, and if interest on the New Note (or gain realized
on its sale, exchange or other disposition) is effectively connected with the
conduct of such trade or business, the United States Alien Holder, although
exempt from the withholding tax discussed in the preceding paragraph, will
generally be subject to regular United States income tax on such effectively
connected income in the same manner as if it were a United States person. In
lieu of the certificate described in the preceding paragraph, such a holder will
be required to provide properly executed Internal Revenue Service Form 4224 (or
successor form) to the withholding agent in order to claim an exemption from
withholding tax. In addition, if the United States Alien Holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% (or such
lower rate provided by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest on and any gain recognized on the
sale, exchange or other disposition of a New Note will be included in the
effectively connected earnings and profits of the United States Alien Holder if
the interest or gain, as the case may be, is effectively connected with the
conduct by the United States Alien Holder of a trade or business in the United
States.
Under Section 2105(b) of the United States federal estate tax law, a New
Note or coupon held by an individual who is not a citizen or resident of the
United States at the time of his death generally will not be subject to United
States federal estate tax as a result of such individual's death, provided that
the individual does not own, actually or constructively, 10 percent or more of
the total combined voting power of all classes of stock of the Company entitled
to vote and, at the time of such individual's death, payments with respect to
such New Note would not have been effectively connected to the conduct by such
individual of a trade or business in the United States.
Backup Withholding and Information Reporting
Under current United States federal income tax law, backup withholding tax
and information reporting requirements apply to certain payments of principal,
premium and interest made to, and to the proceeds of sale before maturity by,
certain noncorporate United States persons. Under current Treasury Regulations,
backup withholding will not apply to payments made on a New Note if the
certifications required by Sections 871(h) and 881(c) are received, provided in
each case that the Company or such paying agent, as the case may be, does not
have actual knowledge that the payee is a United States person.
United States Alien Holders of New Notes should consult their tax advisers
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a United States Alien Holder under the backup withholding
rules will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the United States Internal Revenue Service.
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PERUVIAN TAXATION
In the opinion of Estudio Aurelio Garcia Sayan, Peruvian tax counsel to the
Company, the following summary accurately describes certain principal Peruvian
income and estate tax consequences of (i) the exchange of Old Notes for New
Notes pursuant to the Exchange Offer and (ii) the ownership and disposition of
the New Notes, to holders not domiciled in Peru.
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not result in any Peruvian tax consequences to holders not domiciled in Peru.
Under Peruvian tax law, payments of interest on a New Note to holders who
are "juridical persons" not domiciled in Peru will be subject to income tax in
Peru at a rate of 1%, unless the Company, as currently intended, pays such tax
directly to the Peruvian taxing authority. For Peruvian income tax purposes, a
juridical person not domiciled in Peru will include a corporation, a partnership
and a trust organized under the laws of the United States or any State thereof
and any corporation or other entity organized or established under the laws of
any other jurisdiction outside Peru. To the extent that the Company does not pay
this tax of 1% directly to the Peruvian taxing authority, the Company will
withhold such tax from payments of interest on the New Note and pay Additional
Amounts to holders that are "juridical persons" such that the net amounts
receivable by such holders after withholding at a rate of 1% will equal the
amounts that would have been receivable in the absence of such withholding,
subject to the limitations described in "Description of Notes -- Payments of
Additional Amounts". Payments of interest on the New Notes to holders that are
not "juridical persons" under Peruvian tax law and that are domiciled outside
Peru will be subject to income tax in Peru currently at a rate of 30%. The
Company currently intends to treat a holder of a New Note that is organized or
established under the laws of a jurisdiction outside Peru as a juridical person,
and to pay such 30% income tax by means of withholding with respect to payments
to any holder of a New Note whose name indicates that it is not a juridical
person. As a consequence, the Company will not pay any Additional Amounts to
individuals or estates.
Interest paid on the New Notes will not be subject to any stamp, sales or
similar tax imposed by Peru.
Capital gains realized by holders not domiciled in Peru on the disposition
of New Notes are not subject to tax in Peru.
There are no Peruvian estate or personal property taxes applicable to the
ownership of the New Notes by a holder not domiciled in Peru.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Issuer has agreed that for a period of 90 days after the
consummation of the Exchange Offer it will make this Prospectus, as amended or
supplemented, available to any such broker-dealer for use in connection with any
such resale. The Issuer will not receive any proceeds from any sale of New Notes
by broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
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For period of 90 days after the consummation of the Exchange Offer the
Issuer will promptly send additional copies of this Prospectus and any amendment
or supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal.
The Issuer has agreed in the Registration Rights Agreement to indemnify
each broker-dealer reselling New Notes pursuant to this Prospectus, and their
officers, directors and controlling persons, against certain liabilities in
connection with the offer and sale of the New Notes, including liabilities under
the Securities Act, or to contribute to payments that such broker-dealers may be
required to make in respect thereof.
LEGAL MATTERS
The validity of the New Notes will be passed upon for the Company by Davis
Polk & Wardwell, New York, New York.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of December 31, 1996 and 1995, and the
consolidated statements of income, retained earnings, and cash flows for each of
the three years in the period ended December 31, 1996, incorporated by reference
in this prospectus, have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in auditing and accounting. With respect to the unaudited
interim financial information for the periods ended June 30, 1997 and 1996,
incorporated by reference in this prospectus, the independent accountants have
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
report included in the Company's quarterly report on Form 10-Q for the quarter
ended June 30, 1997 and incorporated by reference herein, states that they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the liability provisions
of Section 11 of the Securities Act of 1933 for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Act.
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GLOSSARY OF CERTAIN MINING TERMS
Anode Copper: Blister copper which has undergone further refinement to
remove impurities. In an anode furnace, the blister copper is blown with air and
natural gas to upgrade its purity to approximately 99.0% copper. It is then cast
into keystone-shaped slabs that are shipped to an electrolytic refinery.
Anode Furnace: A furnace in which blister copper is refined into anode
copper.
Ball Mill: A large rotating cylinder used for grinding ore with metal
balls as the grinding medium.
Bench: The horizontal floor along which mining progresses in a pit. As the
pit progresses to lower levels, safety benches are left in the walls to catch
any rock falling from above.
Blister Copper: Copper which has been cast after passing through a
converter. Blister copper is approximately 98.5% copper and takes its name from
"blisters" that form on the surface.
Breccia: A rock made up of highly angular coarse fragments.
Cathode: Copper cathodes are produced by a refining process. They are sold
or melted and cast into cakes, billets, wirebars or rods.
Concentration: The process by which ore is separated into metal
concentrates and reject material through processes such as crushing, grinding
and flotation. Concentrates are shipped to a smelter.
Concentrator: A plant where concentration takes place.
Converter: A principal phase of the smelting process, which involves the
blowing of oxygen-enriched air through molten metal, causing oxidation and the
removal of sulfur and other impurities from the metal.
Copper Concentrates: A product of the concentrator usually containing 20%
to 30% copper. It is the raw material for smelting.
Crusher (primary, secondary, tertiary): A machine for crushing rock, ore
or other material.
Crushing and Grinding: The processes by which ore is broken into small
pieces to prepare it for further processing.
Dacite: A fine-grained volcanic rock which is similar in composition to
andesite, except for a greater abundance of quartz crystals that are frequently
visible to the naked eye.
Development: Activities related to a mineral deposit commencing at the
point economically recoverable reserves can reasonably be estimated to exist and
generally continuing until commercial production begins.
Diorite: A dark, coarsely crystalline igneous rock, similar in composition
to granite, which is composed principally of silica, alumina, calcium, and iron.
Electrolytic Cathodes: Copper which has been refined by electrolytic
deposition.
Electrolytic Refining: Copper anodes are placed alternately with refined
copper sheets in a tank through which a copper sulfate solution and sulfuric
acid are circulated. A low voltage current is then introduced, causing copper to
transfer from the anodes to the pure copper sheets, producing 99.9% copper
cathodes. Impurities, often containing precious metals, settle to the bottom of
the tank.
Electrowinning: The process of removal of copper from solution by the
action of electric currents.
Electrowon Cathodes: Refined copper recovered from ore by means of
electrochemical processes.
Exploration: Activities associated with ascertaining the existence,
location, extent or quality of a mineral deposit.
Flotation: The process by which minerals attach themselves to the bubbles
on an oily froth and rise to the top where they are skimmed off. This process is
used primarily for the concentration of sulfide ores.
110
<PAGE> 113
Flux: A high grade silica, which reacts with iron oxides formed during
smelting and converting stages, creating a molten slag.
Flotation Cell: Appliance in which froth flotation of ores is performed.
Head Grade: An estimate of the total mineral content of the ore being fed
into the concentrator.
Heap Leach: The process by which a mineral can be economically recovered
from low grade ore. A weak sulfuric acid solution is percolated through ore,
which has been stacked on an impervious liner, to dissolve minerals.
Hectare: A land measure equaling 2.471 acres.
Intrusive Andesite: That portion of a fine-to-medium grained volcanic rock
composed principally of silica, alumina, calcium and iron that has intruded or
penetrated pre-existing rock formations on its route to the surface.
Latite: A fine-grained light-colored volcanic igneous rock composed of
silica, alumina, calcium, and iron.
Latite Porphyry: A light-colored igneous rock composed of mineral grains
of one or more sizes in a ground mass of uniformly finer grain, which is
occasionally associated with porphyry copper deposits.
Leaching: Extracting a soluble metallic compound from an ore by
selectively dissolving it in a suitable solvent.
Matrix: The finer grain material enclosing or filling the interstices
between the larger grains or fragments of a breccia.
Mill: A machine used to grind ore to the consistency of powder.
Milling: A treatment process involving fine grinding of ore followed by
extraction of minerals.
Mine: Mines are the source of mineral-bearing material found near the
surface or deep in the ground.
Mine Area: That portion of the land area encompassing the Company's
Toquepala and Cuajone mines on which mining operations are conducted and
reserves are located.
Mineral Deposit or Mineralized Material: A mineralized underground body
which has been intersected by a sufficient number of closely-spaced drill holes
and/or underground sampling to support sufficient tonnage and ore grade to
warrant further exploration or development. Mineral deposits or mineralized
materials do not qualify as a commercially minable ore reserves (e.g., Probable
(Indicated) Reserves or Proven (Measured) Reserves), as prescribed under
standards of the Commission, until a final and comprehensive economic,
technical, and legal feasibility study based upon the test results has been
concluded.
Mineralization: A deposit of rock containing one or more minerals for
which the economics of recovery have not yet been established.
Ore: A mineral or aggregate of minerals from which metal can be
economically mined or extracted.
Ore Grade: The average amount of metal expressed as a percentage or in
ounces per ton.
Ounces: Unit of weight. A troy ounce equals 31,103 grams or 1.097
avoirdupois ounces.
Overburden: The alluvium and rock that must be removed in order to expose
an ore deposit.
Overburden Stripping: The removal of a waste material, required prior to
ore mining.
Oxide Ore: Metalliferous minerals altered by weathering, surface waters,
and their conversion, partly or wholly, into oxides, carbonates, or sulfates.
Porphyry Copper Deposit: A disseminated large-tonnage, low-grade deposit,
in which the copper minerals occur as discrete grains and veinlets throughout a
large volume of rock.
Probable (Indicated) Reserves: Reserves for which quantity and grade
and/or quality are computed from information similar to that used for Proven
(Measured) Reserves, but the sites for inspection, sampling, and
111
<PAGE> 114
measurement are farther apart or are otherwise less adequately spaced. The
degree of assurance, although lower than that for Proven (Measured) Reserves, is
high enough to assume continuity between points of observation.
Proven (Measured) Reserves: Reserves for which (i) quantities are computed
from dimensions revealed in outcrops, trenches, workings or drill holes and
grade and/or quality are computed from the results of detailed sampling and (ii)
sites for inspection, sampling and measurement are spaced so closely together
and the geologic character is so well defined that the size, shape, depth and
mineral content of the reserves are well established.
Reclamation: The process of restoring mined land to a condition
established by applicable law. Reclamation standards vary widely, but usually
address ground and surface water, topsoil, final slope gradients, overburden and
revegetation.
Refining: The purification of crude metallic products.
Refining Charge: The fees charged by a refinery for purifying crude
metallic products.
Reverberatory Furnace: A furnace with a shallow hearth and a roof which
deflects the flame and radiates heat toward the hearth or the surface of the
charge.
Rhyolitic: Of, or relating to, rhyolite, a light colored medium grained
volcanic rock chemically similar to granite which is composed principally of
silica, alumina, potassium, and sodium with crystals which are frequently
embedded in a glassy ground mass.
Rod Mill: A large rotating cylinder used for grinding ore with metal rods
as the grinding medium.
Smelting: A pyro-metallurgical process of separating metal by fusion from
those impurities with which it may be chemically combined or physically mixed.
Solvent Extraction: A method of separating one or more substances from a
mixture, by treating a solution of the mixture with a solvent that will dissolve
certain substances and leave others.
Sulfide Ore: Ore characterized by the inclusion of metal in the crystal
structure of a sulfide mineral.
Tailings: Finely ground rock from which valuable minerals have been
extracted by milling.
Teniente Converter: A horizontal rotary furnace into which matte,
concentrates and flux are placed. Oxygen-rich air is blown through to provide
sufficient heat to smelt the concentrates. Off-gases are captured and forwarded
to the acid plant.
Tons: Unit of weight. A short ton (ST) equals 2,000 pounds. A metric ton
(MT) equals 2,204.6 pounds.
Trend: The arrangement of a group of ore deposits occurring in a linear
pattern.
112
<PAGE> 115
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
I. Report of Independent Accountants................................................. F-2
Consolidated Statements of Earnings for the Years Ended December 31, 1996, 1995
and 1994........................................................................ F-3
Consolidated Balance Sheet as of December 31, 1996 and 1995....................... F-4
Consolidated Statement of Cash Flows for the Years Ended December 31, 1996, 1995
and 1994........................................................................ F-5
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
December 31, 1996, 1995 and 1994................................................ F-6
Notes to Consolidated Financial Statements........................................ F-7
II. Report of Independent Accountants with respect to Unaudited Condensed Consolidated
Interim Financial Statements.................................................... F-22
Unaudited Condensed Consolidated Statements of Earnings for the Six Months Ended
June 30, 1997 and 1996.......................................................... F-23
Condensed Consolidated Balance Sheets as of June 30, 1997 (Unaudited) and December
31, 1996........................................................................ F-24
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996.......................................................... F-25
Unaudited Notes to Condensed Consolidated Financial Statements.................... F-26
</TABLE>
F-1
<PAGE> 116
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Southern Peru Copper Corporation:
We have audited the accompanying consolidated balance sheets of SOUTHERN
PERU COPPER CORPORATION and SUBSIDIARIES as of December 31, 1996 and 1995, and
the related consolidated statements of earnings, cash flows, and changes in
common stockholders' equity for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Southern Peru
Copper Corporation and Subsidiaries, as of December 31, 1996 and 1995, and the
consolidated results of their operations, and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
January 28, 1997, except for Note 22,
which is as of February 21, 1997
F-2
<PAGE> 117
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS
EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net sales:
Stockholders and affiliates.............................. $ 71,740 $ 85,819 $ 78,386
Others................................................... 681,292 843,021 623,292
-------- -------- --------
Total net sales.................................. 753,032 928,840 701,678
Operating costs and expenses:
Cost of sales............................................ 389,577 439,382 453,951
Administrative and other................................. 49,979 52,687 48,134
Depreciation, amortization and depletion................. 41,623 35,952 39,742
Provision for workers' participation..................... 18,025 32,212 13,944
Exploration.............................................. 5,063 1,950 3,880
-------- -------- --------
Total operating costs and expenses............... 504,267 562,183 559,651
-------- -------- --------
Operating income........................................... 248,765 366,657 142,027
Interest income............................................ 18,264 14,827 6,521
Interest expense........................................... (12,467) (13,904) (7,779)
Other income............................................... 11,358 12,825 23,204
-------- -------- --------
Earnings before taxes on income and minority interest
of labor shares.......................................... 265,920 380,405 163,973
Taxes on income............................................ 80,200 119,093 54,139
Minority interest of labor shares in income of Peruvian
Branch................................................... 5,208 43,558 18,610
-------- -------- --------
Net earnings............................................... $180,512 $217,754 $ 91,224
======== ======== ========
Per common share amounts:
Net earnings............................................. $ 2.25 $ 3.31 $ 1.39
Dividends paid........................................... $ 1.47 $ 1.27 $ 0.33
Weighted average number of shares outstanding............ 80,195 65,717 65,717
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 118
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 173,205 $ 219,646
Marketable securities.......................................... 1,000 42,453
Accounts receivable:
Trade:
Stockholders and affiliates............................... 8,504 8,732
Other trade............................................... 70,252 80,100
Other........................................................ 10,831 11,631
Inventories.................................................... 118,681 103,635
Other current assets........................................... 20,637 16,648
---------- ----------
Total current assets.................................... 403,110 482,845
Net property...................................................... 855,808 779,368
Other assets...................................................... 20,931 9,488
---------- ----------
Total assets............................................ $1,279,849 $1,271,701
========= =========
LIABILITIES
Current liabilities:
Current portion of long-term debt.............................. $ 23,683 $ 17,034
Accounts payable:
Trade........................................................ 23,740 32,889
Other........................................................ 10,124 8,056
Other current liabilities...................................... 47,768 112,390
---------- ----------
Total current liabilities............................... 105,315 170,369
---------- ----------
Long-term debt.................................................... 82,892 76,828
Deferred income taxes............................................. 49,426 39,677
Other liabilities................................................. 4,806 6,354
---------- ----------
Total non-current liabilities........................... 137,124 122,859
---------- ----------
Contingencies.....................................................
Minority interest of labor shares in the Peruvian Branch............ 22,383 24,986
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 1996 -- 33,449,167;
1995 -- 31,249,167 shares authorized; Issued
1996 -- 13,633,674; 1995 -- 11,479,667......................... 137 115
Class A Common stock, par value $0.01; Issued and Authorized:
1996 -- 66,550,833; 1995 -- 68,750,833......................... 666 688
Additional paid-in capital........................................ 265,745 265,738
Retained earnings................................................. 749,267 686,946
Treasury stock, at cost, 46,419 shares at December 31, 1996....... (788) --
---------- ----------
Total Stockholders' equity.............................. 1,015,027 953,487
---------- ----------
Total Liabilities, Minority Interest and Stockholders'
equity............................................... $1,279,849 $1,271,701
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 119
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings............................................. $ 180,512 $ 217,754 $ 91,224
Adjustments to reconcile net earnings to net cash
provided from operating activities:
Depreciation, amortization and depletion.............. 41,623 35,952 39,742
Provision for deferred income taxes................... 12,043 3,168 (2,342)
Minority interest of labor shares..................... 5,208 43,558 18,610
Net (gain) loss on sale of investments and property... 110 2,473 (17,876)
Cash provided from (used for) operating assets and
liabilities:
Accounts receivable................................... 10,498 (1,939) (47,787)
Inventories........................................... (15,046) 7,992 3,502
Accounts payable and accrued liabilities.............. (52,023) 19,667 49,400
Other operating assets and liabilities................ (17,444) 7,699 2,040
Foreign currency transaction gain..................... (6,707) (5,950) (1,619)
--------- --------- ---------
Net cash provided from operating activities...... 158,774 330,374 134,894
--------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures..................................... (120,803) (183,041) (181,912)
Release of restricted cash............................... -- 60,450 --
Purchase of held-to-maturity investments................. -- (76,333) (82,461)
Proceeds from held-to-maturity investments............... 41,453 76,877 75,302
Sale of investments and property......................... -- 2,596 50,252
--------- --------- ---------
Net cash used for investing activities........... (79,350) (119,451) (138,819)
--------- --------- ---------
FINANCING ACTIVITIES
Debt incurred............................................ 47,000 62,000 104,176
Debt repaid.............................................. (34,289) (86,110) (1,803)
Escrow deposits on long-term loans....................... (10,065) 10,809 (12,026)
Dividends paid to common stockholders.................... (117,913) (83,747) (21,415)
Distributions to minority interests...................... (4,091) -- --
Net treasury stock transactions.......................... (1,155) -- --
Purchase of labor share interest......................... (7,130) -- --
Proceeds from labor share subscription................... -- 10,944 --
Installment payment on purchase of Joint Venture
interest.............................................. -- -- (4,200)
--------- --------- ---------
Net cash provided from (used for) financing
activities..................................... (127,643) (86,104) 64,732
--------- --------- ---------
Effect of exchange rate changes on cash.................... 1,778 1,491 819
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents.................................... (46,441) 126,310 61,626
Cash and cash equivalents, beginning of year............... 219,646 93,336 31,710
--------- --------- ---------
Cash and cash equivalents, end of year..................... $ 173,205 $ 219,646 $ 93,336
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 120
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995 1994
---------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Common stock:
Southern Peru Copper Corporation (formerly Southern Peru
Copper Holding Company):
Common Stock:
Balance at beginning of year........................... $ 115
Issuance of 11,480,093 shares....................... -- $ 115
Conversion from Class A to Common Stock, 2,200,000
shares............................................ 22 --
------- --------
Balance at end of year................................... 137 115
------- --------
Class A Common Stock:
Balance at beginning of year........................... 688
Issuance of 68,750,833 shares....................... -- 688
Conversion to Common Stock, 2,200,000 shares........ (22) --
------- --------
Balance at end of year................................. 666 688
------- --------
Southern Peru Limited:
Balance at beginning of year, 76,251,193 shares........ 763 $ 763
Retirement of treasury stock, 10,533,700 shares..... (106) --
Exchange for shares of Southern Peru Copper
Corporation, 65,717,493 shares.................... (657) --
-------- --------
Balance at end of year................................. -- 763
-------- --------
Additional paid-in capital:
Southern Peru Copper Corporation:
Balance at beginning of year............................. 265,738
Additional paid-in capital on shares issued............ -- 81,222
Market value of shares issued in exchange for labor
shares.............................................. -- 184,516
Additional paid-in capital on treasury shares issued... 7 --
------- --------
Balance at end of year................................... 265,745 265,738
------- --------
Southern Peru Limited:
Balance at beginning of year............................. 122,477 122,477
Retirement of treasury stock........................... (41,224) --
Exchange to shares of Southern Peru Copper
Corporation......................................... (81,253) --
-------- --------
Balance at end of year................................... -- 122,477
-------- --------
Treasury Stock:
Southern Peru Copper Corporation:
Balance at beginning of year............................. --
Purchased.............................................. (1,155)
Used for corporate purposes............................ 367
-------
Balance at end of year................................... (788)
-------
Southern Peru Limited:
Balance at beginning of year, 10,533,700 shares.......... (60,000) (60,000)
Retirement of 10,533,700 shares of treasury stock...... 60,000 --
-------- --------
Balance at end of year................................... -- (60,000)
-------- --------
Retained earnings:
Balance at beginning of year................................ 686,946 571,609 501,800
Net earnings............................................. 180,512 217,754 91,224
Dividends paid........................................... (117,913) (83,747) (21,415)
Stock awards............................................. (278) -- --
Retirement of treasury stock............................. -- (18,670) --
------- -------- --------
Balance at end of year...................................... 749,267 686,946 571,609
------- -------- --------
Total stockholders' equity.......................... $1,015,027 $953,487 $634,849
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 121
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation:
The consolidated financial statements of Southern Peru Copper Corporation
and subsidiaries (the "Company") include the accounts of its significant
subsidiaries in which the Company has voting control, and are prepared in
accordance with generally accepted accounting principles in the United States
("U.S. GAAP"). Certain reclassifications have been made in the financial
statements from amounts previously reported to conform to the current year's
presentation.
Use of estimates:
The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Revenue recognition:
Substantially all of the Company's copper is sold under annual contracts.
Sales are recognized when title passes. Pricing is based on prevailing monthly
average London Metal Exchange ("LME") copper prices for a quotational period,
generally being the month of, the month prior or the month following the actual
or contractual month of shipment or delivery according to the terms of the
contracts. Price estimates used for provisionally priced sales are based on
prices in effect at the time of shipment or period end prices, if lower, and
these estimates are subject to change during the settlement period. The Company
sells copper in blister and refined form at industry standard commercial terms.
Net sales include, principally the invoiced value of copper, silver, molybdenum
and, in 1996, gains from the sale or settlement of copper put options.
Cash equivalents and marketable securities:
The Company considers all highly liquid investments with a maturity of
three months or less, when purchased, to be cash equivalents. Marketable
securities include liquid investments with a maturity, when purchased, of more
than three months and are carried at cost, which approximates market value.
Inventories:
Metal inventories are carried at the lower of average cost or market. Costs
incurred in the production of metal inventories exclude general and
administrative costs. Supplies inventories are carried at cost less a reserve
for obsolescence.
Property:
Assets are stated at cost or net realizable value. During 1995, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." This statement requires that long-lived assets, certain identifiable
intangibles and goodwill related to those assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the assets may not be recoverable. The impairment loss on such assets, as well
as long-lived assets and certain identifiable intangibles to be disposed of, is
measured as the amount by which the carrying value of the assets exceeds the
fair value of the assets. Application of the statement had no impact in 1996 or
1995. The Company evaluates the carrying value of assets based on undiscounted
future cash flows considering expected metal prices based on historical metal
prices and price trends.
F-7
<PAGE> 122
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Buildings and equipment are depreciated on the straight-line method over
estimated lives from 5 to 40 years, or the estimated life of the mine if
shorter. The cost of major mine development programs at existing mines, the cost
of bringing new mineral properties into production and the cost of mineral lands
are capitalized and charged to earnings on the units-of-production method using
proven and probable ore reserves.
Maintenance, repairs, normal development costs at existing mines and gains
or losses on assets retired or sold are reflected in earnings as incurred. The
cost of renewals is capitalized and the property unit being replaced is retired.
The cost of betterments is capitalized. General and administrative costs
attributed to mining, exploration and development are expensed as incurred.
Financial Instruments:
Depending on the market fundamentals of a metal and other conditions, the
Company may purchase put options to reduce or eliminate the risk of metal price
declines below the option strike price on a portion of its anticipated future
production. The cost of options is amortized on a straight-line basis during the
period in which the options are exercisable. Gains or losses from the sale or
exercise of options, net of unamortized acquisition costs, are recognized in the
period in which the underlying production is sold and are reported as a
component of the underlying transaction.
Exploration:
Tangible and intangible costs incurred in the search for mineral properties
are charged against earnings when incurred.
2. EXCHANGE OFFER
Southern Peru Copper Holding Company, (the "Holding Company"), was
incorporated on September 7, 1995, pursuant to the General Corporation Law of
the State of Delaware for the purpose of conducting an exchange offer of its
common stock, par value $0.01 per share, for any and all labor shares of the
Peruvian Branch (the "Branch") of Southern Peru Copper Corporation (the
"Operating Company"). In connection with the exchange offer, the Operating
Company changed its name to Southern Peru Limited ("SP Limited") and the Holding
Company changed its name to Southern Peru Copper Corporation (the "Company").
The Holding Company offered to exchange one share of its common stock for
four S-1 labor shares and one share of common stock for five S-2 labor shares.
The exchange offer expired on December 29, 1995, with 80.8% of the labor shares
tendered which reduced the interest of labor shares from 17.3% to 3.3%. At
December 31, 1996, the interest of labor shares was 2.8%. The common stock is
listed on the New York Stock Exchange and the Lima Stock Exchange and trading
commenced January 5, 1996.
In addition, the stockholders of SP Limited exchanged 65,717,493 of their
common stock for 68,750,833 Class A common stock in the Company.
With the completion of the exchange offer, the Company has outstanding two
classes of common stock; the common stock exchanged for labor shares and Class A
common stock which at December 31, 1996 represent 17% and 83% of the common
equity of the Company, respectively. Holders of common stock are entitled to one
vote per share and holders of Class A common stock are entitled to five votes
per share except for the election of directors and as required by law.
The exchange of common stock for labor shares was accounted for a purchase
of a minority interest. The value of the common stock issued in the exchange
(based on the average per share trading value for the three business days ended
January 9, 1996) plus issuance costs exceeded the carrying value of the minority
interests acquired by $82.0 million, net of income taxes. The increase in value
was assigned to proven and probable sulfide
F-8
<PAGE> 123
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. EXCHANGE OFFER -- (CONTINUED)
and leachable ore reserves and mineralized material which is being amortized
based on production, and to metal inventory.
The following table provides the comparative unaudited proforma 1995
earnings information, as if the exchange offer was completed on January 1, 1995.
<TABLE>
<CAPTION>
1995
--------------------------
(UNAUDITED)
HISTORICAL PROFORMA
---------- -----------
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net sales...................................................... $928.8 $ 928.8
---------- -----------
Earnings before taxes on income and minority interest of labor
shares....................................................... 380.4 370.7(a)
Taxes on income................................................ 119.1 118.9(b)
Minority interest of labor shares in Peruvian Branch........... 43.5 7.7(c)
---------- -----------
Net earnings................................................... $217.8 $ 244.1
======= =========
Net earnings per share......................................... $ 3.31 $ 3.04
Cash dividends paid per share.................................. $ 1.27 $ 1.04
Weighted average number of shares outstanding.................. 65.7 80.2
</TABLE>
- ---------------
(a) The market value of the common stock issued for labor shares tendered
pursuant to the exchange offer was in excess of the book value of the
minority interest of such labor shares. This excess was assigned to proven
and probable mineral reserves, mineralized material and to metal inventory.
Proforma earnings reflect the amortization of the excess of market value
over book value which was assigned to mineral reserves and mineralized
material, based on actual copper production and a charge to cost of products
sold of the excess amount which would have been assigned to metal inventory
at January 1, 1995.
(b) Reflects the reduction of the deferred income taxes related to the
amortization of excess of the market value of common stock issued for labor
shares tendered pursuant to the exchange offer over the book value of the
minority interest of such labor shares.
(c) Reflects the reduction of the minority interest of the labor shares tendered
pursuant to the exchange offer.
3. IMPACT OF NEW ACCOUNTING STATEMENT
The American Institute of Certified Public Accountants issued Statement of
Position 96-1, "Environmental Remediation Liabilities" ("SOP 96-1") in October
1996. SOP 96-1 provides authoritative guidance on specific accounting issues in
connection with recognizing, measuring and disclosing environmental remediation
liabilities. Application of SOP 96-1 in the fourth quarter of 1996 had no effect
on the Company's financial statements.
4. FOREIGN EXCHANGE
The functional currency of the Company is the U.S. dollar. The Company's
sales, cash, trade receivables, fixed asset additions, trade payables and debt
are primarily dollar-denominated. A portion of the operating costs of the
Company is denominated in Peruvian soles.
Gains resulting from foreign currency transactions are included in "Other
income" and amounted to $6.7 million, $6.0 million and $1.6 million in 1996,
1995 and 1994, respectively.
F-9
<PAGE> 124
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. INVESTMENTS
In 1995, Fomenta S.A., a wholly owned Peruvian subsidiary, sold its 28.5%
interest in Metalurgica Peruana S.A., ("MEPSA"), for $1.4 million. The sale of
MEPSA, carried at cost, resulted in a pre-tax gain of $1.3 million.
During 1994, the Company sold three investments for $50.3 million. The sale
of these investments, primarily indirect interests in other Peruvian mining
companies, carried at cost, resulted in a pre-tax gain of $18.4 million.
6. ACQUISITION
On May 31, 1994, the Company purchased the Peruvian government owned Minero
Peru Ilo refinery for $65.0 million in cash. The purchase price was primarily
allocated to supplies inventory ($14.9 million) and fixed assets ($51.2 million)
based on their fair values. The Company also committed to make an additional
$20.2 million of capital improvements over three years. The Company had
substantially completed this commitment at December 31, 1996. Prior to the
acquisition, the Company was required to toll-refine copper under a contract
with Minero Peru. The costs of operating the refinery have been included in the
consolidated operating results since the date of acquisition.
7. TAXES ON INCOME
THE COMPONENTS OF THE PROVISION FOR TAXES ON INCOME ARE AS FOLLOWS:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
----- ------ -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
U.S. Federal and state..................................... $ 5.3 $ 4.6 $ 7.3
Foreign:
Current.................................................. 62.9 111.3 49.1
Deferred................................................. 12.0 3.2 (2.3)
----- ------ -----
Foreign.................................................... 74.9 114.5 46.8
----- ------ -----
Total provision for income taxes...................... $80.2 $119.1 $54.1
===== ====== =====
</TABLE>
Total taxes paid were $123.4 million, $80.1 million and $42.4 million in
1996, 1995 and 1994, respectively.
Reconciliation of the statutory income tax rate to the effective income tax
rate is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Peruvian income tax at maximum statutory rates............... 30.0% 30.0% 30.0%
U.S. income tax as statutory rate............................ 35.0 35.0 35.0
Utilization of foreign tax credits........................... (25.3) (27.9) (14.1)
Percentage depletion......................................... (9.0) (6.6) (12.5)
Income not deductible (not taxable) in Peru.................. (1.8) 0.1 2.2
Effect of labor shares....................................... -- -- (4.0)
Other........................................................ 1.3 0.7 (3.6)
----- ----- -----
Effective income tax rate.................................. 30.2% 31.3% 33.0%
===== ===== =====
</TABLE>
F-10
<PAGE> 125
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. TAXES ON INCOME -- (CONTINUED)
Temporary differences and carryforwards which give rise to deferred tax
assets, liabilities and related valuation allowances are as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 1995
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
DEFERRED TAX ASSETS (LIABILITIES)
Current:
Accounts receivable.............................................. $ 0.5 $ 1.5
Inventories...................................................... 0.1 0.1
------ ------
Net deferred tax assets....................................... 0.6 1.6
------ ------
Non-current:
Foreign tax credit carryforwards................................. 69.4 80.8
Alternative minimum tax ("AMT") credit carryforwards............. 6.8 5.8
Property, plant and equipment.................................... (48.7) (38.8)
Other............................................................ (0.7) (0.9)
Valuation allowance for deferred tax assets...................... (76.2) (86.6)
------ ------
Net deferred tax liabilities.................................. (49.4) (39.7)
------ ------
Total net deferred tax liabilities................................. $(48.8) $(38.1)
====== ======
</TABLE>
At December 31, 1996, the foreign tax credit carryforward available to
reduce possible future U.S. income taxes amounted to $69.4 million which expires
as follows: $16.8 million in 1998, $13.6 million in 1999 and $39.0 million in
2001.
The Company has not recorded the benefit of foreign tax credit
carryforwards because of both the expiration dates and the rules governing the
order in which such credits are utilized. The Company also has not recorded a
benefit for the AMT credits, which are not available to reduce AMT. Because of
limitations on both percentage depletion and foreign tax credits under the AMT,
the Company expects an AMT liability for the foreseeable future. Thus, while
such credits do not expire, it is unlikely they will be utilized. Accordingly, a
valuation allowance has been established for the full amount of the foreign tax
credit carryforward and the AMT credit carryforward. The decrease in the
valuation allowance of $10.4 million from 1995 to 1996 is attributable to the
expiration of foreign tax credits in 1996.
Peruvian value added taxes paid are recorded as prepaid expenses and are
utilized to pay Peruvian income taxes or are refunded by the Peruvian tax
department. The carrying value of these Peruvian tax credits approximates their
market value.
8. NET SALES
Net sales were to the following customers:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
S.A. Sogem, N.V. (under a long-term supply contract, see
below)................................................. $ 58.9 $120.8 $ 81.8
Japanese Group (a group of Japanese customers who
purchased under a single sales contract)............... -- 7.1 78.6
Others (none of which are individually 10% or more of
annual sales).......................................... 694.1 800.9 541.3
------ ------ ------
Net Sales.............................................. $753.0 $928.8 $701.7
====== ====== ======
</TABLE>
F-11
<PAGE> 126
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. NET SALES -- (CONTINUED)
At December 31, 1996, the Company has recorded sales of 68.2 million pounds
of copper at a provisional price of $1.02 per pound. These sales are subject to
final pricing based on the average monthly LME copper price in the month of
final settlement which will occur principally in the first quarter of 1997.
Under the terms of a sales contract with Mistui & Co. Ltd. ("Mitsui"), the
Company is required to supply Mitsui, at its option, up to 26,455 tons of copper
cathodes annually for a seven-year period from January 1, 1994 through December
31, 2000. Pricing of the cathodes is based upon the LME monthly average
settlement price plus a producer premium for refined copper cathodes which is
agreed upon annually based on world market terms.
Under the terms of a sales contract with Union Miniere, the Company is
required to supply Union Miniere through its agent, S.A. Sogem N.V., with 46,300
tons of blister copper annually for a ten-year period from January 1, 1994,
through December 31, 2003. The price of the copper contained in blister supplied
under the contract is determined based on the LME monthly average settlement
price less a refining allowance, which is agreed upon annually based on world
market terms.
9. FINANCIAL INSTRUMENTS
Depending on the market fundamentals of a metal and other conditions, the
Company may purchase put options to reduce or eliminate the risk of metal price
declines below the option strike price on a portion of its anticipated future
production. Put options purchased by the Company establish a minimum sales price
for the production covered by such put options and permit the Company to
participate in price increases above the option price. The cost of options is
amortized on a straight-line basis during the period in which the options are
exercisable. Depending upon market conditions the Company may either sell
options it holds or exercise the options at maturity. Gains or losses, net of
unamortized acquisition costs are recognized in the period in which the
underlying production is sold and are reported as a component of the underlying
transaction.
For the full year 1996, the Company realized pre-tax gains of $16.7 million
as a result of its copper price protection program, of which $11.1 million was
recognized in 1996. The remaining $5.6 million will be recognized in the first
quarter of 1997 when the underlying production is sold. Copper put options with
a cost of $1.2 million expired during the first six months of 1996. The
recognized pre-tax gains (losses) of the Company's metal hedging activities, net
of transaction costs were $9.9 million, $(2.1) million and $(1.8) million in
1996, 1995 and 1994, respectively.
The estimated fair values of the Company's financial instruments are:
<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AT DECEMBER 31, VALUE VALUE VALUE VALUE
-------- ------ -------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents................... $173.2 $173.2 $219.6 $219.6
Marketable securities -- Held to Maturity... 1.0 1.0 42.5 42.5
Put Options................................. -- -- 3.2 1.6
Liabilities:
Long-term Debt.............................. $106.6 $102.3 $ 93.9 $ 87.8
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and cash equivalents -- The carrying amount approximates fair value
because of the short maturity of those instruments.
F-12
<PAGE> 127
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. FINANCIAL INSTRUMENTS -- (CONTINUED)
Marketable securities -- The carrying amount and fair value are reported at
amortized cost since these securities are to be held to maturity.
Put options -- Fair value is an estimate based on relevant market
information such as: volatility of similar options, futures prices and the
contracted strike price.
Long-term debt -- The fair market value is based on the quoted market
prices for the same or similar issues or the carrying value is used where a
market price is unavailable.
10. WORKERS' PARTICIPATION
Provisions for workers' participation are calculated at 8% of pre-tax
Branch earnings as required by Peruvian law. The amount is calculated under
Peruvian GAAP and cannot, therefore, be directly derived from the consolidated
financial statements which are prepared in accordance with U.S. GAAP. This
participation is expensed during the year. The Company distributes the accrued
participation to workers following the final results for the year.
11. MINORITY INTEREST OF LABOR SHARES
The minority interest of the labor shares is based on the earnings of the
Company's Peruvian Branch. The amount is calculated under Peruvian GAAP and
cannot therefore be directly derived from the consolidated financial statements
which are prepared in accordance with U.S. GAAP.
Under Peruvian law, the holders of the labor shares are entitled to
preemptive rights, which require the Branch to offer holders the right to
purchase a sufficient number of shares to maintain their existing ownership
percentage of the Branch whenever the Company invests additional capital in the
Branch. In March 1995, the Company invested $61.1 million in the Branch as a
capital contribution to Branch equity (see note 20). Labor shareholders
subscribed to 3.4 million new shares, with a contribution of $10.9 million,
representing 84.2% of the total possible subscription. Since full subscription
rights were not exercised, labor share participation in the Branch decreased
from 17.4% to 17.31%.
On November 29, 1995, the Company announced an offer to exchange the common
stock of the Company for any and all of the labor shares of the Branch. The
offer expired on December 29, 1995, and 46.6 million labor shares or 80.8% of
the total, were exchanged for common stock decreasing the labor share
participation from 17.3% to 3.3%.
During 1996, the Company acquired approximately 1.8 million labor shares
representing a 0.5% interest in the Branch at a total cost of $7.1 million. The
carrying value of minority interest was reduced by $4.4 million and the excess
paid over carrying value of $2.7 million was assigned to proven and probably
sulfide and leachable ore reserves and mineralized material and is being
amortized based on production. As a result of the acquisition, the remaining
labor shareholders hold a 2.8% interest in the Branch at December 31, 1996 and
are entitled to participate in 2.8% of the distributions of the Branch. The 2.8%
share of the Branch's after-tax earnings attributable to the labor shares is
recorded as a minority interest in the Company's financial statements.
F-13
<PAGE> 128
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. INVENTORIES
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 1995
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Metals:
Finished goods................................................... $ 2.4 $ 2.0
Work-in-process.................................................. 47.1 33.1
Supplies, net of reserves........................................ 69.2 68.5
------ ------
Total inventories........................................ $118.7 $103.6
====== ======
</TABLE>
13. PROPERTY
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 1995
-------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Buildings and equipment......................................... $1,503.3 $1,391.7
Mineral Land.................................................... 235.3 237.9
Land, other than mineral........................................ 0.9 0.9
-------- --------
Total property............................................. 1,739.5 1,630.5
Accumulated depreciation........................................ 883.7 851.1
-------- --------
Net property.......................................... $ 855.8 $ 779.4
======== ========
</TABLE>
14. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 1995
----- ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Taxes on income................................................. $ 8.9 $ 59.7
Provision for workers' participation............................ 16.7 31.1
Accrued severance pay, current portion.......................... 3.1 3.7
Salaries and wages.............................................. 8.1 8.0
Other........................................................... 11.0 9.9
----- ------
Total other current liabilities....................... $47.8 $112.4
===== ======
</TABLE>
15. DEBT AND AVAILABLE CREDIT FACILITIES
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 1995
------ -----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
LONG-TERM DEBT CONSISTS OF:
EXIM Bank credit agreement, interest at 6.43%, principal due
1996-2001..................................................... $ 26.3 $32.1
CAF credit agreement, interest at an average of 9.1% as of
December 31, 1996, principal due 1996-2001.................... 35.3 43.2
Mitsui credit agreement, interest at LIBOR + 2.87%, principal
due 1996-2001................................................. 45.0 3.2
Term loans, interest at prime + 3.00%........................... -- 15.4
------ -----
Total debt................................................. 106.6 93.9
Less, current portion........................................... 23.7 17.1
------ -----
Total long-term debt.................................. $ 82.9 $76.8
====== =====
</TABLE>
F-14
<PAGE> 129
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. DEBT AND AVAILABLE CREDIT FACILITIES -- (CONTINUED)
The fair market value of long-term debt was $102.3 million at December 31,
1996 and $87.8 million at December 31, 1995, and was determined using discounted
cash flow analysis on the fixed-rate debt. The fair market value of the
variable-rate debt approximates its carrying amount.
Aggregate maturities of the borrowings outstanding at December 31, 1996,
are as follows (in millions):
<TABLE>
<S> <C>
1997................................................ $ 23.7
1998................................................ 23.7
1999................................................ 23.7
2000................................................ 23.7
2001................................................ 11.8
------
Total..................................... $106.6
======
</TABLE>
At December 31, 1996, there were no unused and available lines of credit
available to the Company under its long-term loan facilities.
Under the most restrictive covenant of the Company's loan agreements,
additional indebtedness of $752 million would have been permitted at December
31, 1996.
Interest paid for borrowings (including amounts capitalized of $1.8 million
and $1.6 million in 1995 and 1994, respectively) was $10.8 million, $14.4
million and $10.5 million in 1996, 1995 and 1994, respectively.
Fees paid for loan agreements were $1.6 million and $3.5 million in 1995
and 1994, respectively, and are amortized over the respective terms of the
loans. On July 21, 1995, the Company prepaid substantially all of the
outstanding balance related to a $115.0 million facility resulting in a charge
to interest expense of $2.0 million for unamortized loan fees.
The financing agreements contained covenants which limit the payment of
dividends to stockholders. Under the most restrictive loan, the Company may not
pay a dividend if the aggregate amount of all dividend payments with respect to
any fiscal quarter is greater than 50% of net income (as defined therein) of the
Company for such fiscal quarter. However, this agreement permits dividends with
respect to the final quarter of each fiscal year to the extent that total
dividends for such fiscal year do not exceed 50% of the first $50 million of
earnings plus 100% of earnings in excess of $50 million for such fiscal year.
These dividend restrictions directly apply to SP Limited as the issuer of the
debt. However, on consolidation they also apply to SPCC. Net assets of SP
Limited unavailable for the payment of dividends to SPCC totaled $821 million at
December 31, 1996.
The financing agreements are collateralized by pledges of receivables from
34,200 tons of copper per year and liens on certain product inventory, fixed
assets and mining concessions. In addition, certain of the agreements require
the Company to maintain a minimum stockholders' equity of $750 million,
specified ratios of debt to equity, current assets to current liabilities and an
interest coverage test. Any reduction of ASARCO Incorporated's ("Asarco") voting
interest in the Company to less than a majority would constitute an event of
default under of the financing agreements. The Company is in compliance with the
various loan covenants at December 31, 1996. Included in Other Assets are $11.3
million held in escrow accounts as required by the Company's loan agreements.
The funds will be released from escrow as scheduled loan repayments are made.
16. BENEFIT PLANS
The Company has two noncontributory, defined benefit pension plans covering
salaried employees in the United States and certain employees in Peru. Benefits
are based on salary and years of service. The Company's funding policy is to
contribute amounts to the plans sufficient to meet the minimum funding
requirements set forth in the Employee Retirement Income Security Act of 1974,
plus such additional amounts as the Company
F-15
<PAGE> 130
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. BENEFIT PLANS -- (CONTINUED)
may determine to be appropriate. Plan assets are primarily invested in immediate
participation guarantee contracts, mutual funds, stock index funds and money
market instruments. Effective January 1, 1997 one of the Company's pension
plans, which provides benefits to non-U.S. expatriate employees, was amended to
cease future benefit accruals. Accordingly, those participants became eligible
for future benefits under the Company's other pension plan.
Net pension costs consist of:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Service cost................................................. $ 0.5 $ 0.3 $ 0.5
Interest cost on projected benefit obligation................ 0.5 0.4 0.4
Actual return on plan assets................................. (0.6) (0.4) 0.4
Other items.................................................. 0.4 0.3 (0.5)
---- ---- ----
Net pension cost............................................. $ 0.8 $ 0.6 $ 0.8
==== ==== ====
</TABLE>
The funded status of the plans using the projected unit credit method is:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 1995
----- -----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Assets and obligations:
Vested benefit obligation........................................ $ 5.3 $ 5.2
Nonvested benefits............................................... 0.5 0.5
----- -----
Accumulated benefit obligation................................ 5.8 5.7
Plan assets at fair value.......................................... 5.0 4.4
----- -----
Plan assets less than accumulated benefit obligation............... 0.8 1.3
===== =====
Projected benefit obligation (PBO)................................. 7.2 7.1
Plan assets at fair value.......................................... 5.0 4.4
----- -----
Plan assets less than PBO........................................ 2.2 2.7
Minimum liability.................................................. 0.5 1.4
Prior service cost................................................. 0.1 0.1
Initial net plan obligation........................................ (2.1) (2.3)
Effect of changes in assumptions and actuarial gains and losses.... 0.2 (0.5)
----- -----
Pension liability reflected on consolidated balance sheet........ $ 0.9 $ 1.4
===== =====
</TABLE>
The actuarial computations are based upon a discount rate on benefit
obligations of 7%, an expected long-term rate of return on plan assets of 8% and
expected annual salary increases of 4%.
Postretirement Benefits:
The postretirement health care plan for retired salaried employees eligible
for Medicare was adopted by the Company on May 1, 1996. Secondary coverage under
the Company's plan is available for all retired salaried employees who are
permanently residing in the United States and who contribute amounts as defined
by the plan.
F-16
<PAGE> 131
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. BENEFIT PLANS -- (CONTINUED)
Net periodic postretirement benefit costs include the following:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
------------
(DOLLARS IN
MILLIONS)
<S> <C>
Service and interest cost..................... $0.1
Amortization of prior service cost............ 0.1
-----
Net periodic postretirement benefit cost...... $0.2
=====
</TABLE>
The following sets forth the plan's status reconciled with amounts reported
in the Consolidated Balance Sheet:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
------------
(DOLLARS IN
MILLIONS)
<S> <C>
Accumulated postretirement benefit obligation ("APBO")
Retirees............................................ $ 0.2
Fully eligible active plan participants............. 0.1
Other plan participants............................. 0.6
-----
Total APBO............................................ 0.9
Item not yet recognized in earnings:
Prior service cost.................................. (0.7)
-----
Postretirement benefit obligation..................... $ 0.2
=====
</TABLE>
The annual assumed rate of increase in the per capita cost of covered
benefits (i.e. health cost trend rate) is 6% for 1997 and is assumed to decrease
gradually to 5% by 1999 and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care cost trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation at December 31, 1996 by $0.1 million and would have no material
effect on the net periodic postretirement benefit costs for 1996. The discount
rate used in determining the accumulated postretirement benefit obligation was
7% at December 31, 1996. The plan is unfunded.
17. STOCKHOLDERS' EQUITY
Common Stock:
The stockholders of the Company at December 31, 1996 were:
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING TOTAL NUMBER
SHARES OF SHARES
----------- ------------
<S> <C> <C>
Class A Common Shares:
ASARCO Incorporated...................................... 43,348,949 54.06%
Cerro Trading Company, Inc............................... 12,028,088 15.00
Phelps Dodge Overseas Capital Corporation................ 11,173,796 13.94
---------- ------
66,550,833 83.00%
Common Shares.............................................. 13,633,674 17.00%
---------- ------
Total............................................ 80,184,507 100.00%
========== ======
</TABLE>
F-17
<PAGE> 132
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
17. STOCKHOLDERS' EQUITY -- (CONTINUED)
On February 27, 1996, Cerro Trading Company, Inc. transferred 2,200,000
Class A common stock shares to The Pritzker Family Philanthropic Fund. In
accordance with the Company's Certificate of Incorporation these shares were
automatically converted into common stock of the Company.
Stock Options:
The Company has two stockholder approved plans, a Stock Incentive Plan and
a Directors Stock Award Plan. The Stock Incentive Plan provides for the granting
of nonqualified or incentive stock options, as defined under the Internal
Revenue Code of 1986, as amended, as well as for the award of restricted stock
and bonuses payable in stock. The price at which options may be granted under
the Stock Incentive Plan shall not be less than 100% of the fair market value of
the common stock on the date of grant in the case of incentive stock options, or
50% in the case of other options. In general, options are not exercisable for
six months and expire after 10 years from the date of grant.
Options granted may provide for Stock Appreciation Rights ("SAR"). An SAR
permits an optionee, in lieu of exercising the option, to receive from the
Company payment of an amount equal to the difference between the market value of
the stock on the date of election of the SAR and the purchase price of the stock
under the terms of the option.
The authorized number of shares under the Stock Incentive Plan is 1,000,000
of which 300,000 may be awarded as restricted stock. At December 31, 1996,
927,110 shares are available for future grants under this plan.
The Directors Stock Award Plan provides that directors who are not
compensated as employees of the Company will be automatically awarded 200 shares
of common stock upon election and 200 additional shares following each annual
meeting of stockholders thereafter. 100,000 shares have been reserved for awards
under the Directors Plan. At December 31, 1996, 5,800 shares have been awarded
under this plan.
The Company has elected the disclosure only requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation". Accordingly, no compensation cost has
been recognized for the Stock Incentive Plan. Had compensation cost for the
Company's Stock Incentive Plan been determined based on the fair value at the
grant date for awards in 1996 consistent with the provisions of SFAS No. 123,
the effect on the Company's net earnings and earnings per share would have been
immaterial.
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions used
for grants in 1996: dividend yield of 6.57%; expected volatility of 28.4%;
risk-free interest rate of 6.17%; and expected life of 6.9 years.
18. RELATED PARTIES
Asarco, a stockholder of the Company, provides principally legal, tax,
treasury and administrative support services to the Company. The amounts paid to
Asarco for these services were $0.8 million, $0.3 million and $0.2 million in
1996, 1995, and 1994, respectively.
19. CONCENTRATION OF RISK
The Company operates two copper mines, a smelter and two refineries in Peru
and substantially all of its assets are located there. There can be no
assurances that the Company's operations and assets that are subject to the
jurisdiction of the government of Peru may not adversely be affected by future
actions by such government. Substantially all of the sales of the Company's
products are exported from Peru to customers principally in Europe, the Pacific
Rim and the United States.
F-18
<PAGE> 133
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. CONCENTRATION OF RISK -- (CONTINUED)
Financial instruments which potentially subject the Company to a
concentration of credit risk consist primarily of cash and cash equivalents,
marketable securities and trade accounts receivable.
The Company invests or maintains available cash with various high quality
banks, principally in the U.S., Canada and Peru, or in commercial paper of
highly rated companies. As part of its cash management process, the Company
regularly monitors the relative credit standing of these institutions, and by
policy, limits the amount of credit exposure to any one institution. At December
31, 1996, the Company had invested 40.9% of its cash equivalents and marketable
securities with Peruvian banks, of which 21.7% of this amount was invested with
one institution.
During the normal course of business, the Company provides credit to its
customers. Although the receivables resulting from these transactions are not
collateralized, the Company has not experienced significant problems with the
collection of receivables.
The largest ten trade receivable balances accounted for 56.6% of the trade
accounts receivable at December 31, 1996 of which one customer represented
11.5%.
20. COMMITMENTS AND CONTINGENCIES
Cuajone Investment Recovery:
In December 1991, the Company and the Government of Peru signed an
agreement the ("1991 Agreement") resolving all open issues concerning the
conclusion of the investment recovery contract which governed the development
and operation of the Cuajone mine. The Company agreed to undertake an investment
program over the five years, 1992-1996, and the Peruvian Government agreed not
to discriminate against the Company in comparison with treatment given to other
mining companies. As part of the 1991 Agreement, in 1991 the Company transferred
$55.0 million from its accounts in New York to an interest-bearing account with
the Central Reserve Bank of Peru, to be withdrawn by the Company at its
discretion solely for application to the investment program. In March 1995,
these funds, aggregating $61.1 million, including accumulated interest, were
transferred to the Branch as a capital contribution and used for the capital
spending program. In conjunction with the transfer, labor shareholders
contributed $10.9 million to the capital of the Branch.
At December 31, 1996, the Company had expended $443.6 million under the
five-year capital program agreed to with the Peruvian Government and has met its
obligations under the agreement.
Environmental:
As part of the 1991 Agreement, the Company has made a significant number of
environmental capital expenditures, including, a sulfuric acid plant at the Ilo
smelter for partial recapture of emissions of sulfur dioxide, completed in 1995
at a cost of $103.0 million, a sewage treatment plant at Ilo, completed in 1994
at a cost of $2.0 million, and a tailings storage facility at Quebrada Honda,
which was completed in 1996 at a cost of $40.8 million. The Company also has
incurred capital costs of $3.0 million for environmental projects committed with
the Ilo refinery acquisition. In addition, in April 1996 the Company began a $35
million expansion of the Ilo sulfuric acid plant. The expansion will increase
the capture of sulfur dioxide emissions from the smelter from 18% to 30% and
will also increase sulfuric acid production at the smelter to 330,000 tons per
year in 1998, the expected year of expanded plant operation. Capital
expenditures in connection with these and other environmental projects were
approximately $29.8 million in 1996.
The Company's exploration, mining, milling, smelting and refining
activities are subject to Peruvian laws and regulations, including environmental
laws and regulations, which change from time to time. The Company's recently
approved environmental compliance and management plan, PAMA, sets forth the
investment to be made by the Company to comply with current Peruvian
environmental regulations applicable to its operations. To
F-19
<PAGE> 134
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
20. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
implement the PAMA, the Company is required to make a minimum annual investment
of 1% of net annual sales until compliance is met. The PAMA will require the
Company to make significant additional capital expenditures to achieve
compliance with the maximum permissible levels for its emission and waste
discharges ("MPLs") within a period of five years, except for environmental
controls applicable to its smelter operation which must be put in place within
10 years. The PAMA contemplates a number of environmental projects, the largest
and most capital intensive of which is the planned modernization of the Ilo
smelter. Management believes that under current Peruvian law and regulations,
compliance with the PAMA will satisfy the MPL requirements pertaining to the
Company's operations during the applicable five- or 10-year implementation
period. The Company remains, however, subject to other environmental
requirements applicable to its operations.
Litigation:
In February 1993, the Mayor of Tacna brought a lawsuit against SP Limited
seeking $100 million in damages from alleged harmful deposition of tailings,
slag and smelter emissions. On May 3, 1996, the Superior Court of Tacna, Peru
affirmed the lower court's dismissal. In May 1996, the plaintiff appealed and
the case presently is before the Peruvian Supreme Court. There is generally no
further right of appeal, however, the Peruvian Supreme Court may grant
discretionary review on limited issues in exceptional cases.
In April 1996, SP Limited was served with a complaint filed in Peru by
approximately 800 former employees challenging the accounting of the Company's
Peruvian Branch and its allocation of financial results to the Mining Community,
the former legal entity representing workers in Peruvian mining companies, in
the 1970's. The complaint seeks the delivery of a substantial number of labor
shares of the Peruvian Branch plus dividends and contains similar allegations to
those made in a prior lawsuit dismissed in September 1995. In August 1996, 64
additional former employees filed a similar lawsuit. SP Limited, other present
and former corporate shareholders of SP Limited and certain other companies are
defendants in a lawsuit in federal district court in Corpus Christi, Texas
brought in September 1995 by 698 Peruvian plaintiffs seeking damages for
personal injury and property damage allegedly caused by the operations of SP
Limited in Peru. Plaintiffs have appealed from the district court order
dismissing the complaint and from an earlier order of that court denying
plaintiffs' motion to remand the case to state court. Oral arguments were heard
in December 1996 and the appellate court's decision is pending.
It is the opinion of management that the outcome of the legal proceedings
mentioned, as well as other miscellaneous litigation and proceedings now
pending, will not materially adversely affect the financial position of the
Company and its consolidated subsidiaries. However, it is possible that
litigation matters could have a material effect on quarterly or annual operating
results, when they are resolved in future periods.
F-20
<PAGE> 135
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
21. SUMMARIZED FINANCIAL INFORMATION OF SIGNIFICANT SUBSIDIARY
The condensed consolidated financial information for Southern Peru Limited,
a wholly owned subsidiary of Southern Peru Copper Corporation, included in the
consolidated financial statements of the Company, is summarized below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
STATEMENT OF EARNINGS AND CASH FLOW
Earnings:
Net Sales............................................ $ 753.0 $ 928.8 $ 701.7
Operating income..................................... 248.8 366.7 142.0
Net earnings......................................... $ 180.5 $ 217.8 $ 91.2
Cash Flow:
Operating activities................................. $ 158.8 $ 330.4 $ 134.9
Investing activities................................. (79.3) (119.5) (138.8)
Financing activities................................. (127.6) (86.1) 64.7
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 1995
-------- ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
BALANCE SHEET
Current assets................................................... $ 403.1 $482.8
Non current assets............................................... 876.7 788.9
Current liabilities.............................................. 105.3 170.4
Noncurrent liabilities........................................... 137.1 122.9
Minority interest................................................ 22.4 25.0
Stockholders' equity............................................. 1,015.0 953.5
</TABLE>
Southern Peru Limited, a wholly owned subsidiary of Southern Peru Copper
Corporation, holds all the operating assets and liabilities of the Company and
does not hold any other operating assets. Accordingly, the effect of the
exchange offer described in note 2 has been reflected in the summary financial
information presented above.
22. SUBSEQUENT EVENT
On February 21, 1997, the Company entered into agreements with Powerfin
Peru S.A., a wholly owned subsidiary of Tractebel S.A. ("Tractebel") for the
sale of a new turbine at its Ilo power plant and a twenty year power purchase
agreement for its copper operations in Peru. Negotiations are being finalized
covering the sale of the Company's existing power plant assets. Closing of the
transaction is subject to obtaining necessary Peruvian government approvals.
F-21
<PAGE> 136
REPORT OF INDEPENDENT ACCOUNTANTS WITH RESPECT TO
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
To the Board of Directors and Stockholders of
Southern Peru Copper Corporation:
We have reviewed the condensed consolidated balance sheet of SOUTHERN PERU
COPPER CORPORATION and SUBSIDIARIES as of June 30, 1997 and the condensed
consolidated statements of earnings and cash flows for the three month and six
month periods ended June 30, 1997 and 1996. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1996, and the
related consolidated statements of income, retained earnings, and cash flows for
the year then ended (not presented herein); and in our report dated January 28,
1997 we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1996, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
COOPERS & LYBRAND L.L.P.
New York, New York
July 21, 1997
F-22
<PAGE> 137
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS,
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Net sales:
Stockholders and affiliates........................................ $ 38,415 $ 31,248
Others............................................................. 402,593 338,329
-------- --------
Total net sales............................................ 441,008 369,577
-------- --------
Operating costs and expenses:
Cost of sales...................................................... 228,296 176,855
Administrative and other expenses.................................. 26,668 24,254
Depreciation, amortization and depletion........................... 23,107 20,670
Provision for workers' participation............................... 10,875 10,445
Exploration expense................................................ 2,712 1,147
-------- --------
Total operating costs and expenses......................... 291,658 233,371
-------- --------
Operating income................................................... 149,350 136,206
Interest income...................................................... 7,679 11,070
Other income......................................................... 4,660 4,855
Interest expense..................................................... (7,268) (6,337)
-------- --------
Earnings before taxes on income and minority interest of labor 154,421
shares............................................................. 145,794
Taxes on income...................................................... 35,587 48,093
-------- --------
Earnings before minority interest of labor shares.................... 118,834 97,701
Minority interest of labor shares.................................... 3,418 3,364
-------- --------
Net earnings......................................................... $115,416 $ 94,337
======== ========
Per common share amounts:
Net earnings(a).................................................... $ 1.44 $ 1.18
Dividends paid..................................................... $ 0.65 $ 0.95
Weighted average number of shares outstanding...................... 80,197 80,204
</TABLE>
- ---------------
(a) The effect of the calculation of net earnings per common share of the
Company's Common Stock equivalents (shares under option) was insignificant.
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE> 138
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
1997 1996
----------- ----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 210,323 $ 173,205
Marketable securities............................................. 208,792 1,000
Accounts receivable, net.......................................... 101,140 89,587
Inventories....................................................... 121,391 118,681
Prepaid taxes..................................................... 81,300 14,019
Other current assets.............................................. 6,128 6,618
---------- ----------
Total current assets........................................... 729,074 403,110
Net property........................................................ 854,632 855,808
Other assets........................................................ 29,108 20,931
---------- ----------
Total Assets.............................................. $ 1,612,814 $1,279,849
========== ==========
LIABILITIES
Current liabilities:
Current portion of long-term debt................................. $ 23,683 $ 23,683
Accounts payable.................................................. 52,190 33,864
Accrued liabilities............................................... 44,385 47,768
---------- ----------
Total current liabilities...................................... 120,258 105,315
---------- ----------
Long-term debt...................................................... 271,050 82,892
Deferred credits.................................................... 69,780 --
Deferred income taxes............................................... 47,363 49,426
Other liabilities and reserves...................................... 3,952 4,806
---------- ----------
Total non-current liabilities.................................. 392,145 137,124
---------- ----------
Minority interest of labor shares................................... 22,094 22,383
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, par value $0.01(a).................................... 143 137
Class A common stock, par value $0.01(b)............................ 659 666
Additional paid-in capital.......................................... 265,745 265,745
Retained earnings................................................... 812,242 749,267
Treasury stock at cost (c).......................................... (472) (788)
---------- ----------
Total stockholders' equity................................ 1,078,317 1,015,027
---------- ----------
Total Liabilities, Minority Interest and Stockholders'
Equity.................................................. $ 1,612,814 $1,279,849
========== ==========
(a) Common shares: Authorized....................................... 34,099 33,449
Outstanding................................... 14,302 13,634
(b) Class A common shares Authorized & Outstanding.................. 65,901 66,551
(c) Treasury stock common shares.................................... 28 46
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE> 139
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings......................................................... $115,416 $ 94,337
Adjustments to reconcile net earnings to net cash provided from
operating activities:
Depreciation, amortization and depletion.......................... 23,107 20,670
Provision for deferred income taxes............................... (1,955) 2,216
Minority interest of labor shares................................. 3,417 3,364
Net loss on sale of investments and property...................... 268 286
Cash provided from (used for) operating assets and liabilities:
Accounts receivable............................................. (11,594) 37,635
Inventories..................................................... (2,710) (4,830)
Accounts payable and accrued liabilities........................ 16,674 (52,898)
Other operating assets and liabilities.......................... 3,342 (17,073)
Foreign currency transaction gain............................... (1,035) (2,428)
-------- --------
Net cash provided from operating activities.................. 144,930 81,279
-------- --------
INVESTING ACTIVITIES
Capital expenditures................................................. (61,354) (51,931)
Purchases of held-to-maturity investments............................ (208,792) --
Proceeds from held-to-maturity investments........................... 1,000 42,453
Proceeds from the sale of investments and property................... 41,885 --
-------- --------
Net cash used for investing activities....................... (227,261) (9,478)
-------- --------
FINANCING ACTIVITIES
Dividends paid....................................................... (52,125) (76,204)
Proceeds from borrowings............................................. 200,000 47,000
Repayment of borrowings.............................................. (11,842) (8,531)
Escrow deposits and finance fees on long-term loans.................. (11,878) (10,152)
Purchase of labor share interest..................................... (4,606) (2,681)
Distributions to minority interests.................................. (1,303) (2,703)
Net treasury stock transactions...................................... -- (1,155)
-------- --------
Net cash provided for (used for) financing activities........ 118,246 (54,426)
-------- --------
Effect of exchange rate changes on cash................................ 1,203 716
-------- --------
Net increase in cash and cash equivalents.............................. 37,118 18,091
Cash and cash equivalents, beginning of period......................... 173,205 219,646
-------- --------
Cash and cash equivalents, end of period............................... $210,323 $237,737
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE> 140
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the Company's financial
position as of June 30, 1997 and the results of operations and cash flows for
the six months ended June 30, 1997 and 1996. This financial data has been
subjected to a limited review by Coopers & Lybrand L.L.P., the Company's
independent accountants. The results of operations for the six month period
are not necessarily indicative of the results to be expected for the full
year. The year end condensed consolidated balance sheet data was derived from
audited financial statements, but does not include all disclosures required
by generally accepted accounting principles. The accompanying unaudited
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
1996 annual report on Form 10-K.
B. In the first quarter of 1997, the Government of Peru approved a reinvestment
allowance for the Company's program to expand the Cuajone mine. The
reinvestment allowance provides the Company with tax incentives in Peru and,
as a result, certain U.S. tax credit carryforwards, for which no benefit has
previously been recorded, are expected to be realized. The estimated net
earnings impact of the reduction in the Company's effective tax rate, as a
result of the reinvestment allowance, for the six months ended June 30, 1997
is approximately $7.7 million. Pursuant to the reinvestment allowance the
Company will receive tax deductions in Peru in amounts equal to the cost of
the qualifying property (approximately $245 million). As qualifying property
is acquired, the financial statement carrying value of the qualifying
property will be reduced to reflect the tax benefit associated with the
reinvestment allowance (approximately $73 million). As a result, financial
statement depreciation expense related to the qualifying property will be
reduced over its useful life (approximately 15 years).
C. INVENTORIES WERE AS FOLLOWS:
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
1997 1996
------------- ---------------
(IN MILLIONS)
<S> <C> <C>
Metals at lower of average cost or market:
Finished goods........................................ $ 1.4 $ 2.4
Work-in-process....................................... 48.8 47.1
Supplies at average cost, net of reserves............... 71.2 69.2
------ ------
Total inventories....................................... $ 121.4 $ 118.7
====== ======
</TABLE>
D. METAL HEDGING ACTIVITIES:
Depending on the market fundamentals of a metal and other conditions, the
Company may purchase put options to reduce or eliminate the risk of metal price
declines on a portion of its anticipated future production. Put options
purchased by the Company establish a minimum sales price for the production
covered by such put options and permit the Company to participate in price
increases above the option price. Depending upon market conditions the Company
may sell put options it holds or exercise the options at maturity. Gains or
losses, net of unamortized acquisition costs are recorded as current liabilities
or current assets and are subsequently recognized in the period in which the
underlying hedged production is sold.
F-26
<PAGE> 141
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
D. METAL HEDGING ACTIVITIES -- (CONTINUED)
Earnings for the first six months included a pre-tax gain of $5.6 million
in 1997 and a pre-tax loss of $0.3 million in 1996 from the Company's price
protection program. There were no pre-tax gains or losses from price protection
in the second quarter of 1997 compared with a pre-tax gain of $0.5 in the second
quarter of 1996.
COPPER PRICE PROTECTION HELD AT JUNE 30, 1997
(IN MILLIONS, EXCEPT PER LB. AMOUNTS)
<TABLE>
<CAPTION>
PERCENT OF
STRIKE PRICE UNAMORTIZED ESTIMATED
POUNDS PERIOD PER POUND COST PRODUCTION
----------------------------------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
94.1............................... 10/97-12/97 $ 0.95 $ 1.4 54%
44.0............................... 1/98-3/98 $ 0.95 0.6 28%
$ 2.0
</TABLE>
At June 30, 1997, the Company has recorded sales of 73.6 million pounds of
copper, at a provisional price of $1.17 per pound. These sales are subject to
final pricing based on the average monthly LME copper price, principally in the
third quarter of 1997.
E. On May 22, 1997, the Company sold $150 million of Secured Export Notes
through a Rule 144A and Regulation S offering with registration rights. The
notes mature in 2007 and were priced at par with a coupon rate of 7.90%. On June
24, 1997, the Company sold $50 million of 8.25% bonds due June 2004. The debt
was issued through Southern Peru Limited, a wholly owned subsidiary of the
Company. Early in the second quarter, the Company also entered into a $600
million, seven year backstop loan facility with a group of international
financial institutions. The proceeds of the aforementioned borrowings will be
used to finance the Company's $1 billion expansion and modernization program at
its Cuajone copper mine and Ilo smelter.
F. COMMITMENTS AND CONTINGENCIES:
Litigation
In February 1993, the Mayor of Tacna, Peru, brought a lawsuit against SP
Limited seeking $100 million in damages from alleged harmful deposition of
tailings, slag and smelter emissions. On May 3, 1996, the Superior Court of
Tacna, Peru affirmed the lower court's dismissal. In May 1996, the plaintiff
appealed and the case presently is before the Peruvian Supreme Court. There is
generally no further right of appeal, however, the Peruvian Supreme Court may
grant discretionary review on limited issues in exceptional cases.
In April 1996, SP Limited was served with a complaint filed in Peru by
approximately 800 former employees challenging the accounting of the Company's
Peruvian Branch and its allocation of financial results to the Mining Community,
the former legal entity representing workers in Peruvian mining companies, in
the 1970's. The complaint seeks the delivery of a substantial number of labor
shares of the Peruvian Branch plus dividends and contains similar allegations to
those made in a prior lawsuit dismissed in September 1995. As of March 31, 1997,
127 additional former employees filed a similar lawsuit. During the second
quarter of 1997, SP Limited was served with an adverse opinion by the lower
court. Peruvian outside counsel has informed SP Limited that the lower court
decision is not supported by facts or law and that the possibility that it will
not be reversed or nullified by Peruvian Courts following appeal is remote. An
appeal was filed during the second quarter of 1997.
F-27
<PAGE> 142
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
G. SUMMARIZED FINANCIAL INFORMATION OF SIGNIFICANT SUBSIDIARY:
Southern Peru Limited: Southern Peru Limited is a wholly owned subsidiary
of Southern Peru Copper Corporation. Southern Peru Limited holds all the
operating assets and liabilities of the Company.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------
1997 1996
------- ------
(IN MILLIONS)
<S> <C> <C>
STATEMENT OF EARNINGS AND CASH FLOW
Earnings:
Net sales....................................................... $ 441.0 $369.6
Operating income................................................ 149.4 136.2
Net earnings.................................................... $ 115.4 $ 94.3
Cash flow:
Operating activities............................................ $ 143.6 $ 78.6
Investing activities............................................ (227.3) (9.5)
Financing activities............................................ $ 119.5 $(51.7)
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
1997 1996
------------ ---------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET
Current assets........................................... $ 729.1 $ 403.1
Noncurrent assets........................................ 883.7 876.7
Current liabilities...................................... 120.3 105.3
Noncurrent liabilities................................... 392.1 137.1
Minority interest........................................ 22.1 22.4
Stockholders' equity..................................... 1,078.3 1,015.0
</TABLE>
H. On April 18, 1997, the Company completed the sale of its Ilo power plant to a
subsidiary of Tractebel S.A. ("Tractebel"), for $41.9 million. In connection
with the sale, a twenty-year power purchase agreement was also completed, under
which Tractebel will provide the Company with its power needs for the next
twenty years. Under the agreement, the Company's cost of power will increase
somewhat from its current level, while the Company will benefit by avoiding
significant capital expenditures that would be required to meet the needs of
expanded operations.
I. IMPACT OF NEW ACCOUNTING STANDARD:
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 128, "Earnings Per Share" (the "Statement").
The Statement specifies the computation, presentation and disclosure
requirements for earnings per share ("EPS"). It will require the Company to
present both basic and diluted EPS amounts for income from continuing operations
and net income on the face of the income statement. The Company does not expect
the impact of this statement to have a material effect on its calculation of
EPS. The statement will be effective for financial statements issued for periods
ending after December 15, 1997, including interim periods.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income". The
Company is currently assessing the impact of this statement, which is effective
for fiscal years beginning after December 15, 1997.
F-28
<PAGE> 143
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
J. SUBSEQUENT EVENTS:
On July 31, 1997, the Company prepaid the remaining $40.0 million balance
on a variable rate loan from Mitsui & Co., Ltd. The payment will result in a
charge of $0.4 million for unamortized loan fees.
F-29
<PAGE> 144
ANNEX A
THE REPUBLIC OF PERU
The information in this Annex A is based upon material obtained from public
sources, including publications and materials from participants in the Peruvian
securities markets and financial sector. The information is believed to be
accurate but has not been independently verified by SP Limited, SPCC, the
Initial Purchasers, or any of their respective advisors.
TERRITORY AND POPULATION
The Republic of Peru, with a total area of 1.3 million square kilometers,
is the third largest country in South America. It borders with the Pacific ocean
to the West, Ecuador and Colombia to the North, Brazil to the East, and Bolivia
and Chile to the South. The Amazon jungle extends throughout a large part of the
territory, and another considerable portion is occupied by the Andes mountains.
The total estimated population is 25.5 million as of December 1995, which makes
Peru the fourth most populous country in South America. As of 1995, 29.9% of
Peruvians lived in rural areas, while 70.1% resided in urban areas, with close
to 7 million people living in Peru's capital, Lima, and its vicinity. Lima is
located on the central coast, next to the port of Callao. One third of the
Peruvian labor force is based in the Lima area, where the country's economic
activity is concentrated. A large percentage of the Peruvian workforce labors in
low productivity informal activities. In 1994, the literacy rate was 87.2%.
Although Spanish is the official language of Peru and is spoken by the great
majority of the population, Quechua, Aymara, and other indigenous languages are
also spoken extensively in some areas.
RECENT HISTORY
Between 1960 and 1990, two political parties, Accion Popular ("AP") and
Alianza Popular Revolucionaria Americana ("APRA"), dominated Peruvian politics.
AP governed Peru from 1963-68, and again from 1980-85. In 1968, democracy was
interrupted by a left wing military coup. Many foreign firms were nationalized,
and government intervention in the economy increased dramatically until the late
1970s, when the economic situation deteriorated rapidly. A new constitution was
passed in 1979. In that year, a major terrorist movement began a campaign of
violence against the government and citizens of Peru, followed in 1983 by a
second terrorist group. In 1985, a young APRA leader was elected president for a
five-year term. Amid massive state intervention and growing violence, the
economy deteriorated rapidly beginning in 1988.
The 1990 Presidential election displaced traditional parties with the
election of the current president, a political outsider who won the presidency
as an independent candidate. The current government dramatically changed the
economic environment by embracing free market policies and made substantial
progress in suppressing terrorist activity, including the arrest (and
imprisonment for life) of the leaders and principal lieutenants of both
terrorist groups in 1992.
In 1992, Congress was dissolved and the election of a new congressional
body that would be responsible for the drafting of a new Constitution took
place. The new Peruvian Constitution was approved by a public referendum on
October 31, 1993, became effective on December 31, 1993, and remains the charter
governing Peru today.
GOVERNMENT AND POLITICAL SYSTEM
Under the new Constitution, the executive power rests with the president,
under whom there are two vice-presidents. The legislature consists of a
unicameral congressional body, composed of 120 representatives who are elected
nationally. The president and representatives are each elected for concurring
five-year terms. The judicial power rests with the Supreme Court, whose members
are appointed by the Consejo Nacional de la Magistratura, a committee consisting
of members of various public institutions. In addition to this structure at the
national level, there are provincial and district municipalities that are
governed by mayors who are elected for terms that currently stand at three years
but will be extended to four and then five years in the following two elections.
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<PAGE> 145
In April 1995, the incumbent was elected to a second five-year term with
64% of the vote. The administration's political party, the Cambio 90-Nueva
Mayora also obtained a majority vote in the Congressional election and currently
holds a majority in Congress. Since taking office again in July 1995, the
current administration has continued to implement political and economic
reforms.
THE PERUVIAN ECONOMY
In the last years of the previous administration, Peru's economy
deteriorated dramatically. Inflation reached 1,772% in 1988 and 2,775% in 1989.
Price increases exceeded 100% per month in July of 1990. GDP declined rapidly
during the same period (-8.8% in 1988 and -11.6% in 1989), and by the middle of
1990, national production had fallen to the levels of the mid-1970s, while per
capita GDP fell to the levels of the early 1960s. Peru was also isolated from
the international financial system as a result of its failure to service its
foreign debt, including debt due to the International Monetary Fund ("IMF") and
the World Bank. In addition, by mid-1990, tax revenues had collapsed to 5.9% of
GDP, price and wage controls were widespread, multiple exchange rates and
capital controls were in place, and a complex web of high tariffs, import
prohibitions and quotas existed. All public utilities were in state hands, as
were large parts of banking, mining, oil and fishing activities.
Shortly after taking office in July 1990, the current government launched
an economic stabilization and restructuring program. The government eliminated
all price controls, substantially reduced wage controls, eliminated restrictions
on capital flows, freed the exchange rate, liberalized imports, controlled
monetary expansion and instituted emergency taxes to reduce the fiscal deficit.
Further, the government established an agenda to reform and reduce government
institutions (including drastic deregulation), instituted a wide-ranging
privatization plan, and sought to re-establish relations with the international
financial community.
The results of this stabilization and restructuring program have been
dramatic. Inflation fell from a high of 7,650% in 1990 to 39.5% in 1993, 15.4%
in 1994 and 10.2% in 1995. In 1996, the inflation rate was 11.8%. GDP in real
terms grew by 5.3% in 1993, 12.8% in 1994, 6.9% in 1995 and 2.5% in 1996. Direct
foreign investment grew from US$1.5 billion in 1992 to US$27 billion in 1996.
Private sector investment grew from 12.3% of GDP in 1990 to 17.6% of GDP in
1994, 19.7% of GDP in 1995 and 18.5% in 1996.
Government Finances
An important achievement of Peru's economic reform has been the improvement
of the fiscal deficit. The fiscal deficit dropped from 6.1% of the country's GDP
in 1989 to a 2.9% surplus in 1994, a 0.6% deficit in 1995, and a 1.1% surplus in
1996. The main factor driving this reduction has been the increase in government
current revenues from 9.2% of GDP in 1989 to 13.0% of GDP in 1994, 13.7% in 1995
and 14.1% in 1996. Revenues from privatization have also bolstered government
finances, representing an additional 4.7% of GDP in 1994, 1.6% of GDP in 1995
and 4.2% of GDP in 1996. Since 1990, neither the government nor the public
sector has received financing, directly or indirectly, from the Central Bank.
The present administration has implemented an extensive program to improve
the Peruvian tax and tax collection system. After the emergency tax measures of
1990, a substantial simplification of the tax system was established. A complex
and inefficient tax system was replaced with four broad-based taxes: an 18%
value added tax, a 30% general corporate income tax (with a minimum asset-based
tax), a two-tier (15% and 25%) import tariff structure, and a selective tax
levied on fuels, alcoholic beverages, and a small number of other products. In
addition, the government has imposed strict sanctions for tax evasion and has
begun cross-referencing tax information with the assistance of a project
sponsored by the IMF. Tax authority has been restructured and is operating with
simpler and more efficient procedures and a better information system.
The Privatization Program
The present administration's economic reform also aimed at terminating the
state's direct participation in entrepreneurial activities. The privatization
program already has generated US$5 billion in proceeds. The largest
privatization to date occurred in February 1994, when a consortium consisting of
Telefonica de Espana and affiliates of Banco Wiese and Grana y Montero S.A. won
the bidding to obtain a 35% controlling stake in each of Peru's two
state-controlled telecommunications companies, CPT and ENTEL. The acquisition
price was US$2.2
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billion. The government further divested its interest in these companies, now
merged into Telefonica del Peru, through a US$1.2 billion global offering in
July 1996.
Other important privatizations have taken place. In July 1994, the
electricity distribution system of Lima, EDELNOR and EDELSUR (now Luz del Sur),
was privatized. The government sold 60% of the shares of these two companies for
US$389 million. In that same month, Interbanc, one of the state-owned commercial
banks, was sold for US$51 million. In October 1994, the Tintaya copper mine was
sold for US$218 million in cash and US$55 million of Peruvian debt. In November
1994, the Cajamarquilla zinc refinery was sold for US$153 million in cash and
US$40 million in Peruvian debt. In May 1995, the government sold 60% of Banco
Continental for US$196.7 million in cash and US$60 million of Peruvian debt. On
October 1995, 60% of EDEGEL, a power generation company, was sold for US$424.4
million in cash and US$100 million of Peruvian debt. In February 1996, the
Siderperu steel plant was sold for US$167 million in cash and US$26 million of
Peruvian debt. In May 1996, 60% of the La Pampilla oil refinery was sold for
US$180 million. Concession rights for two oil fields operated by Petroperu have
been sold for a total US$344 million. Other privatizations during 1996 included
several fish meal plants for US$38 million, mining concessions for US$29 million
(Centromin's project Antamina bought by Inmet Mining Co. & Rio Algom Ltd., has
an investment commitment of US$2.5 billion) and electricity generators and
distributors for US$543 million (includes Empresa de Generacion Electrica Nor
Peru sold for US$228 million plus an investment commitment of US$42 million).
Over 50 smaller privatizations have taken place, including the sale of an iron
mine, an airline, fish meal plants, a hotel chain, gas stations, four cement
plants, mining concessions and small mines, and several small electricity
generators and distributors.
During 1997, Electro Sur Medio S.A. was sold for US$26 million plus a
similar amount in committed investment; other small companies, including a radio
station and a paper mill, were sold for US$32 million. In April an interest in
Centromin's La Oroya metallurgical complex was sold to Industrias Penoles de
Mexico, for US$185 million. Other privatizations scheduled for 1997 include the
remaining electricity generation and distribution companies in Lima and the rest
of the country (including the 1,012MW Mantaro hydroelectric power plant), as
well as the Talara oil refinery and CENTROMIN, a mining conglomerate.
The Peruvian state has retained minority holdings in some companies that
have recently been privatized, such as EDEGEL, EDELNOR and Banco Continental.
These retained shares will be transferred to private investors through offerings
in the local and international capital markets. A central objective of this
program is to promote broad-based ownership of these companies in Peru.
Balance of Payments
The Peruvian trade balance dropped from a surplus of US$399 million in 1990
to a deficit of US$2.0 billion in 1996 as a result of trade liberalization,
economic growth, and the real appreciation of the local currency. Imports
increased from US$2.9 billion in 1990 to US$7.9 billion in 1996. Exports also
grew substantially, from US$3.3 billion in 1990 to US$5.9 billion in 1996. The
current account registered a deficit of US$4.2 billion in 1995 and US$2.6
billion in 1996 (compared with a deficit of US$1.1 million in 1990) due
essentially to the increase in the trade deficit. The capital account, on the
other hand, had a surplus of US$3.2 billion in 1995 and was break-even in 1996
(compared with a deficit of US$588 million in 1990) mainly due to direct foreign
investment, capital repatriation and portfolio investment flows. Foreign
reserves increased by 16.1% from US$5.7 billion in December 1994 to US$6.6
billion in December 1995 and by 13% to US$8.5 billion in December 1996.
Peruvian exports are relatively diversified, although mining products
represented 43.2% of total exports in 1994, 46.8% in 1995 and 45.0% in 1996. In
1996, copper represented 17.8% of total exports, gold 9.8%, zinc 6.8%, lead
4.7%, and oil and petroleum derivatives 6.0%. Other important traditional
products include fishmeal, which represented 14.1% of 1996 exports, and coffee,
which accounted for 3.8% of 1996 exports. The main non-traditional exports are
textiles, agricultural products, iron and steel products, and fresh and canned
seafood. In 1995 and 1996, non-traditional products represented 25.8% and 27.6%
of total exports, respectively. Peru's most important export markets are the
European Community (28.8%), the United States (21.2%) and Japan (10.2%). The
Andean Pact nations as a whole represent approximately 10% of exports.
Imports rose 37.9% in 1995 and 1.7% in 1996, with the private sector
accounting for over 83% of imports. In 1996, 23.4% of imports were consumption
goods (of which half were consumer durables), 41.0% were
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intermediate goods (three quarters of which were raw materials for industries),
and 30.7% were capital goods. As a result of the increase in investment, capital
goods imports showed high growth rates in 1994 and 1995, but recorded a
contraction of 0.5% in 1996. The largest part of Peruvian imports come from the
United States (30.1%), followed by the European Community (13.0%), the Andean
Pact (12.6%) and Japan (6.8%).
External Debt
An important element of the current administration's economic program was
the effort to re-establish ties with the international financial community. On
September 12, 1991, the IMF approved the Peruvian government's economic
stabilization program. The arrears obligations were effectively rescheduled
based on a Rights Accumulation Program ("RAP") designed by the IMF for Peru. A
similar arrangement was implemented with the World Bank. These programs set
quarterly macroeconomic targets to be met by the government and gave Peru the
right to receive future loans. The Peruvian government met all the goals of the
RAP and in March 1993 paid its arrears obligations with the IMF and World Bank,
effectively rolling over a total of US$1.8 billion in loans and receiving new
loans of US$600 million.
In March 1993, the Peruvian government reached an agreement with the IMF
for a three year Extended Fund Credit Facility (EFF). Upon compliance with
annual and quarterly macroeconomic goals, the Peruvian government would have
access to IMF financing. Although the financing facilities were not actually
needed or used, the Peruvian government complied with every quarterly goal
throughout the three-year duration of the program. In May 1993, the Peruvian
government completed negotiations with the Paris Club member governments,
reducing Peru's annual debt payments for the 1993-1995 period from US$1 billion
to approximately US$400 million. In addition, interest rates were reduced,
development aid debt was rescheduled for 20 years, and all other credits were
rescheduled for 15 years. Peru also received commitments for over US$910 million
in concessionary credit and donations from the donor countries and multilateral
institutions.
In May 1996, a new agreement with the IMF was reached for a three-year EFF,
covering the 1996-98 period. This new agreement provided the basis for
negotiations with the Paris Club and the closing of the Brady Plan debt
restructuring program. In July 1996, Peru negotiated a new agreement with
respect to the remaining debt with the Paris Club. This debt which, as of March
1996, totaled US$9,422 million was rescheduled over 23 years.
The Peruvian government also took steps toward resuming negotiations with
commercial banks in respect of Peruvian public sector loans. In November 1992,
as a first step toward resuming negotiations with commercial banks, Peru issued
a Tolling Declaration by which Peru agreed not to assert any defense based on a
statute of limitations, laches or the passage of time in suits in various
foreign courts brought by commercial banks in respect of Peruvian public sector
loans. In response to the issuance of the Tolling Declaration and in
anticipation of the resolution of bilateral issues involving certain bank
lenders, as well as certain other issues, the Bank Advisory Committee ("BAC")
for Peru expressed its willingness to seek the dismissal without prejudice of
various lawsuits initiated against various public sector borrowers if
substantially all such pending litigation were to be simultaneously dismissed.
Substantially all such litigation was subsequently dismissed.
In November 1996, the Peruvian government and the BAC executed an agreement
on Peru's Brady Plan debt restructuring program, which closed in the first
quarter of 1997. Pursuant to Peru's Brady Plan, US$4.4 billion in principal is
to be exchanged for (i) dollar-denominated discount bonds (45% discount) with a
bullet maturity of 30 years and a floating interest rate of LIBOR (the London
inter-bank offered rate) plus 0.8125% per annum, (ii) dollar-denominated par
bonds with a bullet maturity of 30 years and fixed interest rates increasing
from 3% per annum initially to 5% per annum in the twenty-sixth year, (iii)
dollar-denominated front-loaded interest reduction bonds with a maturity of 20
years, amortizing after eight years following issuance, with fixed interest
rates increasing from 3.25% per annum initially to 5% per annum in the tenth
year and a floating interest rate of LIBOR plus 0.8125% per annum in the
eleventh through twentieth years or (iv) cash pursuant to a Dutch auction
buyback in which Peru has agreed to repurchase at least US$1.3 billion of
principal and all associated interest. All past due interest associated with
such US$4.4 billion in principal is to be exchanged for (i) dollar-denominated
past due interest bonds with a maturity of 20 years, which begin amortizing five
years after issuance and bear interest at fixed rates increasing from 4% per
annum initially to 5% per annum in the tenth year and bear interest at a
floating rate per annum in the eleventh through twentieth years and (ii) a pro
rata portion of a US$225
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million cash payment to be made by Peru. In addition to the collateralization of
the principal amount of both the par and discount bonds with US Treasury bonds,
interest payments for both the par and discount bonds are to be collateralized
in an amount equal to six months of interest on a rolling basis. Interest
payments for the front-loaded interest reduction bonds are to be collateralized
in an amount equal to six months of interest for the first ten years on a
rolling basis.
Peru's total foreign debt as of December 1996 was US$33.4 billion,
equivalent to 53.3% of 1996 GDP. These figures include past due interest
generated by the lack of servicing of Peru's commercial bank debt. The majority
of the debt is owed by the public sector and most of this is owed to Paris Club
governments and multilateral financial organizations. Most of the existing debt
was originally contracted in the 1970s and early 1980s and ceased to be
adequately serviced during the 1980s, before resumption of servicing of most of
it during the Fujimori administration.
The following table is a summary of Peru's foreign debt structure as of
December 31, 1996 (in millions).
<TABLE>
<CAPTION>
TOTAL PUBLIC PRIVATE
YEAR TOTAL LONG-TERM LONG-TERM LONG-TERM SHORT-TERM
----------------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1996............. US$ 33,428 US$ 27,815 US$ 25,340 US$ 1,471 US$ 5,613
</TABLE>
- ---------------
Source: Central Bank. "Public Long-term" includes Central Bank.
Gross Domestic Product
After in effect remaining stagnant for approximately 15 years, Peru's GDP
began growing strongly in 1993. The following table sets forth Peru's GDP and
its rate of growth for 1992 through 1996.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
PRODUCTION
Nominal GDP (S/million)............ 52,170 80,010 109,887 132,362 153,512
Real GDP growth(%)................. (1.4) 6.4 13.1 6.9 2.5
</TABLE>
- ---------------
Source: INEI
Private sector investment has been the fastest growing component of GDP in
the last years, as both local and foreign business sought to take advantage of
the opportunities created by the Fujimori administration's economic policy and
the increasing stability of the economy. The following table provides the
composition of Peruvian aggregate demand and GDP between 1992 and 1996.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Aggregate Demand........................... 102.2 102.8 102.9 104.9 104.5
Private Sector Consumption................. 79 77.7 73.6 72.4 75
Public Sector Consumption.................. 6.6 6.6 7.3 8.3 7.6
Private Sector Investment.................. 13.3 15.1 18.1 20.1 18.5
Public Sector Investment................... 3.1 3.4 3.9 4.1 3.4
Gross Domestic Products.................... 100 100.0 100.0 100.0 100
Exports.................................... 10.8 10.7 11.4 11.6 12
Imports.................................... 13 (13.5) (14.3) (16.5) (16.4)
</TABLE>
- ---------------
Source: Central Bank.
The composition of Peru's GDP by productive sectors has not changed
substantially in the last thirty years, with the exception of an increase in the
participation of electricity, communications, water and construction as the
population with access to basic services and housing has increased. The leading
sectors of the Peruvian economy continue to be manufacturing (including mineral,
petroleum, and fishmeal processing), commerce and other services, and
agriculture. Other formal services (transportation, banking, communications,
etc.) and informal
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<PAGE> 149
activities (mostly in service sectors) also comprise a substantial part of GDP.
The following table provides a breakdown of GDP by sector for 1996 (estimated).
<TABLE>
<CAPTION>
1996
----------
(% OF GDP)
<S> <C>
Manufacturing.................................................... 22.6
Commerce and other services(1)................................... 14.1
Agriculture, livestock, and forestry............................. 12.9
Construction..................................................... 8.8
Mining........................................................... 9.1
Electricity and water............................................ 1.5
Fishing.......................................................... 1.3
Other............................................................ 29.7
</TABLE>
- ---------------
Sources: INEI
(1) Includes, among others, restaurants and hotels.
Monetary Policy
Monetary policy is managed by the Central Bank, the Board members of which
are appointed by Congress and the Executive for five year periods, and may not
be removed. The Central Bank's sole mandate is to attain monetary stability.
Exchange rate policy is set by the Central Bank. The local currency is the Sol.
Since 1991, the Central Bank has sought to increase the money supply in
line with the requirements set by economic growth and by the need to remonetize
the economy after the 1988-1990 hyperinflation. Monetary policy has succeeded in
reducing inflation dramatically in the last few years, while allowing for GDP
growth. The main mechanism for increasing the money supply during the last few
years has been Central Bank's purchase of foreign currency in the free foreign
exchange market. There are no limits or controls on capital inflows or outflows,
and the exchange rate has been essentially freely floating since 1991. Central
Bank intervention is usually restricted to limiting a further real appreciation
of the local currency by purchasing dollars.
The Central Bank also sets reserve requirements for banks, with the current
level being 9% for local currency deposits and 45% for foreign currency
deposits. The latter reflects an interest in reducing risks associated with
capital outflows and an effort to reduce further appreciation pressures on the
local currency. Approximately 66% of all loans and deposits in the commercial
banking system are expressed in US dollars, although this ratio is declining
gradually as the remonetization process has advanced. Interest rates for both
local and foreign currency are freely set in the market.
The hyperinflation of the 1980s forced the country to change its currency
twice in the past decade. In February 1985, the Peruvian currency was changed
from "soles" to intis (1 inti = 1,000 soles). In September 1991, the "nuevos
soles" were introduced (1 "nuevo sol" = 1 million intis). In 1996, the
devaluation of the nuevo sol against the US dollar was approximately 12.1% as
compared to an inflation rate for the period of 11%. The
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<PAGE> 150
following table provides the end of period exchange rates, devaluation rates,
and inflation rates, as measured by the IPC, from 1992 to 1996.
<TABLE>
<CAPTION>
EXCHANGE
RATE(1) DEVALUATION % INFLATION %
-------- ------------- -----------
<S> <C> <C> <C>
1992............................................. 1.63 69.8 56.7
1993............................................. 2.15 31.9 39.5
1994............................................. 2.18 1.4 15.4
1995............................................. 2.31 6.0 10.2
1996............................................. 2.59 12.0 11.8
</TABLE>
- ---------------
(1) Nuevos Soles per US Dollar.
The Financial System
The Peruvian financial system is comprised of the Central Bank (Banco
Central de Reserva), Banco de la Nacion (the State's financial agent), and more
than twenty commercial banks and finance companies. In addition to the Central
Bank's role, the Banking Superintendency (Superintendencia de Banca y Seguros,
or SBS) oversees and regulates banking and insurance activities in the country.
The SBS has broad powers to assure compliance with the regulations it sets forth
regarding minimum capital, adequate provisioning, and limits on concentration of
credit risk (including related party transactions) by financial intermediaries.
Capital adequacy ratios are determined on the basis of criteria that are
stricter than the Basel accords and credit risks are assessed on a system-wide
basis so that creditors with non-performing loans in one bank are automatically
considered non-performing (for provisioning purposes) for the system. Peruvian
regulation allows for multiple banking, and most large banks offer a broad range
of financial services. The four largest commercial banks account for
approximately 70% of all loans and deposits.
In the last years, the financial system has seen rapid growth as a result
of economic growth, the recomposition of the banking system, the remonetization
process, and large capital flows into the country. Between 1992 and 1996, total
commercial bank loans, expressed in current soles, grew by approximately 48.6%.
The last years have also seen the appearance of new banks and bank acquisitions
by foreign groups (including the privatization of two banks). The quality of the
banking system's loan portfolio has also improved substantially since 1992. The
ratio of past due loans to total loans for commercial banks fell from over 13.0%
in 1992 to 9.3% in 1993, 7.0% in 1994 and 4.8% in 1995. Due to reduced economic
growth, the ratio has increased to 5.4% in 1996.
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<PAGE> 151
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SP LIMITED OR SPCC SINCE SUCH
DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Documents By
Reference........................... 2
Presentation of Financial
Information......................... 4
Summary............................... 5
Risk Factors.......................... 23
Ratio of Earnings to Fixed Charges.... 31
Capitalization........................ 32
Selected Summary Consolidated
Financial Information............... 33
Selected Summary Operating
Information......................... 34
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 35
The Exchange Offer.................... 46
Business and Properties............... 52
Overview of Copper Market............. 62
Description of Export Receivables..... 63
Regulatory Framework.................. 65
Management............................ 67
Certain Transactions.................. 70
Description of the Notes.............. 71
Registration Rights Agreement; Special
Interest............................ 100
Description of Credit Facility........ 101
Exchange Rates........................ 103
Certain Legal Matters................. 103
Taxation.............................. 105
Plan of Distribution.................. 108
Legal Matters......................... 109
Experts............................... 109
Glossary of Certain Mining Terms...... 110
Index to Consolidated Financial
Statements.......................... F-1
The Republic of Peru.................. A-1
</TABLE>
------------------
UNTIL , 1997 (90 DAYS AFTER THE DATE HEREOF), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
SOUTHERN PERU COPPER CORPORATION LOGO
$150,000,000
7.90% SERIES A SECURED EXPORT EXCHANGE NOTES DUE 2007
Payment of Principal and Interest Guaranteed by
SOUTHERN PERU
COPPER CORPORATION
------------------------------------------------------
<PAGE> 152
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance and distribution of the securities
being registered hereby are estimated (except for the Securities and Exchange
Commission ("SEC") registration filing fees, which is the actual amount) as
follows:
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 45,455
Accounting fees and expenses...................................... 25,000
Legal fees and expenses........................................... 75,000
Printing and engraving expenses................................... 50,000
Exchange Agent fees and expenses.................................. 10,000
Miscellaneous..................................................... 19,545
--------
Total........................................................ $225,000
========
</TABLE>
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation (a "derivative action")) if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. Section 145 of the DGCL provides that it is not exclusive of
other indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise.
Section 11 of Southern Peru Limited's By-Laws provides that Southern Peru
Limited shall indemnify any and all of its directors or officers or former
directors or officers or any person who may have served at its request as a
director or officer of another corporation in which Southern Peru Limited owns
shares of capital stock or of which it is a creditor against expenses actually
and necessarily incurred by them in connection with the defense of any action,
suit or proceeding in which they, or any of them, are made parties, or
proceeding in which they, or any of them, are made parties, or a party, by
reason of being or having been directors or officers or a director or officer of
Southern Peru Limited, or of such other corporation, except in relation to
matters as to which any such director or officer or former director or officer
or person shall be adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty. Such indemnification shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under Southern Peru Limited's By-Laws, agreement, vote of stockholders,
or otherwise. Southern Peru Limited shall have the right to intervene in and to
defend all such actions, suits or proceedings brought against any such director
or officer or former director or officer or person. Whenever in this paragraph a
director or officer or former director or officer or a person is referred to,
such reference shall be inclusive of his heirs, executors and administrators.
The Certificate of Incorporation of Southern Peru Copper Corporation
provides for indemnification of its directors and officers to the fullest extent
permitted by Delaware law. Southern Peru Copper Corporation's By-Laws provide
mandatory indemnification rights to any officer or director of Southern Peru
Copper Corporation who, by reason of the fact that he or she is an officer or
director of Southern Peru Copper Corporation, is involved in a legal proceeding
of any nature. Such indemnification rights will include reimbursement for
expenses incurred by such officer or director in advance of the final
disposition of such proceeding in accordance with the applicable provisions of
Delaware law. The By-Laws of Southern Peru Copper
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<PAGE> 153
Corporation provide that Southern Peru Copper Corporation may arrange for
insurance covering such liabilities and expenses arising from actions or
omissions of a director or officer in his capacity as a Corporate Agent as is
obtainable and is reasonable and appropriate in cost and amount.
The Company has various insurance policies, which became effective April
15, 1996, insuring directors and officers against liabilities they may incur,
including liabilities under the Securities Act of 1933, as amended. The policies
provide coverage for claims not reimbursed by the Company up to an aggregate
limit of $75 million without deductible. For claims which are reimbursed by the
Company, the policies provide coverage up to $75 million with a deductible of $1
million. These policies remain in effect.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------- --------------------------------------------------------------------------------
<S> <C>
3.1(a) Certificate of Incorporation of Southern Peru Limited, filed December 12, 1952.
3.1(a)(i) Certificate of Amendment of Southern Peru Limited, filed August 18, 1955.
3.1(a)(ii) Certificate of Amendment of Southern Peru Limited, filed February 2, 1966.
3.1(a)(iii) Certificate of Amendment of Southern Peru Limited, filed June 12, 1972.
3.1(a)(iv) Certificate of Amendment of Southern Peru Limited, filed February 25, 1976.
3.1(a)(v) Certificate of Designation of Southern Peru Limited, filed March 15, 1976.
3.1(a)(vi) Certificate of Amendment of Southern Peru Limited, filed August 4, 1981.
3.1(a)(vii) Certificate of Amendment of Southern Peru Limited, filed November 4, 1994.
3.1(a)(viii) Certificate of Amendment of Southern Peru Limited, filed December 29, 1995.
3.1(a)(ix) Certificate of Amendment of Southern Peru Limited, filed April 19, 1996.
3.1(b)(i) Restated Certificate of Incorporation of Southern Peru Copper Corporation, filed
December 29, 1995. (Filed as Exhibit 3.1 to the Company's 1995 Annual Report on
Form 10-K and incorporated herein by reference)
3.1(b)(ii) Certificate of Decrease of Southern Peru Copper Corporation, filed February 29,
1996.
(Filed as Exhibit 3.2 to the Company's 1995 Annual Report on Form 10-K and
incorporated herein by reference)
3.1(b)(iii) Certificate of Increase of Southern Peru Copper Corporation, filed February 29,
1996. (Filed as Exhibit 3.3 to the Company's 1995 Annual Report on Form 10-K and
incorporated herein by reference)
3.1(b)(iv) Certificate of Increase of Southern Peru Copper Corporation, filed March 24,
1997. (Filed as Exhibit 3.5 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997 and incorporated herein by reference.)
3.1(b)(v) Certificate of Decrease of Southern Peru Copper Corporation, filed March 24,
1997. (Filed as Exhibit 3.6 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997 and incorporated herein by reference.)
3.2(a) By-Laws of Southern Peru Limited.
3.2(b) By-Laws of Southern Peru Copper Corporation, as last amended on February 9,
1996. (Filed as Exhibit 3.4 to the Company's 1995 Annual Report on Form 10-K and
incorporated herein by reference)
4.1(a) Indenture, dated as of May 30, 1997, among Southern Peru Limited, Southern Peru
Copper Corporation, as guarantor, and Citibank, N.A., as Trustee.
4.1(b) Supplemental Indenture, dated as of May 30, 1997, among Southern Peru Limited,
Southern Peru Copper Corporation, as guarantor, and Citibank, N.A., as Trustee.
4.1(c) Form of Amended and Restated Collateral Trust Agreement, dated as of July 15,
1997, between Southern Peru Limited and Deutsche Bank AG, New York Branch, as
collateral trustee.
</TABLE>
II-2
<PAGE> 154
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------- --------------------------------------------------------------------------------
<S> <C>
4.1(d) Form of New Note.
5 Opinion and Consent of Davis Polk & Wardwell regarding the validity of the New
Notes being registered.
8.1 Opinion of Davis Polk & Wardwell regarding certain tax matters.
8.2 Opinion of Estudio Aurelio Garcia Sayan regarding certain tax matters.
10.1 Form of Agreement Among Certain Stockholders of the Company. (Filed as Exhibit
10.1 to the Company's Registration Statement on Form S-4, as amended by
Amendments No. 1 and 2 thereto, File No. 33-97790 (the "SPCC Form S-4"), and
incorporated herein by reference)
10.2 Tax Stability Agreement, dated August 8, 1994, between the Government of Peru
and the Company regarding SX/EW facility (and English translation). (Filed as
Exhibit 10.3 to the SPCC Form S-4 and incorporated herein by reference)
10.3 Incentive Compensation Plan of the Company. (Filed as Exhibit 10.11 to the SPCC
Form S-4 and incorporated herein by reference)
10.4 Supplemental Retirement Plan of the Company. (Filed as Exhibit 10.12 to the SPCC
Form S-4 and incorporated herein by reference)
10.5 Stock Incentive Plan of the Company. (Filed as an Exhibit to Southern Peru
Copper Corporation's Registration Statement on Form S-8 dated March 25, 1996
(Registration No. 33-32736) and incorporated herein by reference)
10.6 Form of Directors Stock Award Plan of Southern Peru Copper Corporation. (Filed
as Exhibit 10.16 to the SPCC Form S-4 and incorporated herein by reference)
10.7 Form of Deferred Fee Plan for Directors. (Filed as Exhibit 10.8 to Southern Peru
Copper Corporation's 1995 Annual Report on Form 10-K and incorporated herein by
reference)
10.8 Form of Agreement Accepting Membership in the Plan, containing text of
Retirement Plan and Trust for Selected Employees. (Filed as Exhibit 10.17 to the
SPCC Form S-4 and incorporated herein by reference)
10.9 Credit Agreement dated as of March 31, 1997 among Southern Peru Limited, as
Borrower, Southern Peru Copper Corporation, as Guarantor, the several banks and
other financial institutions from time to time parties to the Credit Agreement,
Morgan Guaranty Trust Company of New York, as Administrative Agent, The Chase
Manhattan Bank, as Documentation Agent, Citicorp Securities, Inc., as
Syndication Agent, and Deutsche Bank AG, New York Branch, as Security and
Collateral Agent.
10.10 First Amendment to the Credit Agreement dated July 14, 1997.
12 Statement re Computation of Ratios.
15 Letter re Unaudited Interim Financial Information.
21 Subsidiaries of Southern Peru Copper Corporation.
23.1 Consent of Independent Accountants.
23.2 Consents of Davis Polk & Wardwell (see exhibits 5 and 8.1).
24 Powers of Attorney (included on the signature pages to the Registration
Statement.)
25 Statement of eligibility of Citibank, N.A. on Form T-1.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Instruction to Registered Holder and/or Book-entry transfer of Participant.
99.4 Form of Letter to Client.
99.5 Form of Letter to Registered Holders and Depository Trust Company Participants
</TABLE>
II-3
<PAGE> 155
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
(1) (i) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement; (a) to include any
prospectus required by Section (10)(a)(3) of the Securities Act of 1933; (b) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (c) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
(ii) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof;
(iii) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrants pursuant to the foregoing provisions, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(3) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(4) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) The undersigned registrants hereby undertake that: (a) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective; (b) for the purpose of determining any liability under the
Securities Act of 1933, each post-effective registration statement relating to
the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 156
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 25th day of August, 1997.
SOUTHERN PERU COPPER CORPORATION
By: /s/ CHARLES G. PREBLE
------------------------------------
Name: Charles G. Preble
Title: Director, President and Chief
Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, Kevin R. Morano
and Augustus B. Kinsolving and each one of them, his attorneys-in-fact each with
the power of substitution, for him in any and all capacities, to sign any and
all amendments to this Registration Statement (including post-effective
amendments), and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or his
substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- -------------------------------------------
<C> <S>
/s/ RICHARD DE J. OSBORNE Director, Chairman of the Board
- -----------------------------------------------
Richard de J. Osborne
/s/ CHARLES G. PREBLE Director, President and Chief Executive
- ----------------------------------------------- Officer (principal executive officer)
Charles G. Preble
/s/ RONALD J. O'KEEFE Executive Vice President and Chief
- ----------------------------------------------- Financial Officer (principal financial
Ronald J. O'Keefe officer)
/s/ BRENDAN M. O'GRADY Comptroller (principal accounting officer)
- -----------------------------------------------
Brendan M. O'Grady
/s/ AUGUSTUS B. KINSOLVING Director
- -----------------------------------------------
Augustus B. Kinsolving
/s/ KEVIN R. MORANO Director
- -----------------------------------------------
Kevin R. Morano
/s/ AMB. EVERETT E. BRIGGS Director
- -----------------------------------------------
Amb. Everett E. Briggs
/s/ JAIME CLARO Director
- -----------------------------------------------
Jaime Claro
/s/ FRANCIS R. MCALLISTER Director
- -----------------------------------------------
Francis R. McAllister
</TABLE>
II-5
<PAGE> 157
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- -------------------------------------------
<C> <S>
/s/ JOHN F. MCGILLICUDDY Director
- -----------------------------------------------
John F. McGillicuddy
/s/ ROBERT J. MUTH Director
- -----------------------------------------------
Robert J. Muth
/s/ ROBERT M. NOVOTNY Director
- -----------------------------------------------
Robert M. Novotny
/s/ ROBERT A. PRITZKER Director
- -----------------------------------------------
Robert A. Pritzker
/s/ MICHAEL O. VARNER Director
- -----------------------------------------------
Michael O. Varner
/s/ J. STEVEN WHISLER Director
- -----------------------------------------------
J. Steven Whisler
/s/ DAVID B. WOODBURY Director
- -----------------------------------------------
David B. Woodbury
/s/ DOUGLAS C. YEARLEY Director
- -----------------------------------------------
Douglas C. Yearley
</TABLE>
Dated: August 25, 1997
II-6
<PAGE> 158
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 25th day of August, 1997.
SOUTHERN PERU LIMITED
By: /s/ CHARLES G. PREBLE
------------------------------------
Name: Charles G. Preble
Title: Director, President
and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, Kevin R. Morano
and Augustus B. Kinsolving and each one of them, his attorneys-in-fact each with
the power of substitution, for him in any and all capacities, to sign any and
all amendments to this Registration Statement (including post-effective
amendments), and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or his
substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- -------------------------------------------
<C> <S>
/s/ CHARLES G. PREBLE Director, President and Chief Executive
- ----------------------------------------------- Officer (principal executive officer)
Charles G. Preble
/s/ RONALD J. O'KEEFE Director, Executive Vice President and
- ----------------------------------------------- Chief Financial Officer (principal
Ronald J. O'Keefe financial officer)
/s/ BRENDAN M. O'GRADY Comptroller (principal accounting officer)
- -----------------------------------------------
Brendan M. O'Grady
/s/ AUGUSTUS B. KINSOLVING Director
- -----------------------------------------------
Augustus B. Kinsolving
/s/ KEVIN R. MORANO Director
- -----------------------------------------------
Kevin R. Morano
/s/ HANS A. FLURY Director
- -----------------------------------------------
Hans A. Flury
</TABLE>
Dated: August 25, 1997
II-7
<PAGE> 159
INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------------- --------------------------------------------------------------------- ------------
<S> <C> <C>
3.1(a) Certificate of Incorporation of Southern Peru Limited, filed December
12, 1952.
3.1(a)(i) Certificate of Amendment of Southern Peru Limited, filed August 18,
1955.
3.1(a)(ii) Certificate of Amendment of Southern Peru Limited, filed February 2,
1966.
3.1(a)(iii) Certificate of Amendment of Southern Peru Limited, filed June 12,
1972.
3.1(a)(iv) Certificate of Amendment of Southern Peru Limited, filed February 25,
1976.
3.1(a)(v) Certificate of Designation of Southern Peru Limited, filed March 15,
1976.
3.1(a)(vi) Certificate of Amendment of Southern Peru Limited, filed August 4,
1981.
3.1(a)(vii) Certificate of Amendment of Southern Peru Limited, filed November 4,
1994.
3.1(a)(viii) Certificate of Amendment of Southern Peru Limited, filed December 29,
1995.
3.1(a)(ix) Certificate of Amendment of Southern Peru Limited, filed April 19,
1996.
3.1(b)(i) Restated Certificate of Incorporation of Southern Peru Copper
Corporation, filed December 29, 1995. (Filed as Exhibit 3.1 to the
Company's 1995 Annual Report on Form 10-K and incorporated herein by
reference)
3.1(b)(ii) Certificate of Decrease of Southern Peru Copper Corporation, filed
February 29, 1996. (Filed as Exhibit 3.2 to the Company's 1995 Annual
Report on Form 10-K and incorporated herein by reference)
3.1(b)(iii) Certificate of Increase of Southern Peru Copper Corporation, filed
February 29, 1996. (Filed as Exhibit 3.3 to the Company's 1995 Annual
Report on Form 10-K and incorporated herein by reference)
3.1(b)(iv) Certificate of Increase of Southern Peru Copper Corporation, filed
March 24, 1997. (Filed as Exhibit 3.5 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herein by reference.)
3.1(b)(v) Certificate of Decrease of Southern Peru Copper Corporation, filed
March 24, 1997. (Filed as Exhibit 3.6 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herein by reference.)
3.2(a) By-Laws of Southern Peru Limited.
3.2(b) By-Laws of Southern Peru Copper Corporation, as last amended on
February 9, 1996. (Filed as Exhibit 3.4 to the Company's 1995 Annual
Report on Form 10-K and incorporated herein by reference)
4.1(a) Indenture, dated as of May 30, 1997, among Southern Peru Limited,
Southern Peru Copper Corporation, as guarantor, and Citibank, N.A.,
as Trustee.
4.1(b) Supplemental Indenture, dated as of May 30, 1997, among Southern Peru
Limited, Southern Peru Copper Corporation, as guarantor, and
Citibank, N.A., as Trustee.
4.1(c) Form of Amended and Restated Collateral Trust Agreement, dated as of
July 15, 1997, between Southern Peru Limited and Deutsche Bank AG,
New York Branch, as collateral trustee.
4.1(d) Form of New Note.
5 Opinion and Consent of Davis Polk & Wardwell regarding the validity
of the New Notes being registered.
8.1 Opinion of Davis Polk & Wardwell regarding certain tax matters.
8.2 Opinion of Estudio Aurelio Garcia Sayan regarding certain tax
matters.
</TABLE>
<PAGE> 160
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------------- --------------------------------------------------------------------- ------------
<S> <C> <C>
10.1 Form of Agreement Among Certain Stockholders of the Company. (Filed
as Exhibit 10.1 to the Company's Registration Statement on Form S-4,
as amended by Amendments No. 1 and 2 thereto, File No. 33-97790 (the
"SPCC Form S-4"), and incorporated herein by reference)
10.2 Tax Stability Agreement, dated August 8, 1994, between the Government
of Peru and the Company regarding SX/EW facility (and English
translation). (Filed as Exhibit 10.3 to the SPCC Form S-4 and
incorporated herein by reference)
10.3 Incentive Compensation Plan of the Company. (Filed as Exhibit 10.11
to the SPCC Form S-4 and incorporated herein by reference)
10.4 Supplemental Retirement Plan of the Company. (Filed as Exhibit 10.12
to the Company's Form S-4 and incorporated herein by reference)
10.5 Stock Incentive Plan of the Company. (Filed as an Exhibit to Southern
Peru Copper Corporation's Registration Statement on Form S-8 dated
March 25, 1996 (Registration No. 33-32736) and incorporated herein by
reference)
10.6 Form of Directors Stock Award Plan of Southern Peru Copper
Corporation. (Filed as Exhibit 10.16 to the Company's Form S-4 and
incorporated herein by reference)
10.7 Form of Deferred Fee Plan for Directors. (Filed as Exhibit 10.8 to
Southern Peru Copper Corporation's 1995 Annual Report on Form 10-K
and incorporated herein by reference)
10.8 Form of Agreement Accepting Membership in the Plan, containing text
of Retirement Plan and Trust for Selected Employees. (Filed as
Exhibit 10.17 to the SPCC Form S-4 and incorporated herein by
reference)
10.9 Credit Agreement dated March 31, 1997 among Southern Peru Limited, as
Borrower, Southern Peru Copper Corporation, as Guarantor, the several
banks and other financial institutions from time to time parties to
the Credit Agreement, Morgan Guaranty Trust Company of New York, as
Administrative Agent, The Chase Manhattan Bank, as Documentation
Agent, Citicorp Securities, Inc., as Syndication Agent, and Deutsche
Bank AG, New York Branch, as Security and Collateral Agent.
10.10 First Amendment to the Credit Agreement dated July 14, 1997.
12 Statement re Computation of Ratios.
15 Letter re Unaudited Interim Financial Information.
21 Subsidiaries of Southern Peru Copper Corporation.
23.1 Consent of Independent Accountants.
23.2 Consents of Davis Polk & Wardwell (see exhibits 5 and 8.1).
24 Powers of Attorney (included on the signature pages to the
Registration Statement.)
25 Statement of eligibility of Citibank, N.A. on Form T-1.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Instruction to Registered Holder and/or Book-entry transfer of
Participant.
99.4 Form of Letter to Client.
99.5 Form of Letter to Registered Holders and Depository Trust Company
Participants
</TABLE>
<PAGE> 1
Exhibit 3.1(a)
CERTIFICATE OF INCORPORATION
of
SOUTHERN PERU COPPER CORPORATION
(A Delaware Corporation)
FIRST: The name of the Corporation is
SOUTHERN PERU COPPER CORPORATION
SECOND: Its principal office in the State of Delaware is located at No.
100 West Tenth Street, in the City of Wilmington, County of New Castle. The name
and address of its resident agent is The Corporation Trust Company, No. 100 West
Tenth Street, Wilmington, Delaware.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:
1. To mine, mill, concentrate, smelt, convert, treat, prepare
for market, manufacture, sell, exchange, and otherwise produce and deal
in copper, gold, silver, lead, zinc, iron and all other kinds of ores,
minerals and metals and other materials and goods and merchandise of
every nature and description;
2. To explore and prospect for, examine, investigate, survey,
locate, appraise, purchase, exchange taken on lease or sublease, and
otherwise acquire, own, hold, use, occupy, operate, work, manage,
control, maintain, develop, improve, exploit, mortgage and otherwise
encumber, bargain, sell, grant, assign, transfer, convey, let or
sublet, and otherwise dispose of, and generally deal in and with mines,
mining districts, mining rights, claims, concessions, quarries, mineral
deposits, coal mines, timber lands, and rights, water rights and ways,
grants, lodes, beds, deposits containing or supposed to contain
minerals, metals or ores of any kind, or any other raw materials which
may be used or put to account in the business of the Corporation;
3. To purchase, lease and otherwise acquire, erect, construct,
make, improve, maintain and operate, or aid in or subscribe towards the
erection, construction, making, improvement, maintenance and operation
of, mills, smelters, refineries, factories, plants, laboratories,
shops, store houses, townsites, tanks, buildings, roads, water courses,
reservoirs, dams,
<PAGE> 2
power plants, docks, piers, wharves, machinery, a railroad or railroads
outside the State of Delaware, cars and other rolling stock, steamers,
steamboats, tugs, barges, vessels, airplanes and other aircraft whether
lighter or heavier than air, radio stations and telephone and telegraph
systems outside the state of Delaware, works and structures of every
kind and description, in so far as the same may appertain to or be
useful in the conduct of the business of the Corporation;
4. To take, buy, purchase, exchange, take on lease and
sublease, and otherwise acquire, own, hold, use, occupy, manage,
control, maintain, improve, develop, mortgage and otherwise encumber,
bargain, sell, grant, assign, transfer, convey, let or sublet, and
otherwise dispose of, and generally deal in and with real estate, real
property and any and all interests and rights therein and thereto,
located in any part of the world;
5. To adopt, apply for, obtain, register, purchase, lease and
otherwise acquire, procure licenses under, maintain, protect, hold,
control, own, use, exploit, operate, introduce, develop, pledge, sell,
assign, grant, grant licenses and other rights with respect to and
otherwise dispose of, and generally deal in and with inventions,
improvements, processes, copyrights, patents, trademarks, formulae,
trade names, labels, distinctive marks and similar rights of any nature
and whether or not granted, registered or established by or under the
laws of the United States, any State thereof or of any other country or
place;
6. For any purpose, upon and terns and without limit, to
borrow or raise money, and to issue, draw, make, accept, endorse,
guarantee, sell and dispose of bonds, debentures, notes, drafts, bills
of exchange, warrants, certificates of indebtedness, certificates of
interest and other obligations and securities of the corporation,
secured or unsecured and howsoever evidenced, and as security therefor
to mortgage, pledge, convey, assign in trust or grant any charge or
impose any lien upon all or any part of the real or personal property,
rights, interests or franchises of the Corporation, whether owned by it
at the time or thereafter acquired, and to lend money or other property
with or without collateral security;
7. To promote, finance, aid and assist, financially and
otherwise, any body politic, corporation, association, partnership,
firm, trustee, syndicate, individual, combination, organization or
other entity, located in or organized under the laws of any part of the
world, any stock, share, voting trust certificate, bond, mortgage,
debenture, note, land trust certificate, right, warrant, scrip,
commercial paper, chose in action,
2
<PAGE> 3
contract, evidence of indebtedness, certificate of interest or other
obligation or security of which is held directly or indirectly by or
for the Corporation, or in the business, financing or welfare of which
the Corporation shall have any interest; and in connection therewith to
guarantee or become surety for the performance of any undertaking or
obligation of any such entity, and to guarantee by endorsement or
otherwise the payment of the principal of or interest or dividends on
or sinking fund payments with respect to any such security of any such
entity or any other payments whatsoever to be made by it; and to join
in any reorganization with respect to any such entity;
8. To promote, institute, enter into, conduct, perform,
assist or participate in every kind of commercial, mercantile,
manufacturing, mining, or industrial enterprise, business, work,
contract, undertaking, venture and operation in any part of the world;
and for any such purpose to purchase, lease and otherwise acquire, take
over, own, hold, sell, liquidate and otherwise dispose of the real
estate plants, equipment, inventory, merchandise, materials, stock,
good will, rights, franchises, patents, trademarks and trade names and
other properties of corporations, associations, partnerships, firms,
trustees, syndicates, individuals, combinations, organizations and
entities located in or organized under the laws of any part of the
world; to continue, alter, extend and develop their business, assume
their liabilities, guarantee or become surety for the performance of
their obligations, reorganize their capital and participate in any way
in their affairs, and to take over as a going concern and to continue
in its own name any business so acquired;
9. To pay for any property, securities, rights, or interests
lawfully acquired by the Corporation in cash or other property, rights
or interest held by the corporation or by issuing and delivering in
exchange therefor its own property, stock, shares, bonds, debentures,
notes, warrants for stock, certificates of indebtedness or other
obligations or securities howsoever evidenced;
10. To purchase, hold, cancel, reissue, sell, resell and
transfer shares of its own capital stock and its own bonds, debentures,
warrants, rights, scrip or other obligations or securities of any
nature howsoever evidenced; provided that shares of its own capital
stock belonging to the corporation shall not be voted upon directly or
indirectly;
11. To carry on all or any part of its business, objects or
purposes as principal, factor, agent, contractor, trustee or otherwise,
either
3
<PAGE> 4
alone or associated with any corporation, association, partnership,
firm, trustee, syndicate, individual, combination, organization or
entity in any part of the world;
12. In carrying on its business and for the purpose of
furthering its objects and purposes, to enter into and perform
agreements and contracts of any nature with any government, state,
territory, district, municipality, political or governmental division
or subdivision, body politic, corporation, association, partnership,
firm, trustee, syndicate, individual, combination, organization or
entity whatsoever;
13. To conduct its business in any and all branches thereof,
so far as permitted by law, in the State of Delaware, other States, the
District of Columbia, the territories, colonies, possessions and
dependencies of the United States and in foreign countries, and to
maintain one or more offices and agencies either within or anywhere
without the State of Delaware, and to hold, purchase, mortgage, convey
and otherwise deal in and with real and personal property out of as
well as within the State of Delaware;
14. To do any and all other acts and things necessary,
appropriate or convenient for the furtherance of the business, objects
and purposes herein enumerated and for the exercise of the powers
herein conferred.
The foregoing clause of this Article Third shall be constructed as
purposes, object and powers, and the matters expressed in each clause shall not
be limited in any way, except as otherwise expressly provided, by reference to
or inference from the terms of any other clause (or any other matter within the
same clause), but shall be regarded as independent purposes, objects and powers.
The enumeration of specified purposes, objects and powers shall not be
considered to exclude, limit or restrict in any manner any power, right or
privilege given to the Corporation by law, or to limit or restrict the meaning
of the general terms or the general powers of the Corporation, nor shall the
expression of one thing be deemed to exclude another, although it be of like
nature, not expressed.
Nothing herein contained shall be construed as giving the Corporation
any rights, powers or privileges not permitted to it by law, but the occurrence
within any of the foregoing clauses of this Article Third of any purpose, power
or object prohibited by the laws of the State of Delaware or of any other State
or of any district, territory, colony, dependency or foreign country in which
the Corporation may carry on business shall not invalidate any other purpose,
power or object not so prohibited, by reason of contiguity or apparent
association therewith.
4
<PAGE> 5
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is one hundred fifty thousand
(150,000), all of which are to be without par value.
FIFTH: The minimum amount of capital with which the Corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH: The names and places of residence of the incorporators are as
follows:
<TABLE>
<CAPTION>
Names Residence
----- ---------
<S> <C>
R. Worth Vaughan 1 Grand View Terrace
Tenafly, New Jersey
Douglas H. Soutar 63 Patterson Avenue
Greenwich, Connecticut
John F. O'Conor 11 Huguenot Drive
Larchmont, N.Y.
</TABLE>
SEVENTH: The Corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatsoever.
NINTH: The number of directors of the Corporation shall be fixed by the
by-laws and may be increased or decreased from time to time in the manner
specified therein; provided, however, that the number of directors shall not be
less than three. In the event of any increase in the number of directors, the
additional directors may be elected as in the by-laws provided. Elections of
directors need not be by ballot. Directors of the Corporation need not be
stockholders.
TENTH: In furtherance, not in limitation, of the powers conferred upon
the Board of Directors by statute, the Board of Directors is expressly
authorized, without any vote or other action by stockholders other than such as
at the time shall be expressly required by statute or by the provisions of this
Certificate of Incorporation (and amendments thereof, if any) or the by-laws, to
exercise all of the powers, rights, and privileges of the Corporation (whether
expressed or implied in this Certificate of Incorporation or conferred by
statute) and do all acts and things which may be done by the Corporation,
including, but without limiting the generality of the foregoing, the right
5
<PAGE> 6
(a) to make, adopt, alter, amend and repeal from time to time
by-laws of the Corporation, subject to the right of the stockholders
entitled to vote with respect thereto to alter and repeal by-laws made
by the Board of Directors;
(b) to determine from time to time, subject to the laws of the
State of Delaware, whether and to what extent and at what times and
places and under what conditions and regulations the accounts and books
of the Corporation (other than the stock ledger) or any of them, shall
be open to the inspection of the stockholders; and, except as conferred
by the laws of the State of Delaware, no stockholder shall have any
right to inspect any account, book or document of the corporation
unless and until authorized so to do by resolution of the Board of
Directors or of the stockholders entitled to vote; and
(c) to mortgage, pledge, hypothecate and otherwise encumber
all or any of the property of the Corporation, whether real, personal
or otherwise.
ELEVENTH: Both the stockholders and the Board of Directors shall have
power to hold their meetings either within or without the State of Delaware, and
the books of the Corporation (so far as not prohibited by the laws of said
State) may be kept outside of the State of Delaware at such place or places as
from time to time may be designated by the Board of Directors.
TWELFTH: No director of the Corporation shall be disqualified by his
office from dealing or contracting with the Corporation as vendor, purchaser or
otherwise, nor shall any contract or other transaction of the Corporation be
void or voidable by reason of the fact that any of its directors or any firm or
association of which any of its directors are members or any corporation of
which any of its directors are stockholders, directors or officers, is in any
way interested in such transaction or contract, provided that the fact of such
interest be disclosed or known to the Board of Directors and provided that the
Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such directors at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. No director shall be
liable in any way with respect to any such transaction or contract which shall
be authorized, approved or ratified as aforesaid. This Article Twelfth shall not
be construed to invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the common or statutory law
applicable thereto.
6
<PAGE> 7
THIRTEENTH: Subject to the limitations provided for by the General
Corporation Law of the State of Delaware, as from time to time amended, the
Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute and all rights herein conferred upon stockholders are
granted subject to such reservation.
We, the undersigned, being each of the incorporators hereinbefore
mentioned, for the purpose of forming a corporation to do business both within
and without the State of Delaware, and in pursuance of the General Corporation
Law of the State of Delaware, and the acts amendatory thereof and supplemental
thereto, do make, file and record this certificate, hereby declaring and
certifying that the facts herein stated are truly set forth, and, accordingly,
have signed and sealed this certificate this 10th day of December, A.D. 1952.
/s/ R. Worth Vaughan (L.S.)
______________________________________________
/s/ Douglas H. Sovtav (L.S.)
______________________________________________
/s/ John J. O'Connor (L.S.)
______________________________________________
In the presence of:
/s/ A.V. Burke
____________________________________
7
<PAGE> 8
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
BE IT KNOWN, that on this 10th day of December, A.D., 1952, personally
came before me, a Notary Public for the County and State aforesaid, all of the
parties to the foregoing Certificate of incorporation, known to me personally to
be such, and severally acknowledged the said Certificate to be the act and deed
of the signers, respectively, and that the facts therein stated are truly set
forth.
Given under my hand and seal of office the day and year aforesaid.
/s/ Harold Howe
___________________________________
Harold Howe
Notary Public
State of New York
(SEAL)
<PAGE> 9
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, HARRIS B. McDOWELL, Jr., Secretary of State of the State of
Delaware, DO HEREBY CERTIFY that the above and foregoing is a true and correct
copy of Certificate of Incorporation of the "SOUTHERN PERU COPPER CORPORATION",
as received and filed in this office the twelfth day of December, A.D. 1952, at
11 o'clock A.M.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and official seal, at Dover, this
twelfth day of December in the year of our
Lord one thousand nine hundred and
fifty-two.
HARRIS B. McDOWELL, Jr.
Secretary of State.
(SEAL)
NELLIE W. NORBERT
Ass't. Secretary of State.
<PAGE> 1
Exhibit 3.1(a)(i)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * * *
SOUTHERN PERU COPPER CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the board of directors of said corporation, at a meeting
duly convened and held, adopted a resolution proposing and declaring advisable
the following amendment to the certificate of incorporation of said corporation:
RESOLVED, that the certificate of incorporation of SOUTHERN
PERU COPPER CORPORATION be amended by changing the Article thereof
numbered "FOURTH" so that, as amended, said Article shall be and read
as follows:
"The total number of shares of capital stock which the
Corporation shall have authority to issue is three hundred twenty-six
thousand (326,000) of the par value of one dollar ($1.00) each."
SECOND: That the said amendment has been consented to and authorized by
the holders of all the issued and outstanding stock, entitled to vote, by a
written consent given in accordance with the provisions of section 228 of Title
8 of The Delaware Code of 1953, and filed with the corporation on the 17th day
of August, 1955.
<PAGE> 2
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 228 of Title 8 of The Delaware
Code of 1953.
FOURTH: That the capital of said corporation will not be reduced under
or by reason of said amendment.
2
<PAGE> 3
IN WITNESS WHEREOF, said SOUTHERN PERU COPPER CORPORATION has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
B. Worth Vaughan its Vice-President, and George A. Brockington, its Secretary,
this 17th day of August, 1955.
SOUTHERN PERU COPPER CORPORATION
By /s/ R. Worth Vaughan
_________________________________
Vice-President
By /s/ George A. Brockington
_________________________________
Secretary
SOUTHERN PERU COPPER CORPORATION
INCORPORATED
1952
DELAWARE
3
<PAGE> 4
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this 17th day of August, A.D. 1955, personally
came before me Harold Howe, a Notary Public in and for the County and State
aforesaid, R. Worth Vaughn, Vice-President of SOUTHERN PERU COPPER CORPORATION,
a corporation of the State of Delaware, the corporation described in and which
executed the foregoing certificate, known to me personally to be such, and he,
the said R. Worth Vaughn as such Vice-President, duly executed said certificate
before me and acknowledged the said certificate to be his act and the act and
deed of said corporation; that the signatures of the said Vice-President and of
the Secretary of said corporation to said foregoing certificate are in the
handwriting of the said Vice- President and Secretary of said corporation
respectively, and that the seal affixed to said certificate is the common or
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the
day and year aforesaid.
/s/ Harold Howe
____________________________________
HAROLD HOWE
NOTARY PUBLIC
STATE OF NEW YORK
4
<PAGE> 5
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, JOHN N. McDOWELL, Secretary of State of the State of Delaware, DO
HEREBY CERTIFY that the above and foregoing is a true and correct copy of
Certificate of Amendment of Certificate of Incorporation of the "SOUTHERN PERU
COPPER CORPORATION", as received and filed in this office the eighteenth day of
August, A.D. 1955, at 10 o'clock A.M.
IN TESTIMONY WHEREOF, I have
hereunto set my hand and official
seal, at Dover, this eighteenth day
of August in the year of our Lord
one thousand nine hundred and fifty-
five.
JOHN N. McDOWELL
Secretary of State.
(SEAL)
M.D. TOMLINSON
Ass't. Secretary of State.
<PAGE> 1
Exhibit 3.1(a)(ii)
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
of
SOUTHERN PERU COPPER CORPORATION
SOUTHERN PERU COPPER CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting
duly convened and held, adopted a resolution proposing and declaring advisable
the following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Southern
Peru Copper Corporation be amended by changing the article thereof
numbered "Fourth" so that, as amended, said article shall be and read
as follows:
"The total number of shares of capital stock which
the Corporation shall have authority to issue is seven hundred
eighty two thousand four hundred (782,400) of the par value of
one hundred dollars ($100) each."
and that effective upon the due filing in the office of the Secretary
of State of Delaware of a certificate amending the Certificate of
Incorporation as aforesaid and as provided by law, the three hundred
twenty six thousand (326,000) shares of capital stock of the par value
of one dollar ($1.00) each of the corporation presently authorized,
issued and outstanding shall without any further act be changed into
seven hundred eighty two thousand four hundred (782,400) shares of
capital stock of the par value of one hundred dollars ($100) and that
the officers of this corporation be and they hereby are authorized to
issue certificates for shares of capital stock of the corporation in
the appropriate amounts to reflect such change and to
<PAGE> 2
take such other action as they may deem necessary and appropriate in
connection therewith.
SECOND: That the said amendment has been consented to and authorized by
the holders of all the issued and outstanding stock entitled to vote by a
written consent given in accordance with the provisions of Section 228 of Title
8 of The Delaware Code of 1953 and filed with the corporation on the 27th day of
January, 1966.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of section 242 and 228 of Title 8 of The Delaware Code
of 1953.
FOURTH: That the capital of said corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said SOUTHERN PERU COPPER CORPORATION has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
R. Worth Vaughn, its Vice President, and Harold Howe, its Secretary, the 27th
day of January, 1966.
SOUTHERN PERU COPPER
SOUTHERN PERU COPPER CORPORATION
CORPORATION
CORPORATE SEAL
1962 By /s/ R. Worth Vaughan
---------------------------------
DELAWARE Vice President
By /s/ Harold Howe
---------------------------------
Secretary
2
<PAGE> 3
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 27th day of January A.D. 1966,
personally came before me W. Thomas Reed, a Notary Public in and for the County
and State aforesaid, R. Worth Vaughan, Vice President of SOUTHERN PERU COPPER
CORPORATION, a corporation of the State of Delaware, the corporation described
in and which executed the foregoing certificate, known to me personally to be
such, and he, the said R. Worth Vaughan, as such Vice President, duly executed
said certificate before me and acknowledged the said certificate to be his act
and the act and deed of said corporation; that the signatures of the said Vice
President and the Secretary of said corporation to said foregoing certificate
are in the handwriting of the said Vice President and Secretary respectively of
said corporation and that the seal affixed to said certificate is the common or
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the
day and year aforesaid.
/s/ W. Thomas Reed
---------------------------------
W. THOMAS REED
NOTARY PUBLIC
STATE OF NEW YORK
<PAGE> 4
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, ELISHA C. DUKES, Secretary of State of the State of Delaware, DO
HEREBY CERTIFY that the above and foregoing is a true and correct copy of
Certificate of Amendment of the "SOUTHERN PERU COPPER CORPORATION", as received
and filed in this office the second day of February, A.D., 1966, at 10 o'clock
A.M.
IN TESTIMONY WHEREOF, I have
hereunder set my hand and official
seal at Dover this second day of
February in the year of our Lord one
thousand nine hundred and sixty-six.
ELISHA C. DUKES
Secretary of State
(SEAL)
G.F. DOWNS
Ass't. Secretary of State
<PAGE> 1
Exhibit 3.1(a)(iii)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATED
Southern Peru Cooper Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY.
FIRST: That the Board of Directors of said corporation, at a meeting
duly held on June 6, 1972, adopted a resolution proposing and declaring
advisable the following amendment to the Certificate of Incorporation of said
corporation:
RESOLVED that the Certificate of Incorporation of Southern
Peru Copper Corporation be amended by changing the Article
thereof numbered "TENTH" so that, as amended, said Article
shall be and read as follows:
- "TENTH: In furtherance, not in limitation, of the
powers conferred upon the Board of Directors by
statute, the Board of Directors is expressly
authorized, without any vote or other action by
stockholders other than such as at the time shall be
expressly required by statute or by the provisions of
this Certificate of Incorporation (and amendments
thereof, if any) or the by-laws, to exercise all of
the powers, rights, and privileges of the Corporation
(whether expressed or implied in this Certificate of
Incorporation or conferred by statute) and do all
acts and things which may be done by the corporation,
including, but without limiting the generality of the
foregoing, the right
<PAGE> 2
(a) to make, adopt, alter, amend and repeal
from time to time by-laws of the corporation, subject
to the right of the stockholders entitled to vote
with respect thereto to alter and repeal by-laws made
by the Board of Directors;
(b) to determine from time to time, subject
to the laws of the State of Delaware, whether and to
what extent and at what times and places and under
what conditions and regulations the accounts and
books of the Corporation (other than the stock
ledger) or any of them, shall be open to the
inspection of the stockholders; and, except as
conferred by the laws of the State of Delaware, no
stockholder shall have any right to inspect any
account, book or document of the Corporation unless
and until authorized so to do by resolution of the
Board of Directors or of the stockholders entitled to
vote;
(c) to mortgage, pledge, hypothecate and
otherwise encumber all or any of the property of the
Corporation, whether real, personal or otherwise; and
(d) to delegate such of its duties and
responsibilities to the local managing body of the
Corporation's branch operations in foreign countries
as it deems necessary in order to comply with the
laws and regulations of such foreign countries."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of section 228 of The General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of The General Corporation Law
of the State of Delaware.
2
<PAGE> 3
IN WITNESS WHEREOF, said Southern Peru Copper Corporation has caused
this certificate to be signed by F.W. Archibald its President and attested by
A.J. Gillespie, Jr., its Secretary this 12th day of June, 1972.
Souther Peru Copper Corporation
CORPORATE SEAL
/s/F.W. Archibald
------------------------------------
President
ATTEST:
/s/A.J. Gillespie
- ------------------------------
Secretary
3
<PAGE> 1
Exhibit 3.1(a)(iv)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SOUTHERN PERU COPPER CORPORATION
SOUTHERN PERU COPPER CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation at a meeting
duly called and held duly adopted resolutions setting forth a proposed amendment
to the Certificate of Incorporation of said Corporation, declaring said
amendment advisable and directing that said amendment be submitted to the
stockholders of the Corporation for their consideration and action by written
consent pursuant to Section 228 of the General Corporation Law of the State of
Delaware.
SECOND: That thereafter the necessary number of stockholders as
required by statute, acting by written consent pursuant to Section 228 of the
General Corporation Law of the state of Delaware, adopted and approved said
amendment.
THIRD: That the resolution setting forth said amendment is as follows:
"RESOLVED, that this Board of Directors proposes and hereby
declares it advisable and for the benefit of this Corporation
to amend Article FOURTH of this Corporation's Certificate of
Incorporation, as heretofore amended, so that as amended
Article FOURTH shall be and read and provide as follows:
'FOURTH: Shares, Classes, Preferences, and Rights of Stock.
(A) Authorized Shares
The total-number-of-shares of all classes of stock which the
Corporation shall have authority to issue is 1,134,370 shares consisting of:
<PAGE> 2
150,000 shares of Class A Common Stock, as hereinafter defined
with the par value of $100 per share; and
984,370 shares of Common Stock with the par value of $100 per
share.
(B) Designation of Classes of Shares
One hundred fifty thousand (150,000) shares of the authorized shares,
with the par value of $100 per share and an aggregate par value of $15,000,000,
shall be known as "Class A Common Stock" and nine hundred eighty-four thousand
three hundred seventy (984,370) shares of the authorized shares, with the par
value of $100 per share and an aggregate par value of $98,437,000, shall be
known as "Common Stock". The preferences, limitations and relative rights in
respect of the shares of each class are stated below.
(C) Class A Common Stock
SECTION 1. General. Any unissued shares of Class A Common Stock may be
issued from time to time in one or more series. All shares of Class A Common
Stock shall be of equal rank and shall be identical, except in respect of the
particulars that may be fixed by the Board of Directors as hereinafter provided
pursuant to authority which is hereby expressly vested in the Board of
Directors; and each share of a series shall be identical in all respects with
the other shares of such series. Before any shares of Class A Common stock of
any particular series shall be issued, the Board of Directors shall fix and
determine and is hereby expressly empowered to fix and determine, in the manner
provided by law, the following provisions of the shares of each such series so
far as not inconsistent with the provisions of this Article FOURTH applicable to
all series of Class A Common Stock.
(a) The distinctive designation of such series and the number
of shares which shall constitute such series;
(b) The dividends payable on shares of such series, the
conditions upon which and the dates when such dividends shall be
payable;
(c) The circumstances, if any, under which the shares of such
series will be converted into shares of Common Stock, and the price or
prices or the rate or rates of exchange;
2
<PAGE> 3
(d) The amount payable on shares of such series in the event
of any liquidation, dissolution or winding-up of the affairs of the
Corporation;
(e) Any other preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of shares of such series not fixed and determined in this
Article FOURTH.
SECTION 2. Cash Dividends. The holders of the Class A Common Stock of
each series, in preference to the holders of Common Stock, shall be entitled to
receive, out of the assets of the Corporation which are by law available for the
payment of dividends, such dividends and such amounts and payable at such time
or times, cumulative or non-cumulative, as shall be defined for such series by
the Board of Directors.
SECTION 3. Conversion. (a) Conversion Terms. The circumstances, if any,
under which shares of a series of Class A Common Stock shall be converted into
shares of Common Stock and the price or prices or the rate or rates of exchange
shall be as fixed and determined by the Board of Directors in any resolution
providing for the issue of any particular series of Class A Common Stock.
(b) Conversion Procedure. Within thirty (30) days of the
taking effect of any conversion, the Corporation shall give written
notice to each holder of converted shares of Class A Common Stock that
conversion has become effective. Thereafter each such holder shall
surrender the certificate or certificates of Class A Common Stock, duly
endorsed to the Corporation or in blank, at the office of any Transfer
Agent for the Class A Common Stock (or such other place as shall be
designated by the Corporation), and shall state in writing the name or
names in which he wishes the certificate or certificates of Common
Stock to be issued, and in absence of such statement the Common Stock
shall be issued in a certificate or certificates corresponding to the
certificate or certificates representing the shares of Class A Common
Stock converted. The Corporation will, as soon as practicable
thereafter, deliver at said office to such holder of shares of the
Class A Common Stock or to his nominee or nominees, a certificate or
certificates for the number of full shares of Common Stock to which he
shall be entitled as aforesaid. Shares of the Class A Common Stock
shall be deemed to have been converted and no longer outstanding as of
the conversion date, and the person or persons in whose name the Common
Stock is issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common
3
<PAGE> 4
Stock, including, without limitation, the declaration and payment of
dividends on Common Stock, whether or not the Corporation has given
notice and delivered certificates and whether or not such persons have
surrendered certificates of Class A Common Stock as herein provided.
(c) Fractional Shares. No fraction of a share of Common Stock
shall be issued upon any conversion but, in lieu thereof, there shall
be paid an amount in cash equal to the same fraction of the net book
value of a full share of Common Stock as shown on the most recent
audited balance sheet preceding the date upon which such shares are
converted.
(d) Effect of Recapitalization on Conversion. In case the
Corporation shall be recapitalized, or shall be consolidated with or
merged into, or shall sell or transfer its property and assets as, or
substantially as, an entirety to any other corporation, proper
provisions shall be made as a part of the terms of such
recapitalization, consolidation, merger, sale or transfer whereby the
holder of any shares of Class A Common Stock at the time outstanding
immediately prior to such event thereafter shall be subject to
conversion, with respect to securities of the Corporation resulting
from such recapitalization, consolidation or merger or to which such
sale or transfer shall be made, as shall be substantially equivalent to
the provisions for conversion herein.
SECTION 4. Priority in Event of Dissolution, Liquidation, Etc. (b)
Nature of Priority. Subject to the remaining provisions of this Section, the
Class A Common Stock shall be preferred over the Common Stock as to the net
assets of the Corporation.
(b) Priority Distribution. In event of any dissolution,
liquidation or winding-up of the affairs of the Corporation, after
payment or provisions for payment of the debts and other liabilities of
the Corporation, the holder of each share of a series of Class A Common
Stock shall be entitled to receive, out of the net assets of the
Corporation an amount in cash for each share equal to the amount fixed
and determined by the Board of Directors in any resolution providing
for the issue of any particular series of Class A Common Stock, plus an
amount equal to all dividends accrued and unpaid on each such share up
to the date fixed for distribution, before any distribution shall be
made to the holders of Common Stock, and thereafter shall share ratably
with the holder of Common Stock in the net assets of the Corporation
remaining after such priority distribution.
4
<PAGE> 5
(c) Merger, Sale of Assets, etc. Neither the merger nor
consolidation of the Corporation, nor the sale, lease or conveyance of
all or a part of its assets, shall be deemed to be a liquidation,
dissolution or winding-up of the affairs of the Corporation within the
meaning of this Section 4.
(D) Common Stock
SECTION 1. Dividends.
(a) Source and Medium. Subject to the limitations prescribed
in this Article FOURTH and any further limitations prescribed in
accordance therewith, the holders of the Common Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of the
assets of the Corporation which are by law available therefor,
dividends payable either in cash, in property, or in shares of the
Common Stock.
(b) Limitations Upon Dividends. No dividends other than
dividends payable only in shares of Common Stock shall be paid on the
Common Stock until cash dividends on each outstanding share of Class A
Common Stock in the full amount payable as provided in any resolution
providing for the issue of any particular series of Class A Common
Stock, shall have been paid or been declared and set apart for payment.
SECTION 2. Rights on Dissolution, Liquidation, etc. In event of any
dissolution, liquidation or winding-up of the affairs of the Corporation, the
holders of Common Stock shall be entitled, after payment or provision for
payment of the debts and other liabilities of the Corporation, and the amounts
to which the holders of the Class A Common Stock shall be entitled as a priority
distribution, to share ratably with the holders of the Class A Common Stock in
the net assets of the Corporation remaining after such priority distribution.
(A) General
SECTION 1. Reservation of Common Stock. The Corporation shall at all
times reserve and keep available out of its authorized but unissued Common Stock
solely for the purpose of effecting the conversion or exchange of the shares of
the Class A Common Stock the full number of shares of Common Stock then
deliverable upon the conversion or exchange of all shares of the Class A Common
Stock at the time outstanding.
5
<PAGE> 6
SECTION 2. Voting. Holders of Common Stock and holders of Class A
Common Stock shall have voting rights. At every meeting of the stockholders,
every holder of Common Stock and every holder of Class A Common Stock shall be
entitled to one vote, in person or by proxy, for each share of said Common Stock
and each share of Class A Common Stock, respectively, standing in his name on
the books of the Corporation. Common Stock and Class A Common Stock shall vote
together as a single class except as otherwise required by law.
SECTION 3. Preemptive Rights and Related Matters. Each holder of shares
of any class of the capital stock of the Corporation shall have the first right
to purchase shares (and securities convertible into shares) of any class of the
capital stock of this Corporation that from time to time may be issued (whether
or not presently authorized), including shares from the treasury of this
Corporation, in the ratio that the number of shares of capital stock held by
such holder at the time of issue bears to the total number of shares of capital
stock outstanding at time of issue (excluding shares held in the treasury of the
Corporation). This right shall terminate with respect to any shares preempted to
the extent the respective shareholder does not pay for such shares within ten
(10) days of receipt of a notice in writing from the Corporation stating the
prices, terms and conditions of the issue and inviting such stockholder to
exercise his preemptive rights. The authorized but unissued shares of Common
Stock and Class A Common may be issued for such consideration, not less than the
respective par value thereof, as may be fixed from time to time by the Board of
Directors, provided that shares of capital stock of the Corporation shall not be
issued for consideration other than foreign or domestic currency or in payment
of a debt of the Corporation without the consent of the holders of two-thirds of
the outstanding voting shares. Preemptive rights may be exercised by paying the
offering price to the Corporation or, in the case of offerings in foreign
currency or in payment of a debt of the Corporation, by paying the equivalent
amount in currency of the United States of America.
SECTION 4. Negation of Equitable Interests in Shares or Rights. The
Corporation shall be entitled to treat the record holder of any shares of the
Corporation's capital stock as the owner thereof for all purposes, including all
rights deriving from such shares, and shall not be bound to recognize any
equitable or other claim to, or interest in, such shares or rights deriving from
such shares, on the part of any other person, including, but without limiting
the generality thereof, a purchaser, assignee or transferee of such shares or
rights deriving from such shares, unless and until such purchaser, assignee,
6
<PAGE> 7
transferee or other person becomes the record holder of such shares, whether or
not the Corporation shall have either actual or constructive notice of the
interest of such purchaser, assignee, transferee or other person. Any such
purchaser, assignee, transferee or other person shall not be entitled to receive
notice of the meetings of stockholders; to vote at such meetings; to examine a
complete list of the stockholders entitled to vote at meetings; or to own,
enjoy, and exercise any other property or rights deriving from such shares
against the Corporation, until such purchaser, assignee, transferee or other
person has become the record holder of such shares.
SECTION 5. Stock Dividends and Stock Splits. As long as any shares of
Class A Common Stock are outstanding
(a) the Corporation shall not pay any dividend on any class of
capital stock payable in shares of such class of capital stock and
shall not effect any stock split or recombination with respect to any
class of capital stock unless a stock dividend at the same rate is paid
on each other class of capital stock outstanding payable in shares of
such other class of capital stock or each other class of capital stock
outstanding is split or recombined in the same proportion, as the case
may be, and
(b) the Corporation shall not pay any dividend on any class of
capital stock payable in shares of any other class of capital stock.'"
FOURTH: That said amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the State
of Delaware.
FIFTH: That the capital of said Corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said SOUTHERN PERU COPPER CORPORATION has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
Mr. A.B. White, its Executive Vice President, and Mr. A.J. Gillespie, Jr., its
Secretary, this 25th day of February, 1976.
SOUTHERN PERU COPPER
CORPORATION
By /s/ Mr. A.B. White
---------------------------------
Executive Vice President
7
<PAGE> 8
and
ATTEST:
By /s/A.J. Gillespie, Jr.
---------------------------------
Secretary
8
<PAGE> 1
Exhibit 3.1(a)(v)
SOUTHERN PERU COPPER CORPORATION
CERTIFICATE OF THE DESIGNATION, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF THE CLASS A
COMMON STOCK, SERIES 1, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF WHICH HAVE
NOT BEEN SET FORTH IN THE AMENDED CERTIFICATE
OF INCORPORATION OR IN ANY AMENDMENT THERETO.
---------------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
---------------------------
We, the undersigned, A. B. White and A. J. Gillespie, Jr., Executive
Vice President and Secretary, respectively, of Southern Peru Copper Corporation
(hereinafter called the "Corporation"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, DO HEREBY CERTIFY
that, at a meeting of the Board of Directors of the Corporation duly convened
and held, the following resolution was duly adopted:
RESOLVED, that, pursuant to the authority expressly granted to
and vested in the Board of Directors of this Corporation by the
provisions of the Certificate of Incorporation, as amended, the Board
of Directors hereby provides for the issue of a series of Class A
Common Stock of the Corporation (such series being hereinafter called
"Series 1"), and hereby fixes the designation, preferences and
relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations, or
restrictions thereof (in addition to the designation,
<PAGE> 2
preferences and relative, participating and other special rights, and
the qualifications, limitations, or restrictions thereof, set forth in
the Certificate of Incorporation, as amended, which are applicable to
the Class A Common Stock of all series) as follows:
(A) DESIGNATION. The distinctive designation of Series 1 shall
be "Class A Common Stock, Series 1"; the number of shares which shall
constitute Series 1 shall be 64,962 shares, which number of shares may
be increased or decreased (but not below the number of shares thereof
then outstanding) from time to time.
(B) CASH DIVIDENDS. The holders of the shares of Series 1
shall be entitled to receive as dividends, out of the assets of the
Corporation by law available for the payment of dividends and when and
as declared by the Board of Directors, an amount per share equal to the
purchase price actually paid to the Corporation upon issuance of such
share (the "Basic Preference") plus the Investment Return (hereinafter
defined), before any dividend, other than a dividend payable solely in
shares of Common Stock, shall be declared on Common Stock. "Investment
Return" shall mean dividends on each outstanding share of Series 1 in
an aggrade amount which from the date of issuance of such share until
all dividends required to be paid on such share have been paid is
sufficient to yield the holder of such share a return of ten percent
(10%)
<PAGE> 3
per annum, compounded on April 1 of each year beginning April 1, 1977,
on the amount of the Basic Preference from time to time outstanding. At
such time as there shall have been paid or set aside for payment
dividends equal to the Basic Preference plus the Investment Return on a
share of Series 1, no further dividends shall be declared on such
share, which thereupon shall be converted into Common Stock as provided
in Paragraph (C), and as Common Stock shall be entitled to all the
rights of Common Stock including dividend payments. At any time the
Basic Preference shall be deemed to be outstanding only to the extent
that aggregate dividends theretofore applied against the Basic
Preference are less than the original amount of the Basic Preference,
considering each dividend paid as having been applied first against the
Investment Return accrued to the date of such dividend and any balance
against the Basic Preference.
(C) CONVERSION. Each share of Series 1 shall be converted into
one fully paid and nonassessable share of Common Stock without any
action on the part of the Corporation or the holders of the shares of
Series 1 on the date on which the full aggregate amount of dividends
accrued to and payable on such share as of such date as provided in
Paragraph (B) have been paid or otherwise set aside for payment.
3
<PAGE> 4
(D) PRIORITY IN EVENT OF DISSOLUTION. In event of any
dissolution, liquidation or winding-up of the affairs of the
Corporation, after payment or provisions for payment of the debts and
other liabilities of the Corporation, the holder of each share of
Series 1 shall be entitled to receive, out of the net assets of the
Corporation an amount which, after giving effect to all dividends
theretofore paid on such share, shall equal the Basic Preference plus
the Investment Return to the date fixed for distribution, before any
distribution shall be made to the holders of the Common Stock. In
addition, the holder of each share of Series 1 shall be entitled to
receive, out of the net assets of the Corporation remaining after such
first priority distribution, an amount per share equal to the amount of
such remaining net assets divided by the total shares of capital stock
of the Corporation issued and outstanding as of the date fixed for
distribution.
(E) OTHER RIGHTS. The shares of Series 1 shall not have any
relative, participating, optional or other special rights and powers
other than as set forth above in this Resolution and in the Certificate
of Incorporation, as amended, of the Corporation.
4
<PAGE> 5
IN WITNESS WHEREOF, this Certificate is made under the seal of Southern
Peru Copper Corporation and signed by Mr. A. B. White, its Executive Vice
President, and Mr. A. J. Gillespie, Jr., its Secretary, this 12th day of March,
1976.
SOUTHERN PERU COPPER /s/ A. B. White
CORPORATION INCORPORATED ------------------------------------
1952 Executive Vice President
DELAWARE
ATTEST: /s/ A. J. Gillespie, Jr.
------------------------------------
Secretary
5
<PAGE> 1
Exhibit 3.1(a)(vi)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SOUTHERN PERU COPPER CORPORATION
SOUTHERN PERU COPPER CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation by a consent in
writing in lieu of meeting duly adopted resolutions setting forth a proposed
amendment to the Certificate of Incorporation of said Corporation, declaring
said amendment advisable and directing that said amendment be submitted to the
stockholders of the Corporation for their consideration and action by written
consent pursuant to Section 228 of the General Corporation Law of the State of
Delaware and pursuant to Section 8 of Article I of the By-laws of the
Corporation.
SECOND: That thereafter the necessary number of stockholders as
required by statute, acting by written consent pursuant to Section 228 of the
General Corporation Law of the State of Delaware and pursuant to Section 8 of
<PAGE> 2
Article I of the By-laws of the Corporation, adopted and approved said
amendment.
THIRD: That the resolution setting forth said amendment is as follows:
"RESOLVED, that the Board of Directors proposes and hereby
declares it advisable and for the benefit of this Corporation to amend
Article FOURTH of the Corporation's Certificate of Incorporation, as
heretofore amended, to terminate the authorization of Class A Common
Stock of the Corporation, so that as amended Article FOURTH shall be
read and provide as follows:
'FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 984,370 shares of Common
Stock with the par value of $100 per share.'"
FOURTH: That said amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, said SOUTHERN PERU COPPER CORPORATION has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
Mr. George R. Westby, its Treasurer, and Mr. A. J. Gillespie, Jr., its
Secretary, this 11th day of May, 1981.
By: /s/ George R. Westby
--------------------------------
Treasurer
and
ATTEST: By: /s/ A. J. Gillespie, Jr.
--------------------------------
Secretary
2
<PAGE> 3
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
I, Delores M. Goldstein, a notary public in and for said county in said
state, hereby certify that George R. Westby and A. J. Gillespie, Jr., whose
names as Treasurer and Secretary of Southern Peru Copper Corporation, a
corporation, are signed to the foregoing document, and who are kwown to me,
acknowledged before me on this day that, being informed of the contents of the
documents, they, as such officers and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and seal of office this 30th day of July, 1981.
/s/ Delores M. Goldstein
------------------------------------
Notary Public
Delores M. Goldstein
Notary Public, State of New York
No. 24-4666240
Qualified in Kings County
Cert. Filed in New York County
Commission Expires March 30, 1982
<PAGE> 1
Exhibit 3.1(a)(vii)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SOUTHERN PERU COPPER CORPORATION
* * * * * * * *
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
* * * * * * * *
SOUTHERN PERU COPPER CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the Board of Directors of
the Corporation a resolution was adopted setting forth a proposed amendment to
the Certificate of the Incorporation, declaring said amendment to be advisable,
and directing that said amendment be considered at a special meeting of the
stockholders of the Corporation. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Board of Directors of the Corporation does hereby
deem it advisable and recommends that the stockholders of the
Corporation (the "Stockholders") approve, at a special meeting of
stockholders, a unified proposal (the "Stock Split Proposal" and, if
approved by the Stockholders, the "Stock Split"):
(i) that the Corporation amend (the "Amendment") its Certificate of
Incorporation so that the first paragraph of Article FOURTH of the
Certificate of Incorporation shall read in its entirety as follows:
<PAGE> 2
FOURTH: The total number of shares of stock the Corporation
shall have authority to issue is 100,000,000 shares of Common
Stock with the par value of $0.01 per share.
(ii) that the Corporation effect a one-hundred-for-one stock split of
the common stock of the Corporation, and a decrease in the par value of
the common stock of the Corporation to $0.01 per share, effective on
the date (the "Record Date") that a certificate of amendment relating
to the Amendment is filed with the Secretary of State of the State of
Delaware.
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders holding 100 percent of the Corporation's outstanding voting stock,
acting by unanimous written consent in accordance with Section 228 of the
Delaware General Corporation Law, approved the aforesaid amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 228 and 242 of the General Corporation Law
of the State of Delaware.
FOURTH: That the Corporation has received payment for its stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Kevin R. Morano, its Vice President, and attested by Augustus B.
Kinsolving, its Secretary, this 4th day of November, 1994.
/s/Kevin R. Morano
------------------------------------
Kevin R. Morano
Vice President
Attested by:
/s/Augustus B. Kinsolving
- ------------------------------
Augustus B. Kinsolving
2
<PAGE> 1
Exhibit 3.1(a)(viii)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SOUTHERN PERU COPPER CORPORATION
---------------------------
Southern Peru Copper Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify that the amendment set forth below to the Corporation's
Certificate of Incorporation was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
ARTICLE FIRST is amended to read as follows:
FIRST: The name of the Corporation is
SOUTHERN PERU LIMITED.
IN WITNESS WHEREOF, this Certificate of Amendment, which amends the
provisions of the Certificate of Incorporation of the Corporation, and which has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of Delaware, has been executed by its duly authorized
officer this 29th day of December, 1995.
SOUTHERN PERU COPPER CORPORATION
/s/ Charles G. Preble
-----------------------------------------
Charles G. Preble
President
<PAGE> 1
Exhibit 3.1(a)(ix)
Certificate of Amendment
Southern Peru Limited, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of Southern Peru Limited adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Board of Directors hereby proposes and declares the
advisability of an amendment to the Certificate of Incorporation of
this corporation substituting for the Article "FOURTH" thereof the
following:
"FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is 1,000 shares of Common Stock, with the
par value of $.01 per share.
SECOND: That in lieu of a meeting and vote of stockholders, the sole
stockholder has given unanimous written consent to said amendment in accordance
with Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Section 242 and 228 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by its Vice President and attested by its Assistant Secretary this 16th
day of April, 1996.
Southern Peru Limited
By: /s/ K.R. Morano
--------------------------------
K.R. Morano, Vice President
Attest:
/s/ C.D. Gonzalez
- ---------------------------------
Assistant Secretary
<PAGE> 1
Exhibit 3.2(a)
BY-LAWS
OF
SOUTHERN PERU LIMITED
(FORMERLY SOUTHERN PERU COPPER CORPORATION)
-----------------
AS AMENDED FEBRUARY 20, 1976,
APRIL 19, 1976, MAY 11, 1977,
APRIL 30, 1980 AND APRIL 10, 1986
<PAGE> 2
BY-LAWS
OF
SOUTHERN PERU COPPER
CORPORATION
(A DELAWARE CORPORATION)
---------------
ARTICLE I.
MEETINGS OF STOCKHOLDERS.
SECTION 1. Annual Meetings. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as properly may come before the meeting shall be held at 11
o'clock in the forenoon on the third Wednesday of April in each year, if not a
legal holiday, or, if a legal holiday, then on the next succeeding day not a
legal holiday.
SECTION 2. Special Meetings. Special meetings of the stockholders may
be called at any time by the Chairman of the Board, the President, or the Board
of Directors, and shall be called by the Chairman of the Board, the President or
the Secretary upon the written request of stockholders holding of record in the
aggregate one-tenth or more of the outstanding shares of stock of the
Corporation entitled to vote, such written request to state the purpose or
purposes of the meeting and to be delivered to the Chairman of the Board, the
President or the Secretary.
SECTION 3. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Corporation in New York City or at such
other place, within or without the State of Delaware, as shall be specified in
the respective notices or waivers of notice, except as otherwise required by
statute.
SECTION 4. Notice of Meetings. Except as otherwise required by statute,
the Secretary or an Assistant Secretary shall cause notice of the time, place
and purpose or purposes of each meeting of the stockholders (whether annual or
special) to be mailed, at least ten (but not more than sixty) days prior to the
meeting to each stockholder of record entitled to vote at his post office
address as the same appears on the books of the Corporation at the time of such
mailing.
1
<PAGE> 3
Notice of any meeting of stockholders shall not be required to be given to any
person who may become a stockholder of record after such mailing of such notice
and prior to the meeting, or to any stockholder who shall sign a waiver of such
notice in writing, whether before or after the time of such meeting. Notice of
any adjourned meeting of the stockholders of the Corporation shall not be
required to be given, unless otherwise required by statute.
SECTION 5. List of Stockholders, entitled to vote. The officer who has
charge of the stock ledger of a corporation shall prepare and make, at least ten
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 6. Quorum. At all meetings of the stockholders the presence in
person or by proxy of stockholders holding of record in the aggregate a majority
of the outstanding shares of stock of the Corporation entitled to vote shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the absence of a quorum at any meeting of the stockholders, the stockholders
holding of record in the aggregate at least a majority of the outstanding shares
of stock of the Corporation entitled vote and present in person or by proxy, or,
if no stockholder entitled to vote is present in person or by proxy, any officer
authorized to preside at or act as Secretary of such meeting, may adjourn such
meeting from time to time, for a period not exceeding twenty days at any one
time, until a quorum shall be present. At any such adjourned meeting at which a
quorum may be present any business may be transacted which might have been
transacted at the meeting as originally called.
SECTION 7. Voting. Except as otherwise provided by statute, at each
meeting of the stockholders each stockholder holding of record stock of the
Corporation entitled to vote shall be entitled to one vote for each share of
such stock held by him and registered in his name on the books of the
Corporation at the time of such meeting unless, pursuant to the provisions of
Section 5 of Article VI of these By-Laws, a date shall have been fixed as a
record date for the determination of the stockholders entitled to vote. At each
meeting of the stockholders each stockholder entitled to vote shall be entitled
to vote in person or
2
<PAGE> 4
by proxy, provided, however, that the right to vote by proxy shall exist only in
case the instrument authorizing such proxy to act shall have been executed in
writing by the stockholder himself, or by his attorney thereunto duly authorized
in writing. At all meetings of the stockholders, all matters, other than those
the manner of deciding which is expressly regulated by statute or by the
Certificate of Incorporation or by Sections 3 or 9 of Article II of these
By-Laws, shall be decided by the vote of the stockholders holding of record in
the aggregate at least a majority of the outstanding shares of stock of the
Corporation entitled to vote and present in person or by proxy. Shares belonging
to the Corporation shall not be voted.
SECTION 8. Consent of stockholders in lieu of meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required to be taken at
any annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE II.
BOARD OF DIRECTORS.
SECTION 1. General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors.
SECTION 2. Number, Term of Office and Qualifications. The member of
directors which shall constitute the whole Board of Directors shall be such
number not less than three nor more than fifteen, which number may be changed by
amendment of these By-Laws. The directors shall be elected annually at the
annual meetings of the stockholders, and each director (whether elected at any
annual meeting or to fill a vacancy or otherwise) shall hold office until his
successor is elected and qualified or until his death or until he shall resign
in the manner provided in Section 8 of this Article II, or shall have been
removed in the manner provided in Section 9 of this Article II. In case of any
increase in the number of directors, additional directors to fill the vacancies
in the Board of Directors caused by such increase shall be elected by the
stockholders entitled to vote.
3
<PAGE> 5
SECTION 3. Election of Directors. At each meeting of the stockholders
for the election of directors, the directors shall be elected by a plurality of
the votes cast at such election by the stockholders entitled to vote.
SECTION 4. Annual and Regular Meetings. The annual meeting of the Board
of Directors may be held in each year immediately after the annual meeting of
the stockholders at the place of such annual meeting of stockholders, and if so
held no notice of such annual meeting need be given to any director of the
Corporation. If the annual meeting of the Board of Directors shall not be so
held immediately after the annual meeting of stockholders in any year, such
meeting shall be held as soon thereafter as practicable, upon the notice
provided for in Section 5 of this Article II in the case of special meetings, at
such time and place (which may be within or outside the State of Delaware) as
may be specified in the notice or waiver of notice of such meeting. The Board of
Directors from time to time may provide for the holding of other regular
meetings of the Board of Directors and fix the time and place (which may be
within or outside of the State of Delaware) thereof. Notice of regular meetings
shall not be required to be given; provided, however, that in case the Board of
Directors shall fix or change the time or place of regular meetings, notice of
such action shall be mailed promptly to each director who shall not have been
present at the meeting at which such action was taken, addressed to him at his
usual place of business.
SECTION 5. Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President or by one of the directors at such time and place (which may be within
or outside of the State of Delaware) as may be specified in the respective
notices or waivers of notice thereof. Except as otherwise required by statute,
notice of each special meeting shall be mailed to each director addressed to him
at his usual place of business at least three days before the day on which the
meeting is to be held, or shall be sent to him at such place by telegram, radio
or cable or shall be delivered to him personally, not later than two days before
the day on which the meeting is to be held; provided, however, that if the
meeting is to be held outside the United States, the notice, if mailed, shall be
mailed at least ten days before the day on which the meeting is to be held, or,
if sent by telegram, radio or cable, or delivered personally, shall be so sent
or delivered not later than five days before the day on which the meeting is to
be held. Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting in person, or to any director who shall
waive notice of such meeting in writing or by telegram, radio or cable, whether
before or after the time of such meeting; and any such meeting shall be a legal
meeting without any notice thereof having been given if all the directors shall
be present thereat. Notice of any adjourned meeting shall not be required to be
given.
4
<PAGE> 6
SECTION 6. Quorum and Manner of Acting. If the Board of Directors
consists of fourteen or more persons, the presence of at least nine directors
shall be necessary and sufficient to constitute a quorum for the transaction of
business at meetings, and the affirmative vote of at least nine directors shall
be necessary for the adoption of any resolution or the taking of any action. If
only twelve or thirteen persons have been elected as directors, the presence of
at least eight directors shall be necessary and sufficient to constitute a
quorum for the transaction of business at meetings, and the affirmative vote of
at least eight directors shall be necessary for the adoption of any resolution
or the taking of any action. In the absence of a quorum, a majority of the
directors present may adjourn the meeting from time to time until a quorum shall
be present. Any director who is not to be present at any meeting of directors
shall have the right to send an observer to attend such meeting in his place.
Such observer shall not be counted in determining whether or not a quorum is
present and shall not have any vote.
SECTION 7. Consent of Board of Directors or Committee in Lieu of
Meeting; Telephone Meeting. Unless otherwise restricted by the Certificate of
Incorporation or in these By-Laws, (a) any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting if all members of the Board or Committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or Committee, and (b) any member or
members of the Board of Directors or of any Committee thereof may participate in
a meeting of the Board or Committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting in such manner shall
constitute presence in person at such meeting.
SECTION 8. Resignations. Any director may resign at any time by giving
written notice of such resignation to the Board of Directors, the Chairman of
the Board, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or any such officer.
SECTION 9. Removal of Directors. Any director may be removed at any
time, either for or without cause, by the affirmative vote in person or by proxy
of stockholders holding of record in the aggregate a majority of the outstanding
shares of stock of the Corporation entitled to vote, given at a special meeting
of said stockholders called for the purpose. Any vacancy in the Board of
Directors caused by any such removal shall be filled by such stockholders at
such meeting.
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<PAGE> 7
SECTION 10. Vacancies. If any vacancy shall occur in the Board of
Directors by reason of death, resignation or otherwise, the remaining directors
shall continue to act. Vacancies shall be filled by a plurality of the votes
cast by the stockholders entitled to vote at the annual meeting or at any
special meeting of said stockholders called for the purpose.
SECTION 11. Indemnification of Directors and Officers. The Corporation
shall indemnify any and all of its directors or officers or former directors or
officers or any person who may have served at its request as a director or
officer of another corporation in which the Corporation owns shares of capital
stock or of which it is a creditor against expenses actually and necessarily
incurred by them in connection with the defense of any action, suit or
proceeding in which they, or any of them, are made parties, or a party, by
reason of being or having been directors or officers or a director or officer of
the Corporation, or of such other corporation, except in relation to matters as
to which any such director or officer or former director or officer or person
shall be adjudged in such action, suit or proceeding to be liable for negligence
or misconduct in the performance of duty. Such indemnification shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any By-Law, agreement, vote of stockholders, or otherwise. The Corporation
shall have the right to intervene in and to defend all such actions, splits or
proceedings brought against any such director or officer or former director or
officer or person. Whenever in this paragraph a director or officer or former
director or officer or a person is referred to, such reference shall be
inclusive of his heirs, executors and administrators.
Each director of the Corporation and each member of any committee
designated by the Board of Directors shall, in the performance of his duties, be
fully protected in relying in good faith upon the books of account or reports
made to the Corporation by any of its officials, or by an independent certified
public accountant, or by an appraiser, selected with reasonable care by the
Board of Directors or by any such committee, or in relying in good faith upon
other records of the Corporation.
A director of the Corporation shall be fully protected in relying in
good faith upon the books of account of the Corporation or statements prepared
by any of its officials as to the value and amount of the assets, liabilities
and/or net profits of the Corporation, or any other facts pertinent to the
existence and amount of surplus or other funds from which dividends might
properly be declared and paid.
SECTION 12. Designation as Director Emeritus. The Board of Directors
acting as such or through the Executive Committee may, in its sole discretion,
grant the honorary title of Director Emeritus to a former Director of the
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<PAGE> 8
Corporation in recognition of service to the Corporation. Such title shall be
honorary only, and a Director Emeritus shall not be a "Director" as that term is
used in these By-laws or in any document of the Corporation. Any such Director
Emeritus shall have no duties or responsibilities to the Corporation, nor any
authority to act on behalf of the Corporation or receive any compensation from
it solely by virtue of holding such title.
ARTICLE III.
EXECUTIVE COMMITTEE.
SECTION 1. Power. During the intervals between meetings of the Board of
Directors, the Executive Committee shall have and may exercise all the powers
and authority of the Board of Directors, except as prohibited by statute, in the
management of the business and affairs of the Corporation, including the power
and authority of the Board to declare a dividend and to authorize the issuance
of stock, and may authorize the seal of the Corporation to be affixed to all
papers which may require it.
SECTION 2. Designation of Members; Qualifications; Term of Office;
Alternate Members. The Board of Directors, by resolution or resolutions passed
in the manner provided in Section 6 of Article II, shall designate from among
its members an Executive Committee of five members. Thereafter, members of the
Executive Committee shall be designated annually, in like manner, at the annual
meetings of the Board of Directors. Each member of the Executive Committee
(whether designated at an annual meeting of the Board of Directors or to fill a
vacancy or otherwise) shall be and remain a director and shall hold office until
his successor shall have been designated or until he shall cease to be a
director or until his death or until he shall resign in the manner provided in
Section 5 of this Article III or shall have been removed in the manner provided
in Section 6 of this Article III. Any member of the Executive Committee may
appoint, by an instrument in writing filed with the Secretary of the
Corporation, another member of the Board of Directors to serve as his alternate
on the Executive Committee. During any meeting of the Executive Committee which
shall be attended by an alternate so appointed and not attended by the member
who appointed such alternate, the alternate shall be deemed a member of the
Executive Committee for all purposes in the place of the member who appointed
him.
SECTION 3. Meetings; Notices; Records. The Executive Committee may hold
regular and special meetings at such place or places (within or outside the
State of Delaware) and at such time or times as it shall determine from time to
time. Notice of regular meetings shall not be required to be given; provided,
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<PAGE> 9
however, that whenever the time or place of regular meetings shall be fixed or
changed, notice of such action shall be mailed promptly to each member who shall
not have been present at the meeting at which such action was taken, addressed
to him at his usual place of business. Notice of each special meeting shall be
mailed to each member addressed to him at his usual place of business at least
three days before the day on which the meeting is to be held, or shall be sent
to him at such place by telegram, radio or cable or shall be given to him
personally or by telephone, not later than two days before the day on which the
meeting is to be held; provided, however, that if the meeting is to be held
outside the United States, the notice, if mailed, shall be mailed at least ten
days before the day on which the meeting is to be held, or, if sent by telegram,
radio or cable, or delivered personally, shall be so sent or delivered not later
than five days before the day on which the meeting is to be held. Notice of any
special meeting need not be given to any member who (or the alternate of whom)
shall attend such meeting in person, or who shall waive notice thereof in
writing or by telegram, radio or cable, whether before or after the time of such
meeting; and any such meeting shall be a legal meeting without any notice
thereof having been given if all the members shall be present thereat (a member
being deemed present if his alternate is present). No notice need be given to
any alternate member, and no notice need be given of any adjourned meeting. The
Executive Committee shall keep a record of its proceedings.
SECTION 4. Quorum and Manner of Acting. At all meetings of the
Executive Committee the presence of at least four members shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the
affirmative vote of all members who are present shall he necessary for the
adoption of any resolution or the taking of any action. All questions on which
such a vote shall not have been obtained shall be referred to the Board of
Directors.
SECTION 5. Resignations. Any member of the Executive Committee may
resign at any time by giving written notice of such resignation to the Board of
Directors, the Chairman of the Board, the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or any such
officer.
SECTION 6. Removal. Any member of the Executive Committee may be
removed at any time, either for or without cause, by resolution passed at any
meeting of the Board of Directors in the manner provided in Section 6 of Article
II.
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<PAGE> 10
SECTION 7. Vacancies. If any vacancy shall occur in the Executive
Committee by reason of disqualification, death, resignation, removal or
otherwise, the remaining members shall continue to act and such vacancy may be
filled at any meeting of the Board of Directors by resolution passed in the
manner provided in Section 6 of Article II.
ARTICLE IV.
OFFICERS.
SECTION 1. Number. The officers of the Corporation shall be a Chairman
of the Board, a President, a Chairman of the Executive Committee, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice
Presidents, a Treasurer, a Comptroller, a Secretary, and such other officers as
may be appointed in accordance with the provisions of Section 3 of this Article
IV.
SECTION 2. Election, Term of Office and Qualifications. Each officer
(except such officers as may be appointed in accordance with the provisions of
Section 3 of this Article IV) shall be elected by the Board of Directors
annually at its annual meeting. Each such officer (whether chosen at an annual
meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold
his office until his successor shall have been elected and qualified, or until
his death, or until he shall resign in the manner provided in Section 4 of this
Article IV or shall have been removed in the manner provided in Section 5 of
this Article IV. The Chairman of the Board, the President and the Chairman of
the Executive Committee shall each be and remain a director of the Corporation
while occupying such office. Any other officer may but need not be a director of
the Corporation. Any two of such offices may be held by any one person except
the offices of President and Vice-President.
SECTION 3. Subordinate Officers and Agents. The Board of Directors, or
the Chairman of the Board or the President, with the approval of the Board of
Directors, may from time to time appoint such other officers and agents as the
Board, the Chairman of the Board or the President may deem necessary or
advisable, to hold office for such period, have such authority and perform such
duties as may be determined from time to time by the Board of Directors, the
Chairman of the Board or the President.
SECTION 4. Resignations. Any officer may resign at any time by giving
written notice of such resignation to the Board of Directors, the Chairman of
the Board, the President or the Secretary of the Corporation. Unless otherwise
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<PAGE> 11
specified in such written notice, such resignation shall take effect upon
receipt thereof.
SECTION 5. Removal. The officers specifically designated in Section 1
of this Article IV may be removed, either for or without cause, at any special
meeting of the Board of Directors called for the purpose, by resolution passed
in the manner provided in Section 6 of Article II. The officers and agents
appointed in accordance with the provisions of Section 3 of this Article IV may
be removed, either for or without cause, at any meeting of the Board of
Directors, by resolution passed in the manner provided in Section 6 of Article
II, or by any superior officer or agent upon whom such power of removal shall
have been conferred by the Board of Directors.
SECTION 6. Vacancies. A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner provided in this Article IV for regular election or appointment to such
office.
SECTION 7. The Chairman of the Board. The Chairman of the Board shall
be the chief executive officer of the Corporation, and, subject to the direction
of the Board of Directors, he shall have general supervision over the business
and affairs of the Corporation and over its officers and agents. He shall
preside at all meetings of the stockholders and of the Board of Directors, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. He may sign certificates representing stock of the Corporation the
issuance of which shall have been authorized by the Board of Directors. From
time to time he shall report to the Board of Directors all matters within his
knowledge which the interests of the Corporation may require to be brought to
their notice. He shall perform such other duties as are given to him by these
By-Laws or as from time to time may be assigned to him by the Board of
Directors.
SECTION 8. The President. The President shall be the chief operating
officer of the Corporation and, subject to the direction of the Board of
Directors and the Chairman of the Board, shall have general management and
control of all of its properties. Whenever the Chairman of the Board is unable
to serve by reason of illness or otherwise, or in the event of and during the
period of a vacancy in that office, the President shall be the chief executive
officer of the Corporation and shall exercise all powers of the Chairman of the
Board. In the absence of the Chairman of the Board, he shall preside at all
meetings of the stockholders or of the Board of Directors at which he is
present. He may sign certificates of stock of the Corporation the issuance of
which shall have been authorized by the Board of Directors. He shall perform
such other duties as are given to him by these
10
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By-Laws or as may from time to time be assigned to him by the Board of Directors
or the Chairman of the Board.
SECTION 9. The Chairman of the Executive Committee. The Chairman of the
Executive Committee shall preside at all meetings of the Executive Committee and
shall perform such other duties as are given to him by these By-Laws or as from
time to time may be assigned to him by the Board of Directors.
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<PAGE> 13
SECTION 10. The Executive Vice Presidents. Each Executive Vice
President shall perform such duties as shall be assigned to him by the Chairman
of the Board. In the absence or in the case of the death or disability of the
Chairman of the Board, the President and Chairman of the Executive Committee,
the Executive Vice President designated by the Chairman of the Board or by the
Board of Directors shall perform the duties of the Chairman of the Board and,
when so acting, such Executive Vice President shall have and exercise all the
powers of the Chairman of the Board.
SECTION 11. The Senior Vice Presidents. Each Senior Vice President
shall perform such duties as shall be assigned to him by the Chairman of the
Board. In the absence or in the case of the death or disability of the Chairman
of the Board, the President and Chairman of the Executive Committee, and the
Executive Vice President, the Senior Vice President designated by the Chairman
of the Board or by the Board of Directors shall perform the duties of the
Chairman of the Board and, when so acting, such Senior Vice President shall have
and exercise all the powers of the Chairman of the Board.
SECTION 12. The Vice Presidents. The Vice President or Vice Presidents,
in the order of election as shown in the minutes, at the request of the Chairman
of the Board, the President, an Executive Vice President, or a Senior Vice
President, or in the absence or inability of the Chairman of the Board, the
President, the Executive Vice Presidents and the Senior Vice Presidents to act,
shall perform the duties of the President and, when so acting, shall have all
the powers of and be subject to all restrictions upon the President. Any Vice
President may sign certificates representing stock of the Corporation the
issuance of which shall have been authorized by the Board of Directors. Each
Vice President shall perform such other duties as are given to him by these
By-Laws or as from time to time may be assigned to him by the Board of
Directors, the Chairman of the Board or the President.
SECTION 13. The Treasurer. The Treasurer shall
(a) have charge of and supervision over and be responsible for
the funds, securities, receipts and disbursements of the Corporation;
(b) cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or
other depositaries as shall be selected in accordance with Section 3 of
Article V of these By-Laws or to be otherwise dealt with in such manner
as the Board of Directors may direct;
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(c) cause the funds of the Corporation to be disbursed by
checks or drafts upon the authorized depositaries of the Corporation,
and cause to be taken and preserved proper vouchers for all moneys
disbursed;
(d) render to the Chairman of the Board, the President or the
Board of Directors, whenever requested, a statement of all his
transactions as Treasurer;
(e) sign (unless the Secretary, an Assistant Secretary or an
Assistant Treasurer shall sign ) certificates representing stock of the
Corporation the issuance of which shall have been authorized by the
Board of Directors; and
(f) in general, perform all duties incident to the office of
Treasurer and such other duties as are given to him by these By-Laws or
as from time to time may be assigned to him by the Board of Directors,
the Chairman of the Board or the President.
SECTION 14. The Comptroller. The Comptroller shall be the chief
accounting officer of the Corporation. He shall
(a) keep just, true, correct and suitable cash, check and bank
books, showing particularly all the moneys received, deposited, drawn
and disbursed, for what, and from whom received, to whom and for what
paid;
(b) keep account of all assets and liabilities of the
Corporation;
(c) see that all payments of moneys by the Corporation are
duly authorized;
(d) be the custodian, subject to the Treasurer, of all
securities, contracts and other evidences of the assets of the
Corporation;
(e) be empowered from time to time to require from all
officers or agents of the Corporation reports or statements giving such
information as he may desire with respect to any and all transactions
of the Corporation;
(f) render to the Chairman of the Board, the President or the
Board of Directors, whenever requested, such statements and accounts as
may be required; and
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<PAGE> 15
(g) in general, perform all duties incident to the office of
Comptroller and such other duties as are given to him by these By-Laws
or as from time to time may be assigned to him by the Board of
Directors, the Chairman of the Board or the President.
SECTION 15. The Secretary. The Secretary shall
(a) record all the proceedings of the meetings of the
stockholders and Board of Directors in a book to be kept for that
purpose;
(b) cause all notices to be duly given in accordance with the
provisions of these By-Laws and as required by statute;
(c) be custodian of the records and of the seal of the
Corporation, and cause such seal or a facsimile thereof to be affixed
to all certificates representing stock of the Corporation prior to the
issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly
authorized in accordance with these By-Laws;
(d) see that the books, reports, statements, certificates and
other documents and records required by statute are properly kept and
filed;
(e) have charge of the stock books of the Corporation and
cause the stock and transfer books to be kept in such manner as to show
at any time the amount of stock of the Corporation of each class issued
and outstanding, the manner in which and the time when such stock was
paid for, the names alphabetically arranged and the addresses of the
holders of record thereof, the number of shares held by each and the
time when each became such holder of record; and exhibit at all
reasonable times to any director, upon application, the original or
duplicate stock register;
(f) sign (unless the Treasurer, an Assistant Treasurer or
Assistant Secretary shall sign ) certificates representing stock of the
Corporation the issuance of which shall have been authorized by the
Board of Directors; and
(g) in general, perform all duties incident to the office of
Secretary and such other duties as are given to him by these By-Laws or
as from time to time may be assigned to him by the Board of Directors,
the Chairman of the Board or the President.
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SECTION 16. Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the Corporation shall execute to the
Corporation a bond in such sum and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance of his duties to
the Corporation, including responsibility for negligence and for the accounting
for all property, funds or securities of the Corporation which may come into his
hands.
ARTICLE V.
EXECUTION OF INSTRUMENTS, BORROWING OF
MONEY AND DEPOSIT OF CORPORATE FUNDS.
SECTION 1. Execution of Instruments. All contracts of, and other
instruments requiring execution by, the Corporation shall be signed by either
the Chairman of the Board, the President, the Chairman of the Executive
Committee, an Executive Vice President, a Senior Vice President, a Vice
President, or the Treasurer and by the Comptroller, an Assistant Comptroller,
the Secretary, an Assistant Secretary, or an Assistant Treasurer; provided,
however, that authority to sign any contracts of, or other instruments requiring
execution by, the Corporation may be conferred by the Board of Directors upon
any person or persons whether or not such person or persons be officers of the
Corporation; and provided, further, that such person or persons may delegate,
from time to time, by instrument in writing, all or any part of such authority
to any other person or persons if authorized so to do by the Board of Directors.
SECTION 2. Indebtedness. When so authorized by the Board of Directors,
any officer or agent of the Corporation may effect loans and advances at any
time for the Corporation secured by mortgage or pledge of the Corporation's
property or otherwise, and may do every act and thing necessary or proper in
connection therewith. Such authority may be general or confined to specific
instances.
SECTION 3. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to its credit in such banks or
trust companies or with such bankers or other depositaries as the Board of
Directors may select, or as may be selected by any officer or officers, or agent
or agents, authorized so to do by the Board of Directors.
SECTION 4. Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and all evidences of indebtedness of the Corporation whatsoever,
shall be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
15
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determine. Endorsements for deposits to the credit of the Corporation in any of
its duly authorized depositaries shall be made in such manner as the Board of
Directors from time to time may determine.
SECTION 5. Proxies. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
Chairman of the Board, the President, the Chairman of the Executive Committee,
an Executive Vice President, a Senior Vice, President, a Vice President, or the
Treasurer and by the Secretary or an Assistant Secretary of the Corporation, or
by any other person or persons thereunto authorized by the Board of Directors.
ARTICLE VI.
SHARES OF STOCK.
SECTION 1. Certificates of Stock. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President, the Chairman of
the Executive Committee, an Executive Vice President, a Senior Vice President,
or a Vice President and the Treasurer, or an Assistant Treasurer, or the
Secretary, or an Assistant Secretary (or signed in such other manner as may be
permitted by statute) certifying the number of shares owned by him in the
Corporation. Certificates representing shares of stock of the Corporation shall
be in such form as shall be approved by the Board of Directors and the seal of
the Corporation or a facsimile thereof shall be affixed thereto. There shall be
entered upon the stock books of the Corporation at the time of issuance of each
share the number of the certificate issued, the name of the person owning the
shares represented thereby, the number and class of such shares and the date of
issuance thereof. Every certificate exchanged or returned to the Corporation
shall be marked "Cancelled," with the date of cancellation.
SECTION 2. Transfer of Stock. Transfer of shares of the stock of the
Corporation shall be made on the books of the Corporation by the holder of
record thereof, or by his attorney thereto duly authorized by a power of
attorney duly executed in writing and filed with the Secretary of the
Corporation, and on surrender of the certificate or certificates representing
such shares. The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the absolute owner thereof for all purposes, and
accordingly shall not be bound to recognize any legal, equitable or other claim
to or interest in such share or shares on the part of any other person whether
or not it or they shall have
16
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express or other notice thereof, except as otherwise expressly provided by the
statutes of the State of Delaware.
SECTION 3. Regulations. Subject to the provisions of this Article VI
the Board of Directors may make such rules and regulations as they may deem
expedient concerning the issuance, transfer and registration of certificates for
shares of the stock of the Corporation.
SECTION 4. Transfer Agents and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of stock of the Corporation, and may
require all such certificates to bear the signature of either or both.
SECTION 5. Fixing of Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action.
SECTION 6. Lost, Stolen or Destroyed Certificates. The holder of any
shares of stock of the Corporation shall immediately notify the Corporation and
its transfer agents and registrars, if any, of any loss, theft or destruction of
the certificate representing the same. The Corporation may issue a new
certificate in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, and the Board of Directors may require the
owner of the lost, stolen or destroyed certificate or his legal representatives
to give the Corporation a bond in such sum as the Board may direct, and with
such surety or sureties as may be satisfactory to the Board, to indemnify the
Corporation against any claim that may be made against it or any such transfer
agent or registrar on account of the alleged loss, theft or destruction of any
such certificate. A new certificate may be issued without requiring any Bond
when, in the judgment of the Board of Director, it is proper so to do.
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ARTICLE VIII.
OFFICES.
The Corporation may establish and maintain one or more offices outside
of the State of Delaware, in such places as the Board of Directors from time to
time may deem advisable.
ARTICLE VII.
CORPORATE SEAL.
The Corporate seal shall be circular in form and shall bear the name of
the Corporation and words and figures denoting its organization under the laws
of the State of Delaware and the year thereof and otherwise shall be in such
form as shall be approved from time to time by the Board of Directors.
ARTICLE IX.
FISCAL YEAR.
The fiscal year of the Corporation shall begin on the first day of
January in each year and shall end on the thirty-first day of the following
December.
ARTICLE X.
AMENDMENTS.
All By-Laws of the Corporation shall be subject to alteration or
repeal, and new By-Laws may be made, by the affirmative vote of stockholders
holding of record in the aggregate at least a majority of the outstanding shares
of stock of the Corporation entitled to vote at any meeting.
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ARTICLE XI.
STOCKHOLDERS' AGREEMENT*
So long as the Agreement, dated September 30, 1955, between American
Smelting and Refining Company, Cerro de Pasco Corporation, Newmont Mining
Corporation, Phelps Dodge Corporation and the Corporation shall be in effect, no
action under these By-Laws or by way of amendment of these By-Laws shall be
taken by any party or successor party to such Agreement, or by any
representative of any such party or successor party, which would be inconsistent
with any of the provisions of such Agreement.
- ------------
*This Agreement has been amended by supplemental agreements among such
parties or their successors, dated March 24, 1959, August 2, 1960, June 21,
1968, April 19, 1976, March 31, 1982, January 1, 1986 and May 30, 1988. The name
of American Smelting and Refining Company changed to ASARCO Incorporated
effective April 23, 1975. The name of Cerro de Pasco Corporation became Cerro
Corporation effective January 1, 1961 and the latter corporation was merged into
Cerro-Marmon Corporation effective February 24, 1976. Cerro-Marmon Corporation
changed its name to The Marmon Group, Inc., effective June 3, 1977.
19
<PAGE> 1
EXHIBIT 4.1 (a)
CONFORMED COPY
================================================================================
SOUTHERN PERU LIMITED,
COMPANY,
SOUTHERN PERU COPPER CORPORATION,
GUARANTOR,
AND
CITIBANK, N.A.
TRUSTEE, REGISTRAR AND
PRINCIPAL PAYING AGENT,
--------------------
INDENTURE
DATED AS OF MAY 30, 1997
RELATING TO
SECURED EXPORT NOTES
(ISSUABLE IN SERIES)
--------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
PAGE
RECITALS.................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION....................... 2
SECTION 101. DEFINITIONS.................................................... 2
Accelerated Amortization Event..................................... 2
Accountant......................................................... 2
Acknowledgments ................................................... 2
Act................................................................ 2
Additional Amounts................................................. 3
Additional Percentage.............................................. 3
Additional Secured Obligations..................................... 3
Adequate Substitute Collateral..................................... 3
Affiliate.......................................................... 3
Asset Disposition.................................................. 3
Attributable Principal Amount...................................... 3
Authenticating Agent............................................... 3
Authorized Newspaper............................................... 3
Basic Collateral Percentages....................................... 3
Blocked Collections................................................ 3
Blocked Percentage................................................. 3
Blocking Event .................................................... 4
Board of Directors................................................. 4
Board Resolution................................................... 4
Business Day....................................................... 4
Capitalization Ratio............................................... 4
Collateral......................................................... 4
Collateral Trust Agreement......................................... 4
Collateral Trustee................................................. 5
Collection Account................................................. 5
Collections........................................................ 5
Commission......................................................... 5
Company............................................................ 5
Company Notice..................................................... 5
Company Request.................................................... 5
Company Order...................................................... 5
Guarantor Request.................................................. 5
Guarantor Order.................................................... 5
Concessions........................................................ 5
Consolidated Net Debt.............................................. 5
-i-
<PAGE> 3
PAGE
Consolidated Net Worth............................................. 5
Consolidated Tangible Net Worth.................................... 6
Copper............................................................. 6
Copper Subsidiary.................................................. 6
Corporate Trust Office............................................. 6
Credit Facility.................................................... 6
Credit Facility Collateral Account................................. 6
Credit Facility Total Collateral Percentage........................ 6
Cuajone Mine....................................................... 6
Debt............................................................... 6
Debt Service Retention Event....................................... 7
Default............................................................ 7
Defaulted Interest................................................. 7
Designated Total Collateral Percentages............................ 7
Dollar", "US$" or "$............................................... 7
Duff & Phelps...................................................... 7
Eligible Investments............................................... 7
Environmental Laws................................................. 8
Euroclear.......................................................... 8
Event of Default................................................... 8
Excess Collections................................................. 8
Exchange Act....................................................... 8
Exchange Offer..................................................... 8
Excess Percentage.................................................. 9
Excluded Export Receivables........................................ 9
Export Contracts................................................... 9
Export Receivables................................................. 9
Financing Lease ................................................... 9
Government Obligations............................................. 9
Global Security ................................................... 9
Governmental Agency................................................ 9
Governmental Authority............................................. 9
Guarantor.......................................................... 9
Guarantees......................................................... 10
Holder............................................................. 10
Ilo Refinery....................................................... 10
Ilo Smelter........................................................ 10
Indenture.......................................................... 10
Initial Deposit ................................................... 10
Issue Date......................................................... 10
Lien............................................................... 10
Make-Whole Premium................................................. 10
Mandatory Prepayment Event......................................... 12
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PAGE
Material Adverse Effect............................................ 12
Material Subsidiary................................................ 12
Maturity........................................................... 12
Minority Interests................................................. 12
Moody's............................................................ 12
Officers' Certificate.............................................. 12
Opinion of Counsel................................................. 13
Outstanding........................................................ 13
Outstanding Principal Amount....................................... 14
PAMA............................................................... 14
Paying Agent....................................................... 14
Payment Date....................................................... 14
Permitted Liens.................................................... 14
Person............................................................. 15
Peru............................................................... 15
Peruvian Branch ................................................... 15
Peruvian Government................................................ 15
Place of Payment................................................... 15
Potential Trigger Event............................................ 15
Predecessor SEN.................................................... 15
Principal Paying Agent............................................. 15
Principal Properties............................................... 15
Proceeds........................................................... 15
Program Amount..................................................... 15
Property........................................................... 15
Qualified Letter of Credit......................................... 15
Realization Event.................................................. 16
Receivable......................................................... 16
Redemption Date ................................................... 16
Redemption Price................................................... 16
Registrar.......................................................... 16
Regular Record Date................................................ 16
Required Balance................................................... 16
Requirements of Law................................................ 16
Responsible Officer................................................ 16
Retention Trigger Event............................................ 17
Scheduled Debt Service............................................. 17
Secured Parties.................................................... 17
Securities Act..................................................... 17
Security Register.................................................. 17
SENs............................................................... 17
SENs Basic Collateral Percentage................................... 17
SENs Collateral ................................................... 17
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PAGE
SENs Collateral Account............................................ 17
SENs Reserve Account............................................... 17
SENs Secured Obligations........................................... 17
SENs Total Collateral Percentage................................... 18
Series............................................................. 18
Six Month Debt Reserve Amount...................................... 18
Six Month Debt Service Coverage Ratio.............................. 18
Six Month Ratio ................................................... 18
Special Record Date................................................ 18
Standard & Poor's.................................................. 18
Stated Maturity ................................................... 18
Subsidiary......................................................... 18
Successor Corporation.............................................. 19
Supplemental Indenture............................................. 19
Taxes.............................................................. 19
Three Month Debt Service Coverage Ratio............................ 19
Three Month Ratio.................................................. 19
Toquepala Mine..................................................... 19
Transaction Documents.............................................. 19
Transfer Agent..................................................... 19
Trigger Event...................................................... 19
Trust Indenture Act" or "TIA....................................... 19
Trustee............................................................ 19
U.S. GAAP.......................................................... 20
United States...................................................... 20
United States person............................................... 20
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS........................... 20
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE......................... 21
SECTION 104. ACTS OF HOLDERS................................................ 21
SECTION 105. NOTICES, ETC. TO TRUSTEE, REGISTRAR, PRINCIPAL PAYING
AGENT, COMPANY AND GUARANTOR.............................. 23
SECTION 106. NOTICE TO HOLDERS; WAIVER...................................... 23
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS....................... 24
SECTION 108. SUCCESSORS AND ASSIGNS......................................... 24
SECTION 109. SEPARABILITY CLAUSE............................................ 24
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PAGE
SECTION 110. BENEFITS OF INDENTURE.......................................... 24
SECTION 111. CONFLICT WITH TRUST INDENTURE ACT.............................. 24
SECTION 112. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE
OF PROCESS................................................ 25
SECTION 113. COUNTERPARTS................................................... 26
SECTION 114. LEGAL HOLIDAYS................................................. 26
SECTION 115. INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF
COMPANY AND GUARANTOR EXEMPT FROM INDIVIDUAL LIABILITY.... 26
SECTION 116. CURRENCY....................................................... 26
ARTICLE TWO
FORM OF SENS AND GUARANTEES..................... 27
SECTION 201. FORMS GENERALLY................................................ 27
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION................ 27
SECTION 203. FORM OF GUARANTEES............................................. 28
SECTION 204. SENS ISSUABLE IN GLOBAL FORM................................... 28
ARTICLE THREE
THE SENS............................... 29
SECTION 301. AMOUNT; ISSUABLE IN SERIES..................................... 29
SECTION 302. DENOMINATIONS.................................................. 32
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING................. 32
SECTION 304. TEMPORARY SECURITIES........................................... 34
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE............ 34
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SENS..................... 35
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PAGE
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED................. 37
SECTION 308. PERSONS DEEMED OWNERS.......................................... 39
SECTION 309. CANCELLATION................................................... 39
SECTION 310. COMPUTATION OF INTEREST........................................ 40
SECTION 311. CURRENCY IN RESPECT OF SENS.................................... 40
SECTION 312. RECOURSE TO TRUST ESTATE....................................... 40
ARTICLE FOUR
ACCOUNTS; PAYMENTS; APPLICATION OF FUNDS............... 40
SECTION 401. COLLECTION ACCOUNT............................................. 40
SECTION 402. SENS COLLATERAL ACCOUNTS; PAYMENTS; APPLICATION
OF FUNDS.................................................. 40
SECTION 403. SENS RESERVE ACCOUNT........................................... 43
SECTION 404. STATEMENTS; INVESTMENT OF FUNDS................................ 44
SECTION 405. EXCLUDED EXPORT RECEIVABLES.................................... 45
ARTICLE FIVE
SATISFACTION AND DISCHARGE....................... 45
SECTION 501. SATISFACTION AND DISCHARGE OF INDENTURE........................ 45
SECTION 502. APPLICATION OF TRUST MONEY..................................... 46
ARTICLE SIX
TRIGGER EVENTS; ACCELERATED AMORTIZATION EVENTS;
EVENTS OF DEFAULT; REMEDIES.................... 47
SECTION 601. TRIGGER EVENTS................................................. 47
SECTION 602. ACCELERATED AMORTIZATION EVENT; APPLICATION OF FUNDS........... 50
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PAGE
SECTION 603. EVENTS OF DEFAULT.............................................. 51
SECTION 604. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT............. 53
SECTION 605. COLLECTION OF DEBT AND SUITS FOR ENFORCEMENT BY
TRUSTEE................................................... 55
SECTION 606. TRUSTEE MAY FILE PROOFS OF CLAIM............................... 56
SECTION 607. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SENS...................................................... 57
SECTION 608. APPLICATION OF MONEY COLLECTED................................. 57
SECTION 609. LIMITATION ON SUITS............................................ 57
SECTION 610. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST...................................... 58
SECTION 611. RESTORATION OF RIGHTS AND REMEDIES............................. 58
SECTION 612. RIGHTS AND REMEDIES CUMULATIVE................................. 58
SECTION 613. DELAY OR OMISSION NOT WAIVER................................... 59
SECTION 614. CONTROL BY HOLDERS............................................. 59
SECTION 615. WAIVER OF PAST DEFAULTS........................................ 59
SECTION 616. WAIVER OF STAY OR EXTENSION LAWS............................... 59
SECTION 617. TRUSTEE TO GIVE NOTICE OF TRIGGER EVENT, ACCELERATED
AMORTIZATION EVENT OR DEFAULT, BUT MAY WITHHOLD IN CERTAIN
CIRCUMSTANCES............................................. 60
SECTION 618. UNDERTAKING FOR COSTS.......................................... 60
ARTICLE SEVEN
THE TRUSTEE............................. 61
SECTION 701. DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING
DEFAULT; PRIOR TO DEFAULT................................. 61
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PAGE
SECTION 702. CERTAIN RIGHTS OF TRUSTEE...................................... 62
SECTION 703. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SENS...................................................... 63
SECTION 704. TRUSTEE MAY HOLD SENS.......................................... 63
SECTION 705. MONEY HELD IN TRUST............................................ 63
SECTION 706. COMPENSATION AND INDEMNIFICATION OF TRUSTEE, PAYING
AGENT AND REGISTRAR AND ITS PRIOR CLAIM................... 64
SECTION 707. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY........................ 64
SECTION 708. QUALIFICATION OF TRUSTEE; CONFLICTING INTERESTS................ 64
SECTION 709. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
TRUSTEE OR CO-TRUSTEE..................................... 65
SECTION 710. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR......................... 67
SECTION 711. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.................................................. 68
SECTION 712. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.............. 69
SECTION 713. APPOINTMENT OF AUTHENTICATING AGENT............................ 69
SECTION 714. REGISTRAR AND PAYING AGENTS.................................... 71
ARTICLE EIGHT
HOLDERS' LISTS AND REPORTS BY TRUSTEE,
COMPANY AND GUARANTOR........................ 71
SECTION 801. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS................... 71
SECTION 802. REPORTS BY TRUSTEE............................................. 71
SECTION 803. REPORTS........................................................ 71
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PAGE
ARTICLE NINE
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER............ 73
SECTION 901. COMPANY AND GUARANTOR MAY CONSOLIDATE, ETC., ONLY
ON CERTAIN TERMS.......................................... 73
ARTICLE TEN
SUPPLEMENTAL INDENTURES....................... 74
SECTION 1001.SUPPLEMENTAL INDENTURES WITHOUT VOTE OF HOLDERS................ 74
SECTION 1002.SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS................ 75
SECTION 1003.EXECUTION OF SUPPLEMENTAL INDENTURES........................... 76
SECTION 1004.EFFECT OF SUPPLEMENTAL INDENTURES.............................. 76
SECTION 1005.CONFORMITY WITH TIA............................................ 76
SECTION 1006.REFERENCE IN SENS TO SUPPLEMENTAL INDENTURES................... 77
SECTION 1007.NOTICE OF SUPPLEMENTAL INDENTURES.............................. 77
ARTICLE ELEVEN
REPRESENTATIONS AND WARRANTIES.................... 77
SECTION 1101.CORPORATE ORGANIZATION AND EXISTENCE........................... 77
SECTION 1102.CORPORATE AND GOVERNMENTAL AUTHORIZATION;
NO CONTRAVENTION.......................................... 78
SECTION 1103.NO CONSENTS.................................................... 78
SECTION 1104.BINDING EFFECT................................................. 78
SECTION 1105.[INTENTIONALLY OMITTED]........................................ 78
SECTION 1106.FINANCIAL STATEMENTS........................................... 78
SECTION 1107.PAYMENT OF TAXES............................................... 78
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PAGE
SECTION 1108.ENVIRONMENTAL MATTERS.......................................... 79
SECTION 1109.OWNERSHIP AND LEASES OF PRINCIPAL PROPERTIES................... 79
ARTICLE TWELVE
COVENANTS............................... 79
SECTION 1201.PAYMENT OF PRINCIPAL AND INTEREST.............................. 79
SECTION 1202.MAINTENANCE OF OFFICE OR AGENCY................................ 79
SECTION 1203.MONEY FOR SENS PAYMENTS TO BE HELD IN TRUST.................... 80
SECTION 1204.CONSOLIDATED TANGIBLE NET WORTH................................ 80
SECTION 1205.CAPITALIZATION RATIO........................................... 81
SECTION 1206.COMPLIANCE WITH LAWS AND PAMA.................................. 81
SECTION 1207.CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE............... 81
SECTION 1208.AGGREGATE PROGRAM OUTSTANDINGS AND ADDITIONAL
SECURED OBLIGATIONS; TOTAL COLLATERAL PERCENTAGES......... 81
SECTION 1209.MAINTENANCE OF PROPERTY; INSURANCE............................. 81
SECTION 1210.LIMITATION ON CERTAIN SALES OF ASSETS.......................... 82
SECTION 1211.LIENS.......................................................... 82
SECTION 1212.MAINTENANCE OF BOOKS AND RECORDS............................... 82
SECTION 1213.INSPECTION OF PROPERTY; BOOKS AND RECORDS;
DISCUSSIONS............................................... 82
SECTION 1214.EXPORT SALES................................................... 83
SECTION 1215.DESIGNATION AND TERMINATION OF DESIGNATION OF ADDITIONAL
PERCENTAGES UNDER THE COLLATERAL TRUST AGREEMENT.......... 83
SECTION 1216.LIMITATION ON ADDITIONAL DEBT SECURED BY EXPORT
RECEIVABLES............................................... 84
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PAGE
SECTION 1217.ADDITIONAL AMOUNTS............................................. 84
SECTION 1218.PRESERVATION OF SECURITY INTEREST.............................. 86
SECTION 1219.FURTHER ASSURANCES............................................. 86
ARTICLE THIRTEEN
REDEMPTION OF SENS.......................... 87
SECTION 1301.APPLICABILITY OF ARTICLE....................................... 87
SECTION 1302.ELECTION TO REDEEM; NOTICE TO TRUSTEE.......................... 87
SECTION 1303.SELECTION BY TRUSTEE OF SENS TO BE REDEEMED.................... 88
SECTION 1304.NOTICE OF REDEMPTION........................................... 88
SECTION 1305.DEPOSIT OF REDEMPTION PRICE.................................... 89
SECTION 1306.SENS PAYABLE ON REDEMPTION DATE................................ 89
SECTION 1307.SENS REDEEMED IN PART.......................................... 89
SECTION 1308.REDEMPTION FOR TAX REASONS..................................... 89
ARTICLE FOURTEEN
[INTENTIONALLY OMITTED]....................... 91
ARTICLE FIFTEEN
DEFEASANCE AND COVENANT DEFEASANCE................ 91
SECTION 1501.COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE................................................ 91
SECTION 1502.DEFEASANCE AND DISCHARGE....................................... 91
SECTION 1503.COVENANT DEFEASANCE............................................ 92
SECTION 1504.CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE................ 92
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PAGE
SECTION 1505.DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS............. 94
SECTION 1506.REINSTATEMENT.................................................. 94
ARTICLE SIXTEEN
GUARANTEES.............................. 95
SECTION 1601.GUARANTEES..................................................... 95
SECTION 1602.EXECUTION AND DELIVERY OF THE GUARANTEES....................... 96
ARTICLE SEVENTEEN
MEETINGS OF HOLDERS OF SENS..................... 96
SECTION 1701.PURPOSES FOR WHICH MEETINGS MAY BE CALLED...................... 96
SECTION 1702.CALL NOTICE AND PLACE OF MEETINGS.............................. 97
SECTION 1703.PERSONS ENTITLED TO VOTE AT MEETINGS........................... 97
SECTION 1704.QUORUM; ACTION................................................. 97
SECTION 1705.DETERMINATION OF VOTING RIGHTS; CONDUCT AND
ADJOURNMENT OF MEETINGS................................... 98
SECTION 1706.COUNTING VOTES AND RECORDING ACTION OF MEETINGS................ 99
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THIS INDENTURE, dated as of May 30, 1997 among Southern Peru Limited, a
corporation organized under the laws of Delaware (the "Company"), Southern Peru
Copper Corporation, a corporation organized under the laws of Delaware, as
Guarantor ("the Guarantor") and Citibank, N.A., a national banking association,
as trustee (the "Trustee"), registrar ("Registrar") and principal paying agent
(the "Principal Paying Agent").
RECITALS
WHEREAS, the Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of up to $750 million at any one time
outstanding of its Secured Export Notes (the "SENs"), the proceeds of which will
be used to fund an expansion and modernization of its operations at its Cuajone
Mine and Ilo Smelter and for general corporate purposes and to make deposits in
the SENS Reserve Accounts to the extent required to cause the amounts on deposit
therein to be equal to the Required Balance;
WHEREAS, the Trustee has accepted the trusts created by this Indenture
and in evidence thereof has joined in the execution hereof; and
WHEREAS, all things necessary to make the SENs when issued on behalf of
the Company and authenticated by the Trustee as provided in this Indenture, the
legal, valid and binding obligations of the Company and to provide a security
interest in the Collateral (as hereinafter defined), have been done and
performed; and
WHEREAS, the Guarantor has duly authorized the execution and delivery
of this Indenture to provide for the Guarantees by it with respect to the SENs
as set forth in this Indenture; and
WHEREAS, all things necessary to make the Guarantees, when duly
authorized and executed by the Guarantor and delivered hereunder, the valid
obligations of the Guarantor, and to make this Indenture a valid agreement of
the Guarantor, in accordance with its terms, have been done and performed.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in consideration of the
premises, of the acceptance by the Trustee of the trusts hereby created, and of
the purchase and acceptance of the SENs by the Holders (as hereinafter defined),
the receipt and sufficiency of which is hereby acknowledged, for the equal and
proportionate benefit of all Holders of the SENs or of any series thereof, as
follows:
<PAGE> 15
2
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture
and of any indenture supplemental hereto, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act or by Commission rule under the Trust Indenture Act,
either directly or by reference therein, have the meanings assigned to
them therein; and
(3) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
(4) As used herein and in any SEN, and any certificate or
other document made or delivered pursuant hereto, accounting terms
relating to the Company and the Guarantor not defined in Section 101
and accounting terms partly defined in Section 101, to the extent not
defined, shall have the respective meanings given to them under U.S.
GAAP.
(5) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Indenture.
"Accelerated Amortization Event" shall have the meaning set
forth in Section 602.
"Accountant" means a Person engaged in the practice of
accounting who (except when this Indenture provides that an Accountant must be
independent) may be employed by or affiliated with the Company or an Affiliate.
"Acknowledgments" means written acknowledgments from customers
under annual Export Contracts and Export Contracts with a term greater than one
year, substantially in the form of Exhibit 3.01 to the Collateral Trust
Agreement, pursuant to which such customers, among other things, acknowledge the
liens created pursuant to the terms of the Collateral Trust Agreement and agree
to pay any amounts owing for Copper delivered under such contracts to the
Collateral Trustee for deposit in the Collection Account.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
<PAGE> 16
3
"Additional Amounts" shall have the meaning set forth in
Section 1217.
"Additional Percentage", means for any Series of SENs, for any
date, such additional percentage interest in the Export Receivables and in the
Collections therefrom to be transferred from the Collection Account to the SENs
Collateral Account for such Series, as may be designated by the Company in
writing to the Collateral Trustee and the Trustee pursuant to Section 2.04 of
the Collateral Trust Agreement.
"Additional Secured Obligations" shall have the meaning set
forth in the Collateral Trust Agreement.
"Adequate Substitute Collateral" shall have the meaning set
forth in Section 601(a)(viii).
"Affiliate" of any specified Person means any other Person
(other than a Subsidiary) directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Disposition" shall have the meaning set forth in
Section 1210.
"Attributable Principal Amount" shall have the meaning set
forth in the Collateral Trust Agreement.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate SENs.
"Authorized Newspaper" means a newspaper, in the English
language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Where
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different newspapers in
the same city meeting the foregoing requirements and in each case on any
Business Day.
"Basic Collateral Percentages" shall have the meaning set
forth in the Collateral Trust Agreement.
"Blocked Collections" shall have the meaning set forth in
Section 601(b).
"Blocked Percentage" means on any date of determination, with
respect to any Series of SENs (except as may be otherwise set forth in the
Supplemental Indenture with respect to such Series of SENs), (a) if the
Outstanding Principal Amount is less than $300
<PAGE> 17
4
million, 100%; (b) if the Outstanding Principal Amount is at least US$300
million but not in excess of US$500 million, 75%; and (c) if the Outstanding
Principal Amount is more than US$500 million, 50%.
"Blocking Event" means any of the events specified in Section
601(a) which results in the retention of Collections in any SENS Collateral
Account
"Board of Directors", when used with reference to the Company,
means the board of directors of the Company, and when used with reference to the
Guarantor, means the board of directors of the Guarantor.
"Board Resolution", when used with reference to the Company,
means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors of
the Company and to be in full force and effect on the date of such
certification, and delivered to the Trustee, and when used with reference to the
Guarantor, means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Guarantor to have been duly adopted by the Board of
Directors of the Guarantor and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" when used with respect to any Place of Payment
or any other particular location referred to in this Indenture or in the SENs,
means, unless otherwise specified with respect to any SENs pursuant to Section
301, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment or other location are
authorized or obligated by law or executive order to close.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person other than a
corporation and any and all warrants or options to purchase any of the
foregoing.
"Capitalization Ratio" means, at any date of determination,
the ratio of (i) Consolidated Net Debt at such date of determination to (ii) the
sum of (a) Consolidated Net Debt at such date of determination plus (b)
Consolidated Net Worth at such date of determination plus (c) Minority Interests
at such date of determination.
"Collateral" shall have the meaning set forth in the
Collateral Trust Agreement.
"Collateral Account Agreement" means the Collateral Account
and Security Agreement dated as of March 31, 1997 between the Company and
Deutsche Bank AG, New York Branch, as security and collateral agent for the
several banks and financial institutions party to the Credit Facility.
<PAGE> 18
5
"Collateral Trust Agreement" means the Amended and Restated
Collateral Trust and Security Agreement, dated as of May 30, 1997, between the
Company and Deutsche Bank AG, New York Branch, as Collateral Trustee, as the
same may be amended, supplemented or otherwise modified from time to time.
"Collateral Trustee" means Deutsche Bank AG, New York Branch,
as Collateral Trustee under the Collateral Trust Agreement.
"Collection Account" shall have the meaning set forth in
Section 3.02 of the Collateral Trust Agreement.
"Collections" shall have the meaning set forth in the
Collateral Trust Agreement.
"Commission" means the U.S. Securities and Exchange
Commission, as from time to time constituted, created under the U.S. Securities
Exchange Act of 1934, or, if at any time after the execution of this Indenture
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Notice" means the giving of a written notice by (i)
the Trustee to the Company and the Guarantor or (ii) by the Holders of at least
10% of the aggregate principal amount of Outstanding SENs of a Series to the
Trustee, the Company and the Guarantor, by registered or certified mail
specifying a default or breach occurring hereunder and requiring it to be
remedied and stating that such notice is a "Notice of Default" under this
Indenture.
"Company Request" or "Company Order" and "Guarantor Request"
or "Guarantor Order" means a written request or order signed in the name of the
Company or the Guarantor, as the case may be, by its President or a Vice
President, the Treasurer, the Comptroller or an Assistant Treasurer and
delivered to the Trustee.
"Concessions" means the material mining and processing
concessions granted to the Company by any Governmental Authority of the Republic
of Peru.
"Consolidated Net Debt" means, at any date of determination,
(a) all Debt of the Guarantor and its Subsidiaries at such date of determination
minus (b) the aggregate amount of cash on deposit in funded escrow accounts at
such date of determination in which a Lien has been granted to secure the
repayment of any such Debt.
"Consolidated Net Worth" means, at any date of determination,
all items which would, in accordance with U.S. GAAP, be included under
shareholders' equity on a
<PAGE> 19
6
consolidated balance sheet of the Guarantor and its Subsidiaries at such date of
determination adjusted to exclude the effects of (i) any non-cash, nonrecurring
charges, (ii) any non-cash extraordinary charges and (iii) any other non-cash
charges required as a result of a change after March 31, 1997 of accounting
principles or in the application thereof under U.S. GAAP in the year of such
charge or in the year of adoption of any such change and without giving effect
to the future effects of such charge or change. In the case of clauses (i) and
(ii), "non-cash" refers to the portion of the charge which, at the time of the
charge, will not be required to be paid prior to the final Maturity of any
outstanding SEN.
"Consolidated Tangible Net Worth" means, at any date of
determination, Consolidated Net Worth at such date of determination after
deducting therefrom the sum of deferred charges, goodwill, trademarks and other
intangibles of the Guarantor and its Subsidiaries reflected on the consolidated
balance sheet of the Guarantor at such date of determination.
"Copper" means anode copper, blister copper, cathodes, copper
concentrates, electrolytic cathodes, and electrowon cathodes.
"Copper Subsidiary" shall have the meaning set forth in
Section 1219(b) hereof.
"Corporate Trust Office" means the corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be principally administered, which office on the date of execution of this
Indenture is located at 120 Wall Street, 13th Floor, New York, New York 10043,
except that with respect to presentation of SENs for payment or for registration
of transfer or exchange, such term shall mean the office or agency of the
Trustee at which, at any particular time, its corporate agency business shall be
conducted.
"Credit Facility" means the $600,000,000 Credit and Guarantee
Agreement dated as of March 31, 1997, among the Guarantor, the Company, the
several banks and other financial institutions from time to time parties
thereto, Morgan Guaranty Trust Company of New York, as Administrative Agent, The
Chase Manhattan Bank, as Documentation Agent, Citicorp Securities, Inc., as
Syndication Agent, and Deutsche Bank AG, New York Branch, as Collateral Agent,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Credit Facility Collateral Account" shall have the meaning
set forth in the Collateral Account Agreement.
"Credit Facility Total Collateral Percentage" shall have the
meaning set forth in the Collateral Trust Agreement.
"Cuajone Mine" means the copper mine, concentrator and mill
(including without limitation the mining and other concessions relating thereto)
located in Cuajone, Peru.
<PAGE> 20
7
"Debt" means, of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices), (b) all obligations of such Person under Financing Leases,
(c) all guarantees or endorsements (other than endorsements for collection or
deposit in the ordinary course of business) of such Person of Debt of others and
(d) all liabilities secured by any Lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof.
"Debt Service Retention Event" means, at any date of
determination, the Six Month Ratio for the most recently ended six month period
is less than 3.0 to 1.0.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Designated Total Collateral Percentages" shall have the
meaning set forth in the Collateral Trust Agreement.
"Dollar", "US$" or "$" means a dollar or other equivalent unit
in such coin or currency of the United States of America as at the time shall be
legal tender for the payment of public and private debts.
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
"Eligible Investments" means the following investments:
(1) any indebtedness, issued by, or fully guaranteed by or insured
by, the United States of America, or any agency or
instrumentality of the United States of America;
(2) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or Federal funds sold by any
commercial bank, depository institution or trust company, so
long as at the time of such investment or contractual
commitment providing for such investment the unsecured
commercial paper or other unsecured short-term debt
obligations of such commercial bank, depository institution or
trust company have a credit rating of at least A-1 from
Standard & Poor's and P-1 from Moody's, and at least D-1 from
Duff & Phelps, if rated by Duff & Phelps;
(3) unsecured debt securities bearing interest or sold at a
discount issued by (i) a corporation (other than an Affiliate
of the Borrower) incorporated under the laws of the United
States of America or any State thereof or the District of
Columbia or (ii) any commercial bank, depository institution
or trust company, which have, at the time of such investment,
a credit rating of at least A-1 by
<PAGE> 21
8
S&P and at least P-1 by Moody's and at least D-1 from Duff &
Phelps, if rated by Duff & Phelps;
(4) unsecured commercial paper which has, at the time of such
investment, a rating of at least P-1 from Standard & Poor's
and P-1 from Moody's and at least D-1 from Duff & Phelps, if
rated by Duff & Phelps;
(5) repurchase obligations with respect to any security described
in clauses (1), (2), (3) or (4) above, in each case entered
into with either (i) a commercial bank, a depository
institution or trust company (acting as principal) which, in
respect of its unsecured commercial paper or other short-term
unsecured debt, has credit ratings of at least A-1 from
Standard & Poor's and P-1 from Moody's and at least D-1 from
Duff & Phelps, if rated by Duff & Phelps; or (ii) a money
market fund maintained by a bank or a broker (which may be a
money market fund managed by Citibank, N.A. or any person who
acts as a successor Trustee) which, in respect of its
unsecured commercial paper or short-term unsecured debt, has a
credit rating of at least A-1 from Standard & Poor's and P-1
from Moody's and at least D-1 from Duff & Phelps, if rated by
Duff & Phelps; and
(6) a money market fund maintained by a bank or a broker (which
may be a money market fund managed by Citibank, N.A. or any
person who acts as a successor Trustee) which fund has a
credit rating of at least AAAm from Standard & Poor's and Aaa
from Moody's and at least the equivalent rating from Duff &
Phelps, if rated by Duff & Phelps; provided that this category
(6) of investment shall have been accepted by each Rating
Agency.
"Environmental Laws": (a) the PAMA (or any successor thereto)
so long as it is in effect or, (b) if the PAMA (or any such successor thereto)
is not in effect, any and all Peruvian central, regional or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, requirements
of any Governmental Authority or other Requirements of Law regulating, relating
to or imposing liability or standards of conduct concerning protection of human
health or the environment, as now or at any time hereafter in effect.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear System.
"Event of Default" has the meaning specified in Section 603.
"Excess Collections" shall have the meaning set forth in
Section 402.
"Exchange Act" means the U.S. Securities Exchange Act of 1934,
as from time to time amended.
"Exchange Offer" means, with respect to any Series of SENs
originally issued pursuant to Rule 144A and/or Regulation S under the Securities
Act, any offer by the
<PAGE> 22
9
Company to Holders of such SENs to exchange such SENs for SENs registered under
the Securities Act, with substantially identical terms to such originally issued
SENs.
"Excess Percentage" shall have the meaning set forth in the
Collateral Trust Agreement.
"Excluded Export Receivables" shall have the meaning set forth
in the Collateral Trust Agreement.
"Export Contracts" shall have the meaning set forth in the
Collateral Trust Agreement.
"Export Receivables" shall have the meaning set forth in the
Collateral Trust Agreement.
"Financing Lease" means any lease of property, real or
personal, the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee.
"Government Obligations" means securities that are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case under clauses (i) or (ii), are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
"Global Security" means one or more global securities
representing a Series of the SENs.
"Governmental Agency" means any public legal entity or public
agency of Peru or the United States, whether created by federal, state,
provincial or local government or any other legal entity now existing or
hereafter created, or now or hereafter owned or controlled, directly or
indirectly, by any public legal entity or public agency of Peru or the United
States.
"Governmental Authority" means any nation or government, any
state, regional or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
<PAGE> 23
10
"Guarantor" means the Person named as the Guarantor in the
first paragraph of this Indenture until a Successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantor" shall mean such successor Person.
"Guarantees" shall have the meaning set forth in Section 1602.
"Holder" means the Person in whose name a SEN (including the
Guarantee endorsed thereon) is registered in the Security Register.
"Ilo Refinery" means the copper refinery located in Ilo, Peru,
including, without limitation, the essential buildings, structures and equipment
and the processing and other concessions relating thereto.
"Ilo Smelter" means the copper smelter located in Ilo, Peru,
including, without limitation, the essential buildings, structures and equipment
and the processing and other concessions relating thereto.
"Indenture" means this instrument as originally executed and
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of particular Series of SENs established as
contemplated by Section 301; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument, "Indenture" shall mean,
with respect to any one or more Series of SENs for which such Person is Trustee,
this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms of
particular Series of SENs for which such Person is Trustee established as
contemplated by Section 301, exclusive, however, of any provisions or terms
which relate solely to other Series of SENs for which such Person is not
Trustee, regardless of when such terms or provisions were adopted, and exclusive
of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such
Trustee but to which such Person, as such Trustee, was not a party.
"Initial Deposit" with respect to the SENs of any Series,
shall have the meaning set forth in the Supplemental Indenture with respect to
the SENs of such Series.
"Issue Date" with respect to the SENs of any Series, shall
have the meaning set forth in the Supplemental Indenture with respect to the
SENs of such Series.
"Lien" means any mortgage, pledge, hypothecation, assignment,
lien (statutory or other), charge or other security interest of any kind.
"Loans": means any loans made pursuant to the Credit Facility.
"Make-Whole Premium" means, with respect to any Series of
SENs, except as may be otherwise provided in the Supplemental Indenture with
respect to such Series of
<PAGE> 24
11
SENs, the amount, determined as of the Business Day prior to the Applicable Date
(as defined below), in respect of a Series of SENs (or the portion thereof) to
be redeemed or prepaid, as the case may be, equal to the amount (but not less
than zero) obtained by subtracting (a) the sum of the unpaid principal amount of
such SENs (or the portion thereof) being redeemed or prepaid and the amount of
interest thereon accrued to such Redemption Date, from (b) the sum of the
Current Values of all amounts of principal and interest on such SENs (or the
portion thereof) being redeemed or prepaid that would otherwise have become due
after the date of such determination if such SENs were not being redeemed (each
such amount of principal or interest being referred to herein as an "Amount
Payable"). The "Current Value" of any Amount Payable means such Amount Payable
discounted (on a monthly basis) to its present value on the date of
determination, in accordance with the following formula:
Current Value = Amount Payable
--------------
(1 + d/12)n
where "d" is in the sum of (i) 75 basis points plus (ii) the Treasury Yield per
annum expressed as a decimal and "n" is an exponent (which need not be an
integer) equal to the number of monthly periods and portions thereof (any such
portion of a period to be determined by dividing the number of days in such
portion of such period by the total number of days in such period, both computed
on the basis of twelve 30-day months in a 360-day year) between the date of such
determination and the due date of the Amount Payable. The "Treasury Yield" shall
be determined by reference to the yields for U.S. Treasury securities as
indicated (currently on page "500" thereof) on the Telerate Screen for actively
traded U.S. Treasury securities at approximately 10:00 a.m. (New York City time)
on the Business Day next preceding such Applicable Date or, if such yields shall
not be reported as of such time or the yields reported as of such time shall not
be ascertainable, by reference to the most recent Federal Reserve Statistical
Release H.15 (519) which has become publicly available at least two Business
Days prior to such Applicable Date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data acceptable to
the Trustee), and shall be the most recent weekly average yield on actively
traded U.S. Treasury securities adjusted to a constant maturity equal to the
then remaining weighted average life of the outstanding principal amount of such
SENs (the "Remaining Life"), computed by dividing (A) the sum of all remaining
principal payments on such SENs into (B) the total of the products obtained by
multiplying (1) the amount of each remaining principal payment on such SENs by
(2) the number of years (calculated to the nearest one-twelfth) which will
elapse between the date as of which such computation is made and the due date of
each remaining principal payment on such SENs. If the Remaining Life is not
equal to the constant maturity of a U.S. Treasury security for which a weekly
average yield is given, the Treasury Yield shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of (x) the actively traded U.S. Treasury security with the
average life closest to and greater than the Remaining Life and (y) the actively
traded U.S. Treasury security with the average life closest to and less than the
Remaining Life, except that if the Remaining Life is less than one year, the
weekly average yield on actively traded U.S. Treasury securities adjusted to a
constant maturity of one year shall be used. The Treasury Yield shall be
computed to the
<PAGE> 25
12
fifth decimal place (one-thousandth of a percentage point) and then rounded to
the fourth decimal place (one hundredth of a percentage point). "Applicable
Date" means (i) with respect to any redemption of SENs, the Business Day
preceding the day on which the notice of redemption is given pursuant to Section
1304 and (ii) with respect to any prepayment resulting from an Accelerated
Amortization Event, the Business Day preceding the date of such prepayment.
"Mandatory Prepayment Event": any event (other than an event
of default or similar event) which requires the Company to make any mandatory
prepayment (including, without limitation, as a result of an accelerated
amortization event) in respect of the principal of any Loans or Additional
Secured Obligations (other than regularly scheduled payments of principal) or to
make any mandatory redemption, defeasance or purchase of any Loans or Additional
Secured Obligations. For the avoidance of doubt, the term "defeasance" shall not
include the retention of Collections in a SENs Collateral Account as a result of
a Blocking Event.
"Material Adverse Effect" means, when used in connection with
any Series of SENs, a material adverse effect on (a) the ability of the Company
or the Guarantor, as the case may be, to meet its obligations to pay interest
on, principal of, or any premium on, such Series of SENs or any other payment
obligations under the Indenture or (b) the validity or enforceability of this
Indenture or any of the other Transaction Documents.
"Material Subsidiary" means any Subsidiary with respect to
which the occurrence of any of the events described in Sections 603(vi) or (vii)
would result in a Material Adverse Effect.
"Maturity", when used with respect to any SEN, means the date
on which the principal of such SEN or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
acceleration, notice of redemption or otherwise.
"Minority Interests" means, at any date of determination, all
amounts reflected in respect of minority interests, in accordance with U.S.
GAAP, on the consolidated balance sheet of the Guarantor and its Subsidiaries at
such date of determination.
"Moody's" means Moody's Investors Services, Inc.
"Notices" means written notices from the Company to its export
customers, substantially in the form attached to the Collateral Trust Agreement.
"Officers' Certificate", when used with respect to the
Company, means a certificate signed by (i) the President, any Vice President,
the Secretary, the Treasurer or the Comptroller, and by (ii) an Assistant
Treasurer or an Assistant Secretary of the Company, and delivered to the Trustee
and when used with respect to the Guarantor, means a certificate signed by (iii)
the President, any Vice President, the Treasurer or the Comptroller of the
Guarantor, and by (iv) the Comptroller, an Assistant Treasurer, the Secretary or
an Assistant
<PAGE> 26
13
Secretary of the Guarantor, and delivered to the Trustee, provided, however,
that in either case, any two officers identified in clause (i) with respect to
the Company or clause (iii) with respect to the Guarantor shall satisfy the
foregoing requirements.
"Opinion of Counsel" means a written opinion of counsel
qualified in the appropriate jurisdiction who, except as otherwise expressly
required hereunder, may be an employee of or counsel for the Company.
"Outstanding", when used with respect to a Series of SENs,
means, except as otherwise required by TIA, as of the date of determination, all
SENs theretofore authenticated and delivered under this Indenture, except:
(i) SENs theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) SENs, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company or the
Guarantor) in trust or set aside and segregated in trust by the Company
or the Guarantor (if the Company or the Guarantor, as the case may be,
shall act as its own Paying Agent) for the Holders of such SENs;
provided that, if such SENs are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) SENs, except to the extent provided in Sections 1502 and
1503, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article Fifteen; and
(iv) SENs which have been paid pursuant to Section 307 or in
exchange for or in lieu of which other SENs have been authenticated and
delivered pursuant to this Indenture, other than any such SENs in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such SENs are held by a bona fide purchaser in
whose hands such SENs are valid obligations of the Company;
provided, however, that for purposes of Section 301 hereof and for purposes of
determining whether the Holders of the requisite principal amount of the
Outstanding SENs of any Series have given any request, demand, authorization,
direction, notice, consent or waiver or taken any other action hereunder or are
present at a meeting of Holders for quorum purposes, and for the purpose of
making the calculations required by TIA Section 313, SENs owned by the Company,
the Guarantor or any other obligor upon the SENs or any Affiliate of the
Company, the Guarantor or of such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall be
protected in making such calculation or in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only SENs which the
Trustee knows to be so owned shall be so disregarded. SENs so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so
<PAGE> 27
14
to act with respect to such SENs and that the pledgee is not the Company, the
Guarantor or any other obligor upon the SENs or any Affiliate of the Company or
such other obligor.
"Outstanding Principal Amount" shall have the meaning set
forth in the Collateral Trust Agreement.
"PAMA" means the Programa de Adecuacion y Manejo Ambiental
(Environmental Adequacy and Management Program), as defined in Supreme Decree
No. 016-93-EM, as amended or replaced from time to time.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or Additional Amounts, if any, or interest on or premium,
if any, on any SENs on behalf of the Company.
"Payment Date", with respect to any SEN of any Series, shall
have the meaning set forth in the Supplemental Indenture with respect to the
SENs of such Series.
"Permitted Liens" means (i) Liens existing on the date hereof;
(ii) Liens securing loans from or guaranteed or insured by export credit,
governmental, bilateral or multilateral agencies; (iii) Liens for taxes,
assessments, governmental charges, other governmental obligations or levies or
statutory Liens for sums not yet due or being contested in good faith; (iv)
Liens to secure the purchase price of property or assets acquired by the
Guarantor or the Company or any of their subsidiaries after the date hereof, or
to secure Debt incurred solely to finance the acquisition of property or assets
acquired by the Guarantor or the Company or any of their subsidiaries after the
date hereof; provided, however, that such Lien is limited to the property or
assets financed, secures Debt in an amount not in excess of the purchase price
of such property or assets, and is created within 180 days of the acquisition of
such property or assets; (v) any Lien on any property or assets of an entity
that becomes a Subsidiary of the Guarantor or the Company, or on any property or
assets acquired by the Guarantor, the Company or any of their Subsidiaries that
exists prior to such entity becoming a Subsidiary or such acquisition and that
was not created in contemplation thereof; (vi) any Lien created to secure Debt
incurred to finance the cost (including capitalized interest) of construction,
acquisition, improvement or development of specific property or assets; provided
that such Lien is restricted solely to the specific property or assets
constructed or acquired or the specific improvement or development and secures
Debt in an amount not in excess of the financed cost of such property or assets;
(vii) replacements, renewals or extensions of the Liens permitted pursuant to
clauses (i) through (vi) above, so long as (A) the principal amount is not
increased over the original principal amount and (B) such Liens do not extend to
any additional property or assets; (viii) any Lien incurred in the ordinary
course of business in connection with social security, workers' compensation,
unemployment insurance and similar types of laws or regulations; (ix) any
statutory Lien of a landlord, carrier, warehouseman, mechanic or materialman
incurred in the ordinary course of business for a sum not yet due or the payment
of which is being contested in good faith; (x) Liens to secure the performance
of bids, trade contracts, leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a similar nature, in each case
incurred in the ordinary course of business;
<PAGE> 28
15
(xi) other Liens securing Debt that in the aggregate at any time does not exceed
an amount equal to 10% of (A) the total assets of the Guarantor as reported on
the most recent quarterly financial statements of the Guarantor minus (B) the
aggregate amount of Debt secured by Liens permitted under clauses (ii) and (vi)
above; and (xii) any Lien securing a judgment, unless (A) the judgment it
secures shall not have been discharged within 60 days after the entry thereof,
or (B) execution of the judgment it secures shall not have been discharged
within 60 days after the expiration of any stay thereof pending appeal.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
Governmental Authority.
"Peru" means the Republic of Peru.
"Peruvian Branch": the Peruvian Branch of the Company.
"Peruvian Government" means the central government of Peru.
"Place of Payment" means, when used with respect to the SENs
of or within any Series, the place or places where the principal of (and
premium, if any, on) and interest on such SENs are payable as specified or
contemplated by Sections 301 and 1202.
"Potential Trigger Event" means any event which is, or after
notice or passage of time or both, would be, a Trigger Event other than an event
under Section 601(a)(x) which occurs prior to the 180th day after the date
hereof.
"Predecessor SEN" of any particular SEN means every previous
SEN evidencing all or a portion of the same debt as that evidenced by such
particular SEN.
"Principal Paying Agent" means the Person named as the
"Principal Paying Agent" in the first paragraph of this Indenture, and any
successor Principal Paying Agent.
"Principal Properties" means, the collective reference to the
Toquepala Mine, the Cuajone Mine, the Ilo Smelter and the Ilo Refinery.
"Proceeds" shall have the meaning set forth in the Collateral
Trust Agreement.
"Program Amount" means US$750,000,000, as such amount may be
adjusted from time to time in accordance with the provisions of Section 2.02(c)
of the Collateral Trust Agreement and Section 1214 hereof.
"Property" means any asset, revenue or any other property,
whether tangible or intangible, real or personal, including, without limitation,
any right to receive income.
"Qualified Letter of Credit" means an irrevocable letter of
credit (which expires no later than one year after the date of issuance or any
annual anniversary thereof
<PAGE> 29
16
pursuant to an annual renewal) issued in favor of the Trustee by a depository
institution or trust company, which has, at the time of issuance or the
effective date of such annual renewal, a credit rating with respect to its
short-term U.S. dollar unsecured obligations of at least "A-1" from Standard &
Poor's and P-1 from Moody's and at least "D-1" from Duff & Phelps, if rated by
Duff & Phelps, and allowing the Trustee, upon presentation of a sight draft, to
make drawings under such letter of credit.
"Rating Agencies" means at any date the collective reference
to any of Standard & Poor's, Moody's and Duff & Phelps, that, at such date, are
rating any Series of the SENs.
"Realization Event" shall have the meaning set forth in the
Collateral Trust Agreement.
"Receivable" shall mean the existing or future indebtedness
and payment obligations of a Person arising from the sale of Copper by the
Company and shall include the right to payments of any interest, taxes, finance
charges or late charges and other obligations of such Person with respect
thereto.
"Redemption Date", when used with respect to any SEN to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", when used with respect to any SEN to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registrar" means Citibank, N.A., until a successor Registrar
shall have become such pursuant to the applicable provisions of this Indenture,
and, thereafter, "Registrar" shall mean such successor Registrar.
"Regular Record Date", with respect to any SEN of any Series,
shall have the meaning set forth in the Supplemental Indenture with respect to
the SENs of such Series.
"Required Balance" with respect to any Series of SENs, shall
have the meaning set forth in the Supplemental Indenture with respect to the
SENs of such Series.
"Requirements of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer", when used with respect to the Trustee,
means any officer within the Corporate Trust Office of the Trustee, including
any Vice President, Assistant Vice President, Senior Trust Officer, Trust
Officer, or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above-designated officers, and also,
with respect to a particular matter, any other officer to
<PAGE> 30
17
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. "Responsible Officer" when used with
respect to the Company or the Guarantor means the president, chief executive
officer, chief financial officer, principal accounting officer or treasurer of
the Company or the Guarantor, as the case may be, or other executive officer of
the Company or the Guarantor who in the normal performance of his or her
operational duties would have knowledge of any particular event or the subject
matter relating to any certificate, report or notice to be delivered or given
under the Indenture.
"Retention Trigger Event" means the occurrence of a Trigger
Event specified in Sections 601(a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(ix) or
(a)(xi) or any other Trigger Event which has become a Blocking Event.
"Scheduled Debt Service" means, for a Series of SENs, as of
any date of determination and in relation to any period of time, the sum of all
interest and principal payments scheduled to be made by the Company on such
Series for such period of time.
"Secured Parties" shall have the meaning set forth in the
Collateral Trust Agreement.
"Securities Act" means the U.S. Securities Act of 1933 and any
statute successor thereto, in each case as amended from time to time.
"Security Register" means the books for the exchange,
registration and registration of transfer of the SENs.
"SENs" means any secured export notes issued by the Company
under and in accordance with the terms of this Indenture, the form of which
notes shall be annexed to the Supplemental Indenture providing for the issuance
of the Series of such notes.
"SENs Basic Collateral Percentage" shall have the meaning set
forth in the Collateral Trust Agreement.
"SENs Collateral" with respect to the SENs of any Series,
shall mean the collateral in which a security interest is granted to the Trustee
in favor of the Holders of such Series pursuant to the Supplemental Indenture
with respect to the SENs of such Series.
"SENs Collateral Account" shall have the meaning set forth in
Section 402.
"SENs Reserve Account" shall have the meaning set forth in
Section 403.
"SENs Secured Obligations" means any and all of the debts,
obligations and liabilities of the Company to the SEN Holders or the Trustee
provided for or arising under the SENs or the Indenture, whether now existing or
hereafter arising, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or
<PAGE> 31
18
incurred (including, without limitation, interest accruing at the then
applicable rate provided in a Supplemental Indenture for any Series of SENs and
interest accruing at the then applicable rate provided in such Supplemental
Indenture after the filing of any petition in bankruptcy, or the commencement of
any insolvency reorganization or like proceeding, relating to the Company,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) which may arise under, out of, or in connection with the SENs,
the Indenture or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel that are required to be paid
by the Company pursuant to the terms of any of the foregoing agreements).
"SENs Total Collateral Percentage" shall have the meaning set
forth in the Collateral Trust Agreement.
"Series" means any Series of SENs issued pursuant to a
Supplemental Indenture.
"Six Month Debt Reserve Amount" shall have the meaning set
forth in Section 601(c).
"Six Month Debt Service Coverage Ratio", means (a) 1.75 to
1.00, with respect to any six month period when the Outstanding Principal Amount
is less than or equal to $300 million on the last day of such six month period;
(b) 2.00 to 1.00, with respect to any six month period when the Outstanding
Principal Amount is greater than $300 million but less than or equal to $500
million on the last day of such six month period; or (c) 2.25 to 1.00, with
respect to any six month period when the Outstanding Principal Amount is greater
than $500 million on the last day of such six month period.
"Six Month Ratio" shall have the meaning set forth in Section
601(a).
"Special Record Date" for the payment of any Defaulted
Interest on the SENs of or within any Series means a date fixed by the Trustee
pursuant to Section 307.
"Standard & Poor's" means Standard & Poor's Ratings Group.
"Stated Maturity" when used with respect to any SEN or any
installment of principal thereof or interest thereon, means the date specified
in such SEN as the fixed date on which the principal of such SEN or such
installment of principal or interest is due and payable.
"Subsidiary" means, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of
<PAGE> 32
19
which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Indenture shall refer
to Subsidiaries of the Guarantor.
"Successor Corporation" shall have the meaning set forth in
Section 901.
"Supplemental Indenture" means an Indenture supplemental
hereto relating to a particular Series of SENs.
"Taxes" shall have the same meaning set forth in Section 1217.
"Three Month Debt Service Coverage Ratio" means (a) 1.5 to
1.00, with respect to any three month period when the Outstanding Principal
Amount is less than or equal to $300 million on the last day of such period; (b)
1.75 to 1.00, with respect to any three month period when the Outstanding
Principal Amount is greater than $300 million but less than or equal to $500
million on the last day of such period; or (c) 2.00 to 1.00, with respect to any
three month period when the Outstanding Principal Amount is greater than $500
million on the last day of such period.
"Three Month Ratio" shall have the meaning set forth in
Section 601(a).
"Toquepala Mine" means the copper mine, concentrator and mill
(including without limitation the mining and other concessions relating thereto)
located in Toquepala, Peru.
"Transaction Documents" means, with respect to any Series of
SENs, the Collateral Trust Agreement, this Indenture, the Supplemental Indenture
relating to such Series, the SENs of such Series and the Guarantees endorsed
thereon and any other document or agreement pursuant to which a Lien is granted
on any Collateral in connection with the Collateral Trust Agreement, this
Indenture and the Supplemental Indenture relating to such Series.
"Transfer Agent" means any person authorized by the Company to
effectuate the exchange or transfer of any SEN on behalf of the Company
hereunder.
"Trigger Event" shall have the meaning set forth in Section
601.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force at the date as of which this Indenture was executed, except
as provided in Section 1005; provided that if the TIA is amended hereafter, to
the extent required, TIA means the TIA as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one
<PAGE> 33
20
such Person, "Trustee" as used with respect to the SENs of any Series shall mean
only the Trustee with respect to SENs of that Series.
"U.S. GAAP" means generally accepted accounting principles in
the United States of America in effect from time to time.
"United States" means the United States of America (including
the states and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with
respect to any SENs pursuant to Section 301, an individual who is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Company or the Guarantor, as the case may be, to
the Trustee to take any action under any provision of this Indenture, the
Company or the Guarantor, as the case may be, shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture (including any covenant compliance with which constitutes
a condition precedent) relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such
certificate or opinion is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture shall include: (1) a
statement that each individual signing such certificate or opinion has read such
covenant or condition and the definitions herein relating thereto; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether, in the opinion of each such
individual, such covenant or condition has been complied with.
Any certificate or opinion of an officer of the Company or the
Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any certificate or opinion of
counsel may be based, insofar as it relates to factual matters, information with
respect to which is in the possession of the Company or the Guarantor, as the
case may be, upon a
<PAGE> 34
21
certificate or opinion of or representations by an officer or officers of the
Company or the Guarantor, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based as
aforesaid are erroneous.
Any certificate or opinion of an officer of the Company or the
Guarantor or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an Accountant in
the employ of the Company or the Guarantor, unless such officer or counsel, as
the case may be, knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to such accounting
matters upon which his certificate, statement or opinion is based as aforesaid
are erroneous.
On the anniversary of the date of issuance of SENs of any
Series that are secured by a Lien on any Property, and annually thereafter, the
Company shall furnish to the Trustee Opinions of Peruvian and United States
counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and re-filing of
this Indenture, any Supplemental Indenture, the Collateral Trust Agreement and
any other requisite documents and with respect to the execution and filing of
any financing statements and continuation statements as is necessary to maintain
the Lien created by this Indenture or any Supplemental Indenture or the
Collateral Trust Agreement with respect to such Series and reciting the details
of such action or stating that in the opinion of such counsel no such action is
necessary to maintain such Lien. Such Opinions of Counsel shall also describe
the recording, filing, re-recording and re-filing of this Indenture, any
Supplemental Indenture, the Collateral Trust Agreement and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinions of such counsel, be required
to maintain the Lien of this Indenture or any Supplemental Indenture until the
anniversary of such date of issuance in the following calendar year.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 104. ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver, vote or other action provided
by this Indenture to be given or taken by Holders of the Outstanding SENs of all
Series or one or more Series, as the case may be, may be embodied in and
evidenced by (1) one or more instruments of substantially
<PAGE> 35
22
similar tenor signed by such Holders in person or by agents or proxies duly
appointed in writing, (2) the record of Holders of SENs of such Series voting in
favor thereof, either in person or by proxies duly appointed in writing, at any
meeting of Holders of SENs of such Series duly called and held in accordance
with the provisions of Article Seventeen, or (3) a combination of such
instruments and any such record. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments or record
or both are delivered to the Trustee and, where it is hereby expressly required,
to the Company or the Guarantor or both. Such instrument or instruments and any
such record (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments or so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent or proxy, or of the holding
by any Person of a SEN, shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee, the Company and the Guarantor, if made
in the manner provided in this Section. The record of any meeting of Holders of
SENs shall be proved in the manner provided in Section 1706.
Without limiting the generality of the foregoing, a Holder,
including a depositary of a Holder of a Global Security, may make, give or take,
by a proxy or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted in this Indenture to be made, given or taken by Holders, and a
depositary that is a Holder of a Global Security may provide its proxy or
proxies to the beneficial owners of interest in any such Global Security.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of SENs, the principal amount and serial
numbers of SENs held by any Person, and the date of holding the same, shall be
proved by the Security Register.
(d) If the Company shall solicit from the Holders of SENs any
request, demand, authorization, direction, notice, consent, waiver, vote or
other Act, the Company may, at its option, by or pursuant to Board Resolution,
fix in advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver, vote or
other Act, but the Company shall have no obligation to do so. Notwithstanding
TIA Section 316(c), such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not earlier than the
date 30 days prior to the first solicitation of Holders generally in connection
therewith and not later than the date such solicitation is completed unless
otherwise specified herein. If such a
<PAGE> 36
23
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver, vote or other Act may be given before or after such record
date, but only the Holders of record at the close of business on such record
date shall be deemed to be Holders for the purposes of determining whether
Holders of the requisite percentage of Outstanding SENs have authorized or
agreed or consented to such request, demand, authorization, direction, notice,
consent, waiver, vote or other Act, and for that purpose the Outstanding SENs
shall be computed as of such record date; provided that no such request, demand,
direction, authorization, agreement, notice, consent waiver, vote or other
action by the Holders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Indenture not later
than eleven months after the record date.
(e) Any request, demand, authorization, direction, notice,
consent, waiver, vote or other Act of the Holder of any SEN shall bind every
future Holder of the same SEN and the Holder of every SEN issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, the
Company or the Guarantor in reliance thereon, whether or not notation of such
action is made upon such SEN.
(f) At any time prior to (but not after) the evidencing to the
Trustee of the taking of any action by the Holders of the percentage in
aggregate principal amount of the SENs of any or all Series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a SEN
the serial number or other distinguishing symbol of which is shown by the
evidence to be included among the serial numbers or other distinguishing symbols
of the SENs the Holders of which have consented to such action may, by filing
written notice at the office of the Trustee and upon proof of holding as
provided in this Article, revoke such action so far as concerns such SEN.
SECTION 105. NOTICES, ETC. TO TRUSTEE, REGISTRAR, PRINCIPAL
PAYING AGENT, COMPANY AND GUARANTOR. Any request, demand, authorization,
direction, notice, consent, waiver, vote or Act of Holders or other documents
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
(1) the Trustee, Registrar, or Principal Paying Agent by any
Holder, by the Company or by the Guarantor shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its office located at Citibank, N.A.,
Structured Finance Team, 120 Wall Street, 13th floor, New York, New
York 10043, Attention: Peter M. Pavlyshin; or
(2) the Company or the Guarantor by the Trustee, Registrar or
Principal Paying Agent or by any Holder shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company,
Attention: Treasurer, or the Guarantor, Attention: Treasurer, addressed
to either at 180 Maiden Lane, New York, New York 10038-4991, or at any
other address previously furnished in writing to the Trustee by the
Company or the Guarantor.
<PAGE> 37
24
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice of any event to Holders of SENs by the Company, the
Guarantor or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid to each such Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders of SENs is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders of SENs given as provided. Any notice mailed to a Holder in the
manner herein provided shall be conclusively deemed to have been received by
such Holder whether or not such Holder actually receives such notice.
In case, by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be impractical to
mail notice of any event to Holders of SENs when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be
sufficient giving of such notice for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture by the Company or the Guarantor shall bind their
respective successors and assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE. In case any provision in
this Indenture, any SEN or Guarantee shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE. Nothing in this Indenture,
the SENs or the Guarantees, express or implied, shall give to any Person, other
than the parties hereto, any Authenticating Agent, any Paying Agent, any
Registrar and their successors hereunder and the Holders of SENs, any benefit or
any legal or equitable right, remedy or claim under this Indenture, the SENs or
the Guarantees.
<PAGE> 38
25
SECTION 111. CONFLICT WITH TRUST INDENTURE ACT. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such Act to be a part of and govern this
Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
SECTION 112. GOVERNING LAW; CONSENT TO JURISDICTION AND
SERVICE OF PROCESS. (a) All matters in respect of this Indenture, the SENs and
the Guarantees shall be governed by, and construed in accordance with, the laws
of the State of New York, United States of America, without regard to conflicts
of law principles thereof.
(b) The Company and the Guarantor consent to the non-exclusive
jurisdiction of any court of the State of New York or any United States federal
court sitting in the Borough of Manhattan, New York City, New York, United
States, and any appellate court from any thereof, and waive any immunity from
the jurisdiction of such courts over any suit, action or proceeding that may be
brought in connection with this Indenture or the SENs. The Company and the
Guarantor irrevocably waive, to the fullest extent permitted by law, any
objection to any suit, action, or proceeding that may be brought in connection
with this Indenture or the SENs in such courts whether on the grounds of venue,
residence or domicile or on the ground that any such suit, action or proceeding
has been brought in an inconvenient forum. The Company and the Guarantor agree
that final judgment in any such suit, action or proceeding brought in such court
shall be conclusive and binding upon the Company or the Guarantor and may be
enforced in any court to the jurisdiction of which the Company or the Guarantor
is subject by a suit upon such judgment; provided that service of process is
effected upon the Company or the Guarantor in the manner provided by this
Indenture.
(c) Each of the Company and the Guarantor shall appoint an
agent in New York City for service of process if the Company or the Guarantor
shall cease to or shall not have a place of business in New York City and
promptly deliver to the Trustee letters from such process agent acknowledging
its appointment as agent for such purpose in form and substance reasonably
satisfactory to the Trustee. The Company and the Guarantor agree that service of
all writs, process and summonses in any suit, action or proceeding brought in
connection with this Indenture, the SENs or the Guarantees against the Company
or the Guarantor in any court of the State of New York or any United States
federal court sitting in the Borough of Manhattan, New York City may be made
upon such process agent, whom the Company and the Guarantor each appoint as its
authorized agent for service of process. The Company and the Guarantor agree
that such appointment shall be irrevocable so long as any of the SENs remain
outstanding or until the irrevocable appointment by the Company or the Guarantor
of a successor in The City of New York as its authorized agent for such purpose
and the acceptance of such appointment by such successor. The Company and the
Guarantor further agree to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. If such person shall cease to
act as the Company's or the Guarantor's agent for service of process, the
Company or the Guarantor, as the case may be, shall appoint without
<PAGE> 39
26
delay another such agent and provide prompt written notice to the Trustee of
such appointment. With respect to any such action in any court of the State of
New York or any United States federal court in the Borough of Manhattan, New
York City, service of process upon such person, as the authorized agent of the
Company or the Guarantor for service of process, and written notice of such
service to the Company or the Guarantor, shall be deemed, in every respect,
effective service of process upon the Company or the Guarantor.
(d) Nothing in this Section shall affect the right of any
party to serve legal process in any other manner permitted by law or affect the
right of any party to bring any action or proceeding against any other party or
its property in the courts of other jurisdictions.
SECTION 113. COUNTERPARTS. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 114. LEGAL HOLIDAYS. In any case where any Payment
Date, Redemption Date, or Stated Maturity or Maturity of any SEN shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of any SEN other than a provision in the SENs of any Series
or the Supplemental Indenture relating thereto which specifically states that
such provision shall apply in lieu of this Section) payment of interest or
principal (and premium, if any) need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Payment Date or
Redemption Date or at the Stated Maturity or Maturity; provided, that no
interest shall accrue for the period from and after such Payment Date,
Redemption Date, Stated Maturity or Maturity, as the case may be.
SECTION 115. INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS OF COMPANY AND GUARANTOR EXEMPT FROM INDIVIDUAL LIABILITY. No recourse
under or upon any obligation, covenant or agreement contained in this Indenture,
any SEN, or any Guarantee or because of any indebtedness evidenced thereby,
shall be had against any incorporator, as such, or against any past, present or
future stockholder, officer or director, as such, of the Company or the
Guarantor or of any successor thereof, either directly or through the Company or
the Guarantor or any successor thereof, under any rule of law, statute, or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the SENs by the Holders thereof and as part of
the consideration for the issuance of the SENs.
SECTION 116. CURRENCY. Each reference in this Indenture and
the other Transaction Documents to Dollars is of the essence. To the fullest
extent permitted by applicable law, the obligation of the Company or the
Guarantor in respect of any amount due under this Indenture and other
Transaction Documents with respect to the SENs shall, notwithstanding any
payment in any other currency (whether pursuant to a judgment or otherwise), be
discharged only to the extent of the amount in Dollars that the Person entitled
<PAGE> 40
27
to receive that payment may, in accordance with normal banking procedures,
purchase with the sum paid in such other currency (after any premium and costs
of exchange) on the Business Day immediately following the day on which that
Person receives that payment. If the amount in Dollars that may be so purchased
for any reason falls short of the amount originally due, the Company or the
Guarantor shall pay such additional amounts, in Dollars, as may be necessary to
compensate for the shortfall and if the Dollars so purchased exceed the amount
originally due, such excess shall be remitted to the Company or the Guarantor,
as the case may be. Any obligation of the Company or the Guarantor not
discharged by that payment shall, to the extent permitted by applicable law, be
due as a separate and independent obligation and, until discharged as provided
herein, shall continue in full force and effect.
ARTICLE TWO
FORM OF SENS AND GUARANTEES
SECTION 201. FORMS GENERALLY. The SENs of each Series shall be
in substantially the forms as shall be established by or pursuant to a Board
Resolution and in one or more Supplemental Indentures, in each case with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have imprinted or otherwise
reproduced thereon such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to comply with
the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such SENs, as evidenced by their execution
of the SENs. Any portion of the text of any SEN may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the SEN. Temporary
SENs of any series may be issued as permitted by Section 304.
The Trustee's certificate of authentication on all SENs shall
be in substantially the form set forth in this Article.
The definitive SENs shall be printed, lithographed or engraved
on steel-engraved borders or may be produced in any other manner permitted by
the rules of any securities exchange on which the SENs may be listed, if any,
all as determined by the officers of the Company executing such SENs, as
evidenced by their execution of such SENs.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 713, the Trustee's certificate of
authentication shall be in substantially the following form:
<PAGE> 41
28
This is one of the SENs of the Series designated herein and
referred to in the within-mentioned Indenture.
Citibank, N.A., as Trustee
By
----------------------------
Authorized Signatory
SECTION 203. FORM OF GUARANTEES. The Guarantees to be endorsed
on the SENs of each Series shall be in substantially the form set forth in
Exhibit A hereto (subject to the provisions set forth in Section 1602 hereof) or
as shall be established by or pursuant to a Board Resolution of the Guarantor,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with the rules of any securities exchange or to conform to general
usage or as may, consistently herewith, be determined by the officers executing
such Guarantees, as evidenced by their execution of such Guarantees. If the form
of Guarantee with respect to the SENs of any Series is established by action
taken pursuant to a Board Resolution with respect to any Series of SENs, the
form of such Guarantee shall be attached as an Exhibit to the Supplemental
Indenture for such Series of SENs.
The Guarantees to be endorsed on the definitive SENs of any
Series shall be printed, lithographed or engraved on steel engraved borders or
may be produced in any other manner, all as determined by the officers executing
such Guarantees, as evidenced by their execution of such Guarantees.
SECTION 204. SENS ISSUABLE IN GLOBAL FORM. If SENs of or
within a Series are issuable in global form, as contemplated by Section 301,
then, notwithstanding clause (8) of Section 301, any such SEN shall represent
such of the Outstanding SENs of such Series as shall be specified therein and
may provide that it shall represent the aggregate amount of Outstanding SENs of
such Series from time to time endorsed thereon and that the aggregate amount of
Outstanding SENs of such Series represented thereby may from time to time be
increased or decreased to reflect exchanges. Any endorsement of a SEN in global
form to reflect the amount, or any increase or decrease in the amount, of
Outstanding SENs represented thereby shall be made by the Trustee in such manner
and upon instructions given by such Person or Persons as shall be specified
therein or in the Company Order to be delivered to the Trustee pursuant to
Section 303 or Section 304. Subject to the provisions of Section 303 and, if
applicable, Section 304, the Trustee shall deliver and redeliver any SEN in
global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or Section 304 has been, or simultaneously is,
delivered, any instructions by the Company or the Guarantor with respect to
endorsement or delivery or redelivery of a SEN in global form
<PAGE> 42
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shall be in writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply
to any SEN represented by a SEN in global form if such SEN was never issued and
sold by the Company or the Guarantor and the Company or the Guarantor delivers
to the Trustee the SEN in global form together with written instructions (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) with regard to the reduction in the principal amount of SENs
represented thereby, together with the written statement contemplated by the
last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless
otherwise specified as contemplated by Section 301, payment of principal of and
any premium and interest on any SEN in global form shall be made to the Person
or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as
provided in the preceding paragraph, the Company, the Guarantor, the Trustee and
any agent of the Company, the Guarantor and the Trustee shall treat as the
Holder of such principal amount of Outstanding SENs represented by a global SEN
the Holder of such global SEN.
ARTICLE THREE
THE SENS
SECTION 301. AMOUNT; ISSUABLE IN SERIES. The aggregate
principal amount of SENs which may be authenticated and delivered under this
Indenture shall be limited to US$750,000,000, except for SENs authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other SENs of the Series pursuant to Section 304, 305, 306, 1006 or 1307 or
pursuant to an Exchange Offer.
The SENs constitute the direct and unconditional obligations
of the Company and rank pari passu without preference among themselves. The
payment obligations of the Company under the SENs will at all times rank at
least equally in priority of payment with all other present and future unsecured
and unsubordinated obligations of the Company from time to time outstanding.
The SENs may be issued in one or more Series. Prior to the
issuance of SENs of any Series, there shall be (i) established in one or more
Board Resolutions of the Company and of the Guarantor or pursuant to authority
granted by one or more Board Resolutions of the Company and of the Guarantor,
(ii) subject to Section 303, set forth in, or determined in the manner provided
in, an Officers' Certificate, and (iii) if the SENs to be issued are of a Series
not theretofore created, established in one or more Supplemental Indentures, any
or all of the following, as applicable (each of which (except for the matters
set forth in clauses (1), (2), (9), (12), (13), (17), (19) and (20) below), if
so provided, may
<PAGE> 43
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be determined from time to time by the Company or the Guarantor with respect to
unissued SENs of the Series and set forth in such SENs of the Series when issued
from time to time):
(1) the title of the SENs of the Series (which shall
distinguish the SENs of the Series from all other Series of SENs);
(2) any limit upon the aggregate principal amount of the SENs
of the Series that may be authenticated and delivered under this
Indenture, except for SENs authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
SENs of the Series pursuant to Section 304, 305, 306, 1006 or 1307 or
pursuant to an Exchange Offer (and except for any SENs which, pursuant
to Section 303, are deemed never to have been authenticated and
delivered hereunder);
(3) the date or dates, or the method by which such date or
dates will be determined or extended, on which the principal of the
SENs of the Series is payable:
(4) the rate or rates at which the SENs of the Series shall
bear interest, if any, or the method by which such rate or rates shall
be determined, the date or dates from which such interest shall accrue,
or the method by which such date or dates shall be determined, the
Payment Dates on which such interest shall be payable and the Regular
Record Date, if any, for the interest payable on any SENs on any
Payment Date, or the method by which such date or dates shall be
determined, and the basis upon which interest shall be calculated if
other than on the basis of a 360-day year of twelve 30-day months;
(5) the place or places, if any, other than or in addition to
the Borough of Manhattan, The City of New York, where the principal of
(and premium, if any, on) and any interest on SENs of the Series shall
be payable, any SENs of the Series may be surrendered for registration
of transfer or surrendered for exchange and, if different than the
location specified in Section 106, the place or places where notices or
demands to or upon the Company or the Guarantor in respect of the SENs
of the Series and this Indenture may be served;
(6) the period or periods within which, the price or prices at
which, and other terms and conditions upon which SENs of the Series may
be redeemed, in whole or in part, at the option of the Company, if the
Company is to have that option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase SENs of the Series, and the period or periods within which,
the price or prices at which, and other terms and conditions
(including, without limitation, the type of consideration to be paid by
the Company) upon which SENs of the Series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
<PAGE> 44
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(8) if other than denominations of US$250,000 and any integral
multiple of US$1,000 in excess thereof, the denominations in which any
SENs of the Series shall be issuable;
(9) the identity of the Trustee for such SENs and, if other
than the Trustee, the identity of each SEN Registrar and/or Paying
Agent, any qualifications of the Trustee or any co-trustee with respect
to such SENs in addition to the qualifications otherwise specified in
this Indenture and any obligations or duties of the Trustee or any
co-trustee with respect to such SENs in addition to the obligations and
duties otherwise specified in this Indenture;
(10) the percentage of the principal amount at which such SENs
will be issued and, if other than the principal amount thereof, the
portion of the principal amount of SENs of the Series that shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 604 or the method by which such portion shall be
determined;
(11) whether Article Fifteen is inapplicable to the SENs of
the Series and any provisions in modification of, in addition to or in
lieu of the provisions of Article Fifteen that shall be applicable to
the SENs of the Series;
(12) provisions, if any, granting special rights to the
Holders of SENs of the Series upon the occurrence of such events as may
be specified;
(13) any deletions from, modifications of or additions to the
Trigger Events, Accelerated Amortization Events, Events of Default,
covenants or representations and warranties of the Company or the
Guarantor with respect to SENs of the Series, whether or not such
Trigger Events, Accelerated Amortization Events, Events of Default,
covenants or representations and warranties are consistent with the
Trigger Events, Accelerated Amortization Events, Events of Default or
covenants set forth herein;
(14) any restrictions applicable to the offer, sale or
delivery of SENs;
(15) the date as of which any SENs of the Series shall be
dated if other than the date of original issuance of the first SEN of
the Series to be issued;
(16) the manner in which or the Person to whom any interest on
any SEN of the Series shall be payable, if other than the Person in
whose name that SEN (or one or more Predecessor SENs) is registered at
the close of business on the Regular Record Date for such interest;
(17) if the SENs of the Series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary SEN of such Series) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, the form and/or
terms of such certificates, documents or conditions;
<PAGE> 45
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(18) any modifications to the Guarantees of the SENs of such
Series pursuant to Section 203;
(19) any modifications to the circumstances when the Company
will pay Additional Amounts as contemplated by Section 1217 on the SENs
of the Series in respect of any tax, assessment or governmental charge
and, if so, any modifications to the circumstances, when the Company
will have the option to redeem such SENs rather than pay such
Additional Amounts (and the terms of any such option); and
(20) any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) relating to the Series
(which terms shall not be inconsistent with the requirements of the
Trust Indenture Act or the provisions of this Indenture).
Each Series of SENs shall be issued pursuant to a Supplemental
Indenture hereto.
All SENs (and any Guarantees endorsed thereon) of any one
Series shall be substantially identical except as to denomination and except as
may otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
Supplemental Indenture. Not all SENs of any one Series need be issued at the
same time, and, unless otherwise provided, a Series may be reopened for
issuances of additional SENs of such Series.
SECTION 302. DENOMINATIONS. All SENs shall be issuable in such
denominations as shall be specified as contemplated by Section 301. SENs, other
than those issued in global form (which may be of any denomination), shall be
issuable in denominations of US$1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The SENs shall be executed manually or by facsimile on behalf of the Company by
its Chairman and/or its President or any Vice President or the Treasurer. The
signature of any of these officers on the SENs may be the manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the SENs.
In case any officer of the Company who shall have signed any
of the SENs shall cease to be such officer before the SEN so signed shall be
authenticated and delivered by the Trustee or disposed of by the Company, such
SEN nevertheless may be authenticated and delivered or disposed of as though the
person who signed such SEN had not ceased to be such officer of the Company; and
any SEN may be signed on behalf of the Company by such person as, at the actual
date of the execution of such SEN, shall be the proper officers of the Company,
although at the date of the execution and delivery of this Indenture any such
person was not an officer.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver SENs of any Series, executed
by the Company and
<PAGE> 46
33
having Guarantees endorsed thereon to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such SENs, and the
Trustee in accordance with such Company Order shall authenticate and deliver
such SENs without any further action by the Company. If not all the SENs of any
Series are to be issued at one time and if the Board Resolution and Supplemental
Indenture establishing such Series shall so permit, such Company Order may set
forth procedures acceptable to the Trustee for the issuance of such SENs and
determining terms of particular SENs of such Series such as interest rate,
maturity date, date of issuance and date from which interest shall accrue.
In authenticating such SENs, and accepting the additional
responsibilities under this Indenture in relation to such SENs, the Trustee
shall be entitled to receive, and (subject to TIA Sections 315(a) through
315(d)) shall be fully protected in relying upon,
(1) (a) a copy of any Board Resolution or Board Resolutions
relating to such Series;
(b) an executed supplemental indenture relating thereto; and
(c) an Officer's Certificate setting forth the form and terms
of the SENs as required pursuant to Sections 201 and 301, respectively, and
prepared in accordance with the requirements of the Trust Indenture Act and
Section 102; or
(2) or an Opinion of Counsel stating:
(a) that the form or forms of such SENs and of the Guarantees
endorsed thereon have been established in conformity with the
provisions of this Indenture;
(b) that the terms of such SENs and of the Guarantees endorsed
thereon have been established in conformity with the provisions of this
Indenture;
(c) that such SENs and the Guarantees endorsed thereon, when
completed by appropriate insertions and executed and delivered by the
Company and the Guarantor to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the
Trustee in accordance with this Indenture and issued by the Company and
the Guarantor in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute the legal, valid and binding
obligations of the Company and the Guarantor, enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency,
reorganization and other similar laws of general applicability relating
to or affecting the enforcement of creditors rights and to general
equitable principles and to such other qualifications as such counsel
shall conclude do not materially affect the rights of Holders of SENs;
and
(d) that the Indenture (including any Supplemental Indenture
relating to such SENs) and the Collateral Trust Agreement have been
duly recorded, registered and filed in such manner and in such places
as may be required by law in order to make effective and to maintain
the Lien intended to be created, and reciting the
<PAGE> 47
34
details of such action, or stating that no such action is necessary to
make effective and to maintain such Lien.
Notwithstanding the provisions of Section 301 and this Section
303, if not all the SENs of any Series are to be issued at one time it shall not
be necessary to deliver the Officers' Certificate otherwise required pursuant to
Section 301 or the Company Order and Opinion of Counsel otherwise required
pursuant to this Section 303 prior to or at the time of issuance of each SEN,
but such documents shall be delivered prior to or at the time of issuance of the
first SEN of such Series.
The Trustee shall have the right to decline to authenticate
and deliver any SENs under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Company or
if the Trustee in good faith by its Responsible Officers shall determine that
such action would expose the Trustee to personal liability to existing Holders
or would adversely affect the Trustee's own rights, duties or immunities under
this Indenture or otherwise. Each SEN shall be dated the date of its
authentication.
No SEN or Guarantee shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such SEN a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any SEN executed by the Company shall be
conclusive evidence that such SEN has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture. Notwithstanding the
foregoing, if any SEN shall have been authenticated and delivered hereunder but
never issued and sold by the Company, and the Company shall deliver such SEN to
the Trustee for cancellation as provided in Section 309 together with a written
statement (which need not comply with Section 102 and need not be accompanied by
an Opinion of Counsel) stating that such SEN has never been issued and sold by
the Company, for all purposes of this Indenture such SEN shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES. Pending the preparation of
definitive SENs of any Series, the Company may execute, and upon Company Order
the Trustee shall authenticate and deliver, temporary SENs which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive SENs (and having
endorsed thereon Guarantees substantially of the tenor of the definitive
Guarantees) in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as conclusively the
officers executing such SENs and Guarantees may determine, as conclusively
evidenced by their execution of such SENs and Guarantees. In the case of SENs of
any Series, such temporary SENs may be in global form.
If temporary SENs of any Series are issued, the Company will
cause definitive SENs of that Series to be prepared without unreasonable delay.
After the preparation of definitive SENs of such Series, the temporary SENs of
such Series shall be exchangeable for definitive SENs of such Series, upon
surrender of the temporary SENs of such Series at the
<PAGE> 48
35
office or agency of the Company in a Place of Payment for that Series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary SENs of any Series, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive SENs of the same Series of authorized denominations. Until so
exchanged the temporary SENs of any Series shall in all respects be entitled to
the same benefits under this Indenture as definitive SENs of such Series.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE. Subject to any applicable laws and such reasonable regulations as it
may prescribe, Citibank, N.A., as Registrar, shall keep the Security Register
for each Series of SENs at its office at 111 Wall Street, 5th floor, New York,
New York 10042, for the registration of ownership, exchange, and transfer of the
SENs. Included in the books and records for the SENs shall be notations as to
whether such SENs have been paid, exchanged or transferred and cancelled or
lost, stolen, mutilated or destroyed and whether such SENs have been replaced.
In the case of the replacement of any of the SENs, the Registrar shall keep a
record of the SEN so replaced and the SEN issued in replacement thereof. In the
case of the cancellation of any of the SENs, the Registrar shall keep a record
of the SEN so cancelled and the date on which such SEN was cancelled.
Upon presentation for exchange or transfer of any SEN of any
Series at the Corporate Trust Office of the Registrar accompanied by a written
instrument of exchange or transfer with signature medallion guarantee in a form
approved by the Company and the Registrar, executed by the registered Holder or
his attorney-in-fact duly authorized in writing with signature medallion
guarantee, and upon completion of any certification required by the terms of
this Indenture (including any required with respect to any Series as specified
in the Supplemental Indenture related thereto), such SEN shall be exchanged or
transferred upon the Security Register, and one or more new SENs of the same
Series shall be authenticated and issued (with a Guarantee endorsed thereon) in
the name of the Holder (in the case of exchanges only) or the transferee, as the
case may be. No exchange or transfer of a SEN shall be effective under this
Indenture or the SENs unless and until such SEN has been registered in the name
of such Person in the Security Register. Furthermore, the exchange or transfer
of any SEN shall not be effective under this Indenture or the SENs unless the
request for such exchange or transfer is made by the registered Holder or by a
duly authorized attorney-in-fact at the Corporate Trust Office of the Registrar.
All SENs (including the Guarantees endorsed thereon) issued
upon any registration of transfer or exchange of SENs shall be the valid
obligations of the Company and the Guarantor, as the case may be, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the SENs
surrendered upon such registration of transfer or exchange.
Every SEN presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Guarantor or
the Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer with signature medallion guarantee, in form satisfactory to the
Company, the Guarantor and the Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing.
<PAGE> 49
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No service charge shall be made for any registration of
transfer or exchange of SENs, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of SENs, other than
exchanges pursuant to Section 304, 1006 or 1307 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange SENs of any Series during a period beginning at the
opening of business 15 days before the day of the selection for redemption of
SENs of that Series under Section 1303 and ending at the close of business on
the day of the mailing of the relevant notice of redemption, or (ii) to register
the transfer of or exchange any SEN so selected for redemption in whole or in
part, except the unredeemed portion or any SEN being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SENS. If
any mutilated or defaced SEN is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new SEN of the same Series and of like tenor and aggregate principal amount,
having endorsed thereon a Guarantee and bearing a number or other distinguishing
symbol not contemporaneously outstanding in exchange and substitution for the
mutilated or defaced SEN.
If there shall be delivered to the Company, the Guarantor and
to the Trustee (i) evidence to their satisfaction of the destruction, loss or
theft of any SEN and (ii) such security or indemnity as may be required by them
to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company, the Guarantor or the Trustee that such SEN has
been acquired by a bona fide purchaser, the Company shall execute and upon
Company Order the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen SEN, a new SEN of the same Series and of like tenor
and aggregate principal amount, having endorsed thereon a Guarantee and bearing
a number or other distinguishing symbol not contemporaneously outstanding in
lieu of and substitution for the SEN so destroyed, lost or stolen. In every case
the applicant for a substitute SEN shall furnish to the Company and to the
Trustee (and any agent of the Company or Trustee, if requested by the Company)
such security or indemnity as may be required by them to indemnify and defend
and save each of them harmless and, in every case of destruction, loss or theft,
evidence to their satisfaction of the destruction, loss or theft of such SEN and
the ownership thereof.
In case any SEN that has matured or is about to mature or has
been called for redemption in full shall become mutilated or defaced or be
destroyed, lost or stolen, the Company in its discretion may instead of issuing
a substitute SEN pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated or defaced SEN), if the applicant for
such payment shall furnish to the Company and to the Trustee (and any agent of
the Company or Trustee, if requested by the Company) such security or indemnity
as any of them may require to indemnify and defend and to save each of them
harmless, and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such SEN and of the ownership
thereof.
<PAGE> 50
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Upon the issuance of any new SEN under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new SEN of any Series issued pursuant to this Section in
lieu of any destroyed, lost or stolen SEN (including the Guarantee endorsed
thereon) shall constitute an original additional contractual obligation of the
Company (and, with respect to such Guarantee, the Guarantor) whether or not the
destroyed, lost or stolen SEN shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other SENs of that Series duly issued
hereunder.
All SENs shall be held and owned upon the express condition
that, to the extent permitted by law, the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated, defaced, destroyed,
lost or stolen SENs and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
(a) Unless otherwise provided as contemplated by Section 301 with respect to any
Series of SENs,
(i) Payments in respect of the principal and premium, if any,
on the final Maturity of the SENs of any Series will be made only
against surrender for cancellation of such SENs at the Corporate Trust
Office of the Principal Paying Agent in the City of New York and,
subject to any fiscal or other laws and regulations applicable thereto,
at the specified offices of any other Paying Agent appointed by the
Company.
(ii) Payment in respect of interest on each Payment Date and
Additional Amounts with respect to any SENs and all other payments of
principal and premium, if any due on such SENs on each Payment Date
will be made, in Dollars, to the person in whose name such SENs (or one
or more Predecessor SEN) is registered in the Securities Register on
the close of business on the Regular Record Date immediately preceding
such Payment Date at the office or agency of the Company maintained for
such purpose pursuant to Section 1202; provided, however, that each
installment of interest and principal on any SEN may at the Company's
option be paid by (i) mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to
Section 308, to the address of such Person as it appears on the
Security Register or (ii) transfer to an account maintained by the
payee located in the United States;
(iii) If the due date for payment of any principal or interest
in respect of any SEN is not a Business Day at
<PAGE> 51
38
the Place of Payment, the Holder thereof will not be entitled to
payment of the amount due until the next succeeding Business Day at
such place and will not be entitled to any further interest or other
payment in respect of any such delay;
(iv) Any interest on any SEN of any Series which is payable,
but is not punctually paid or duly provided for, on any Payment Date
shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such
defaulted interest and, if applicable, interest on such defaulted
interest (to the extent lawful) at the rate specified in the SENs of
such Series, or in the Supplemental Indenture relating thereto (such
defaulted interest and, if applicable, interest thereon herein
collectively called "Defaulted Interest") may be paid by the Company,
at its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the SENs of
such Series (or their respective Predecessor SENs) are
registered at the close of business on a Special Record Date
("Special Record Date") for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each SEN of such
Series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of
money in Dollars (except as otherwise specified pursuant to
Section 301 for the SENs of such Series) equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit on or prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be given in
the manner provided in Section 106, not less than 10 days
prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor haying been so given, such Defaulted Interest shall
be paid to the Persons in whose name the SENs of such Series
(or their respective Predecessor SENs) are registered at the
close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted
Interest on the SENs of any Series in any other lawful manner
not inconsistent with the requirements of any securities
exchange on which such SENs may be listed, and upon such
notice as may be required by such exchange, if, after notice
<PAGE> 52
39
given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
(b) At least ten (10) Business Days prior to each Payment
Date, any Redemption Date or the Maturity of the SENs, the Company shall furnish
to the Principal Paying Agent and each other Paying Agent to whom the Company
has provided funds directly pursuant to this Indenture a certificate of a
Responsible Officer specifying the amount required to be deducted or withheld on
payments of principal or interest on the SENs due on such date of payment for or
on account of any Taxes, if any, and certifying that such amount will be
withheld and paid by the Company to the extent required by Section 1217 hereof
provided that if there is no change in the percentage to be withheld for or on
account of any Taxes from the previous period, the previously delivered
certificate shall be deemed to continue to apply and the Company shall not be
required to provide a new certificate. The Company covenants to indemnify the
Principal Paying Agent and the other Paying Agents for, and to hold each
harmless against, any loss, liability or reasonable expense incurred without
negligence, bad faith or willful misconduct on their part, arising out of or in
connection with actions taken or not taken by any of them in reliance on any
certificate furnished to them pursuant to this paragraph or the failure to
furnish any such certificate. The obligations of the Company under the preceding
sentence shall survive payment of all the SENs, the satisfaction and discharge
of this Indenture and the resignation or removal of the Trustee, Registrar or
any Paying Agent.
Any certificate required by this Section to be provided to the
Principal Paying Agent and any other Paying Agent shall be deemed to be duly
provided if telecopied to the Principal Paying Agent and such other Paying
Agent. Upon request, the Company shall provide the Principal Paying Agent with
documentation reasonably satisfactory to the Principal Paying Agent evidencing
the payment of Taxes in respect of which the Company has paid any Additional
Amounts. Copies of such documentation shall be made available to the Holders or
other Paying Agents, as applicable, upon request therefor.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment
of a SEN for registration of transfer, the Company, the Guarantor, the Trustee
and any agent of the Company, the Guarantor or the Trustee may treat the Person
in whose name such SEN is registered in the Security Register for such Series as
the absolute owner of such SEN for the purpose of receiving payment of principal
of (and premium, if any, on) and (subject to Sections 305 and 307) interest on
such SEN and for all other purposes whatsoever, whether or not such SEN be
overdue, and none of the Company, the Guarantor, the Trustee or any agent of the
Company, the Guarantor or the Trustee shall be affected by notice to the
contrary. None of the Company, the Trustee, any Paying Agent or the Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of any SEN in
global form or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Global
Security, nothing herein shall prevent the Company, the Guarantor, the Trustee,
or any agent of the Company, the Guarantor or the Trustee from giving effect to
any written certification, proxy or other
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authorization furnished by any depositary, as a Holder, with respect to such
Global Security or impair as between such depositary and owners of beneficial
interests in such Global Security the operation of customary practices governing
the exercise of the rights of such depositary (or its nominee) as Holder of such
Global Security.
SECTION 309. CANCELLATION. All SENs surrendered for payment,
redemption, repayment at the option of the Holder, registration of transfer or
exchange or for credit against any current or future sinking fund payment shall,
if surrendered to any Person other than the Trustee, be delivered to the
Trustee. All SENs so delivered to the Trustee shall be promptly cancelled by it.
The Company may at any time deliver to the Trustee for cancellation any SENs
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any SENs previously
authenticated hereunder which the Company has not issued and sold, and all SENs
so delivered shall be promptly cancelled by the Trustee. If the Company or the
Guarantor shall so acquire any of the SENs, however, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
SENs unless and until the same are surrendered to the Trustee for cancellation.
No SENs shall be authenticated in lieu of or in exchange for any SENs cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled SENs held by the Trustee shall be disposed of by the Trustee in
accordance with its customary procedures.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise
specified as contemplated by Section 301 with respect to any SENs, interest on
the SENs of each Series shall be computed on the basis of a 360-day year of
twelve 30-day months.
SECTION 311. CURRENCY IN RESPECT OF SENS. All SENs will be
denominated in, and all payments of the principal of (and premium, if any on)
and interest on any SEN of any Series will be made in, Dollars.
SECTION 312. RECOURSE TO TRUST ESTATE. The trust estate
granted to the Trustee as security for a particular Series of SENs will serve as
security only for that Series. Notwithstanding any provision of this Indenture
or any Supplemental Indenture to the contrary, Holders of SENs of one Series
shall have no recourse against the trust estate granted to the Trustee as
security for any other Series of SENs, and no judgment against the Company or
the Guarantor for any amount due with respect to one Series of SENs may be
enforced against the trust estate securing any other Series of SENs, nor may any
prejudgment lien or other attachment be sought against any such other trust
estate.
ARTICLE FOUR
ACCOUNTS; PAYMENTS; APPLICATION OF FUNDS
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SECTION 401. COLLECTION ACCOUNT. Prior to the execution and
delivery of this Indenture, the Collateral Trustee has established pursuant to
the Collateral Trust Agreement the Collection Account.
SECTION 402. SENS COLLATERAL ACCOUNTS; PAYMENTS; APPLICATION
OF FUNDS.
(1) Concurrently with the execution and delivery of each
Supplemental Indenture relating to a Series of SENs, the Trustee shall establish
a segregated trust account denominated in Dollars, created and maintained by the
Trustee in its trust capacity in its corporate trust department and entitled
Citibank, N.A./Southern Peru Limited Series _____ SENs Collateral Trust Account"
and clearly indicating that such account is being held for the benefit of the
Holders of such Series of the SENs (each, a "SENs Collateral Account") into
which monies will be deposited and from which monies will be withdrawn as
provided in this Indenture and the Supplemental Indenture for the applicable
Series and the Collateral Trust Agreement. Each SENs Collateral Account shall be
maintained at all times until payment and performance of all SENs Secured
Obligations of the applicable Series in accordance with the provisions hereof.
All monies and instruments credited to each SENs Collateral Account from time to
time shall constitute part of the SENs Collateral for the applicable Series and
shall be collateral security for the payment and performance by the Company of
all the SENs Secured Obligations of the applicable Series and, subject to the
terms of this Indenture and the Collateral Trust Agreement, shall at all times
be subject to the sole dominion and control of the Trustee. Until payment and
performance of all SENs Secured Obligations of the applicable Series in
accordance with the provisions hereof, the Company shall have no right to the
funds credited to a SENs Collateral Account, except as provided in Section 402
hereof.
(2) Except as may be otherwise provided for any Series in a
Supplemental Indenture for such Series, on each Business Day, the Trustee shall
apply the funds deposited in the SENs Collateral Account for each Outstanding
Series as follows in the following order of priority:
(A) first, to the extent due and not paid, an amount equal to
such Series' pro rata share of the fees and expenses of the Trustee
payable under this Indenture shall be paid to the Trustee;
(B) second, if the amount on deposit on such Business Day in
the SENs Reserve Account for such Series (after giving effect to all
transfers to be made on such day) is less than the Required Balance for
such Series, an amount equal to the amount necessary to cause the
amount on deposit in the SENs Reserve Account for such Series to equal
the Required Balance; and
(C) third, (i) so long as no Retention Trigger Event or Debt
Service Retention Event has occurred and is continuing with respect to
such Series, the remainder of such funds shall be transferred to the
Company; or (ii) if a Retention Trigger Event or Debt Service Retention
Event has occurred and is
<PAGE> 55
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continuing with respect to such Series, an amount equal to the amount
of such funds as is necessary to cause the amount on deposit in such
SENs Collateral Account to equal the past due interest and principal on
the SENs of such Series and interest and principal due on the SENs of
such Series on the immediately succeeding Payment Date shall remain on
deposit in such SENs Collateral Account until applied in accordance
with paragraph (4) of this Section 402 and the remainder of such funds,
if any (the "Excess Collections"), subject to any further retention of
Excess Collections required pursuant to the provisions of Sections
601(b) and 604, shall be transferred to the Company.
(3) Unless a Retention Trigger Event or a Debt Service
Retention Event has occurred and is continuing, with respect to SENs of any
Series, the Company will, no later than each Payment Date with respect to such
Series, deposit with Paying Agents a sum (in Dollars) sufficient to pay the
principal (and premium, if any) or interest so becoming due on such Payment Date
(collectively, the "Due Amount"), such sum to be held in trust for the benefit
of the Persons entitled to such principal, premium or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act. If a Retention Trigger Event or a Debt Service
Retention Event has occurred and is continuing with respect to the SENs of any
Series, no later than 10:00 a.m. on the third Business Day prior to each Payment
Date with respect to such Series, the Trustee will give the Company written
notice of the amount on deposit in the SENs Collateral Account for such Series
and the Company will, no later than the Business Day prior to each Payment Date
with respect to such Series, deposit in the SENs Collateral Account the excess,
if any, of the Due Amount for such Payment Date over the amount on deposit on
such SENs Collateral Account on the Business Day prior to each Payment Date with
respect to such Series, and the Company will promptly notify the Trustee of its
action or failure so to act.
If at 11:00 a.m. (New York City time) on a Payment Date for
the SENs of any Series the SENs Collateral Account for such Series does not have
on deposit or the Paying Agent has not received from the Company immediately
available funds in Dollars sufficient to make the payments required to be made
on such SENs on such Payment Date, the Trustee shall transfer from the SENs
Reserve Account (or make a draw under a Qualified Letter of Credit delivered
pursuant to Section 403(5)) for such Series to such SENs Collateral Account or
the Paying Agent on such Payment Date immediately available funds in Dollars in
an amount which when added to the amounts of immediately available funds in
Dollars held in such SENs Collateral Account or held by such Paying Agent will
be sufficient to enable the Trustee or the Paying Agent to make such required
payments on such Payment Date. If any amounts are transferred from the SENs
Reserve Account for any Series pursuant to the immediately preceding sentence,
the Company shall, no later than the next Business Day after receipt of notice
from the Trustee that such amounts were transferred, deposit immediately
available funds in Dollars in such SENs Reserve Account in an amount sufficient
to cause the amount on deposit in the SENs Reserve Account at such time to be
equal to the Required Balance at such time.
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(4) Except as may be otherwise provided for any Series in a
Supplemental Indenture for such Series, during the occurrence and continuance of
a Retention Trigger Event, an Accelerated Amortization Event or a Debt Service
Retention Event, on each Payment Date the Trustee will apply the amounts
credited to the SENs Collateral Account for such Series in the following order
of priority:
(i) first, to the payment of interest on the SENs of
such Series which is past due;
(ii) second, to the payment of scheduled payments of
interest on such SENs then due and payable;
(iii) third, to the payment of any principal of such
SENs which is then past due;
(iv) fourth, to the payment of scheduled payments of
principal of such SENs then due and payable; and
(v) fifth to the payment of the amount of principal
of such SENs, if any, required to be prepaid pursuant to
Section 602 together with any Make-Whole Premium due on the
amount of such prepayment.
Absent a specific request from the Trustee, a Company Order
shall not be required in connection with the making of payments by the Trustee
hereunder. If so requested, the Trustee may rely conclusively and shall be fully
protected in its reliance on a Company Order that complies with this Section 402
with respect to payments to be made under clauses (2)(B) and (C), or clause (4)
of this Section 402, and the Trustee shall not be required to investigate any
fact or matter stated in such Company Order (but the Trustee shall verify the
accuracy of the calculation of the payments to be made under such clauses),
provided that if such Company Order is not received in a timely manner by the
Trustee, the Trustee shall nevertheless make payments with respect to such
clauses as set forth therein.
(5) Upon the SENs of a Series becoming or being declared due
and payable, all amounts on deposit in the SENs Collateral Account for such
Series will be applied in accordance with Section 608.
SECTION 403. SENS RESERVE ACCOUNT. (1) For each Series of
SENs, (except as otherwise provided in the Supplemental Indenture for such
Series) concurrently with the execution and delivery of the Supplemental
Indenture for such Series, the Trustee will establish a segregated note reserve
trust account (a "SENs Reserve Account"), denominated in Dollars, created and
maintained by the Trustee in its trust capacity in its corporate trust
department, into which monies will be deposited and from which monies will be
withdrawn as provided in this Indenture and the Supplemental Indenture for such
Series. On the Issue Date for such Series, the Company shall cause funds in an
amount equal to the Initial Deposit for such Series to be deposited in the SENs
Reserve Account for such Series.
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The Trustee shall credit such amount to the SENs Reserve Account upon receipt
thereof. The Trustee shall also credit the SENs Reserve Account with (i) amounts
to be transferred from the Collection Account pursuant to Section 402(2)(B) and
(ii) amounts transferred to the Trustee from the Company specifically for
deposit into the SENs Reserve Account. The Trustee shall transfer funds from the
SENs Reserve Account to the SENs Collateral Account as provided in Section
402(3) hereof. In the event that the amount on deposit in the SENs Reserve
Account is less than the Required Balance at any time, the Trustee shall
promptly give immediate notice thereof to the Company, Attention: Treasurer, by
telecopy (telecopy no. (212) 510-1990) of such deficiency.
(2) All monies and instruments credited to the SENs Reserve
Account for such Series from time to time shall constitute part of the SENs
Collateral for such Series and shall at all times be subject to the sole
dominion and control of the Trustee.
(3) Upon the SENs of a Series becoming or being declared due
and payable, all amounts on deposit in the SENs Reserve Account for such Series
shall be applied in accordance with Section 608.
(4) Except to the extent set forth hereunder, the Company
shall have no right to the funds credited to the SENs Reserve Account for such
Series. If at any time the Required Balance is reduced or there are funds in the
SENs Reserve Account for such Series in excess of the Required Balance, the
Trustee shall cause all such excess funds, if any, in the SENs Reserve Account
for such Series to be credited to the SENs Collateral Account for such Series
and disbursed on such date in accordance with Section 402 hereof. In addition on
the date on which the SENs of any Series are paid in full the Trustee shall
cause the amounts on deposit in the SENs Reserve Account for such Series to be
paid to the Company.
(5) The Company may deliver, or cause to be delivered, to the
Trustee a Qualified Letter of Credit in satisfaction of its obligations to fund
any SENs Reserve Account and the amount available to be drawn under such letter
of credit shall be deemed to constitute funds on deposit in such SENs Reserve
Account. Each such letter of credit shall provide (i) that it may be drawn upon
by the Trustee at any time a withdrawal is permitted or required to be made from
such SENs Reserve Account under this Indenture and (ii) if such letter of credit
is not renewed at least five Business Days prior to its expiry date, the Trustee
may draw the full amount of such letter of credit and deposit such amount in the
applicable SENs Reserve Account.
SECTION 404. STATEMENTS; INVESTMENT OF FUNDS. On or before the
fifteenth (15th) day of each calendar month the Trustee shall provide the
Company and the Rating Agencies with a written statement of (i) the balances in
the SENs Collateral Account and the SENs Reserve Account at the end of the
immediately preceding calendar month for each Series of SENs, (ii) the amounts
deposited into the SENs Collateral Account and the SENs Reserve Account,
respectively, for the immediately preceding calendar month for each Series of
SENs and (iii) the application of amounts withdrawn from the SENs Collateral
Account and the SENs Reserve Account, respectively, for the immediately
preceding calendar month for each Series of SENs. To the extent not applied as
provided in Section
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402 or 403 hereof, funds remaining on deposit in the SENs Collateral Account or
the SENs Reserve Account for such Series shall be invested by the Trustee, as
specified in written investment instructions given by a Responsible Officer or a
Person designated by such Responsible Officer in Eligible Investments, but if no
such investment instructions are provided, the Trustee shall, pursuant to
written standing instructions from the Company, invest such funds overnight in
Eligible Investments until such instructions are received from the Company and
the Trustee shall incur no liability with respect to such investments in
Eligible Investments; provided that after the occurrence and during the
continuance of a Trigger Event or an Event of Default, such investments shall be
invested by the Trustee in Eligible Investments selected by the Trustee. All
investments of amounts on deposit in the SENs Collateral Account for any Series
shall mature on the next Payment Date for such Series and all amounts invested
in the SENs Reserve Account for any Series shall have maturities such that an
amount at least equal to the Scheduled Debt Service due on the next Payment Date
for such Series shall mature on such Payment Date. The Company shall deliver to
the Trustee on the Issue Date of each Series of SENs written investment
instructions given by a Responsible Officer or a Person designated by such
Responsible Officer, specifying its initial investment instructions. On the
maturity date of each investment, the Company will provide written reinvestment
instructions to the Trustee. If such instructions are not provided, the Trustee
shall, pursuant to written standing instructions from the Company, invest such
funds overnight in Eligible Investments until further written instructions are
received from the Company and the Trustee shall incur no liability with respect
to such investments in Eligible Investments. All such Eligible Investments shall
be maintained in the name of the Trustee and pledged to the Trustee to be held
by it or on its behalf as part of the SENs Collateral hereunder, and the Trustee
shall be authorized to endorse any of such Eligible Investments in a manner
satisfactory to it, on behalf of the Company. The Trustee may rely conclusively
and shall be fully protected, as provided in Article Seven in its reliance on
written investment instructions given by a Responsible Officer or a Person
designated by such Responsible Officer. All earnings on Eligible Investments
shall be credited to the SENs Collateral Account or the SENs Reserve Account, as
the case may be, upon receipt thereof by the Trustee. Whenever the Trustee is
required to make any payment or transfer under this Indenture, the Trustee shall
have the right, and is hereby irrevocably authorized, to sell or otherwise
liquidate any Eligible Investments to the extent necessary to make such payment
or transfer and shall have no liability for and shall be fully protected from
and against any losses incurred in connection with such sale or liquidation.
SECTION 405. EXCLUDED EXPORT RECEIVABLES. The Company agrees
that it shall not exclude Receivables pursuant to clause 2(x) of Section 2.02(b)
of the Collateral Trust Agreement, if after giving effect to such exclusion, on
a pro forma basis, a Trigger Event would have occurred as of the most recent
month end under Section 601(a)(i) or (ii) if such Receivables (and the
Collections therefrom) had been excluded as of the first day of the three-month
and six-month period referred to in Sections 601(a)(i) and (ii), respectively.
In connection with an exclusion pursuant to such clause 2(x), the Company shall
provide the Trustee with a certificate of a Responsible Officer at least five
Business Days prior to the date such exclusion is to become effective,
certifying to the calculations set forth in the immediately preceding sentence.
<PAGE> 59
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ARTICLE FIVE
SATISFACTION AND DISCHARGE
SECTION 501. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall upon a Company Request cease to be of further effect with
respect to any Series of SENs (except as to any surviving rights of registration
of transfer or exchange of SENs of such Series herein expressly provided for and
except as otherwise specifically provided in this Indenture) and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such Series when
(1) either
(A) all SENs of such Series theretofore authenticated
and delivered (other than (i) SENs of such Series which have
been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306, (ii) SENs of such Series for
whose payment money has theretofore been deposited in trust
with the Trustee or any Paying Agent) have been delivered to
the Trustee for cancellation; or
(B) all SENs of such Series not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) if redeemable at the option of the
Company, are to be called for redemption within one
year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Company,
and the Company or the Guarantor, in the case of (i), (ii) or
(iii) above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose an amount in Dollars sufficient to pay and discharge
the entire indebtedness on such SENs not theretofore delivered
to the Trustee for cancellation, for principal, premium, if
any, and Additional Amounts, if any, and interest to the date
of such deposit (in the case of SENs which have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company or the Guarantor has paid or caused to be paid
all other sums payable hereunder by the Company with respect to such
Series; and
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(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture as to such Series have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 706, the
obligations of the Company and the Guarantor to the Principal Paying Agent and
any other Paying Agent under Section 307(b), the obligations of the Trustee to
any Authenticating Agent under Section 713 and, if money shall have been
deposited with the Trustee pursuant to subclause (B) of clause (1) of this
Section, the obligations of the Trustee under Section 502 and the last paragraph
of Section 1203 shall survive.
SECTION 502. APPLICATION OF TRUST MONEY. Subject to the
provisions of the last paragraph of Section 1203, all money deposited with the
Trustee pursuant to Section 501 shall be held in trust and applied by it, in
accordance with the provisions of the SENs and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest
for whose payment such money has been deposited with the Trustee; but such money
need not be segregated by the Trustee from other funds except to the extent
required by law.
ARTICLE SIX
TRIGGER EVENTS; ACCELERATED AMORTIZATION EVENTS;
EVENTS OF DEFAULT; REMEDIES
SECTION 601. TRIGGER EVENTS.
(a) "Trigger Event", with respect to SENs of a particular Series
whenever used herein, means any one of the following events (whatever the reason
for such Trigger Event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body) and such other events as may be established with respect to the SENs of
such Series as contemplated in Section 301, continued for the period of time, if
any, and after the giving of notice, if any, designated in this Indenture or as
may be established with respect to such SENs as contemplated in Section 301, as
the case may be, unless such event is either inapplicable or is specifically
deleted or modified in, or pursuant to, the supplemental indenture under which
such Series of SENs is issued, as the case may be as contemplated in Section
301:
(i) as of the last day of any month falling at least three
months after the Issue Date for such Series, the ratio (the "Three
Month Ratio") of (x) aggregate Collections transferred to the SENs
Collateral Account with respect to such Series during the three
calendar months ending on such day to (y) the sum of all scheduled
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payments of principal of, and interest (including Additional Amounts)
on, such Series during the three calendar months ending on such day
shall be less than the Three Month Debt Service Coverage Ratio;
(ii) as of the last day of any month falling at least six
months after the Issue Date for such Series, the ratio (the "Six Month
Ratio") of (x) aggregate Collections transferred to the SENs Collateral
Account with respect to such Series during the six calendar months
ending on such day to (y) the sum of all scheduled payments of
principal of, and interest (including Additional Amounts) on, such
Series during the six calendar months ending on such day shall be less
than the applicable Six Month Debt Service Coverage Ratio;
(iii) An Event of Default described in clauses (i) or (xi) of
Section 603 shall have occurred and be continuing;
(iv) the Guarantor shall fail to comply with Section 1204 or
1205;
(v) the Guarantor or the Company shall fail to comply with
Section 901 or Section 1210;
(vi) the Guarantor or the Company shall fail to comply with
Section 1211 and such failure shall continue unremedied (A) for a
period of 10 days, if the Company or the Guarantor shall create, incur
or assume any Lien in violation of such Section, or (B) for a period of
45 days, if the Company or the Guarantor shall permit to exist any
Liens in violation of such Section, in each case after the earlier of
(x) the date a Company Notice shall have been given or (y) the date a
Responsible Officer of the Company shall have acquired actual knowledge
of such failure;
(vii) Any Event of Default described under subsection (viii)
of Section 603 shall have occurred and be continuing;
(viii) The Collateral Trustee ceases for any reason to have a
perfected first priority security interest in the Collateral, other
than Liens of the type set forth in clauses (iii), (viii) and (ix) of
the definition of "Permitted Liens", or the Trustee ceases for any
reason to have a perfected first priority security interest in the SENs
Collateral relating to such Series, other than Liens in favor of the
Collateral Trustee pursuant to the Collateral Trust Agreement and Liens
of the type set forth in clauses (iii), (viii) and (ix) of the
definition of "Permitted Liens", and any such cessation is not cured,
or Adequate Substitute Collateral is not provided, within 5 days after
the earlier of (x) the date a Company Notice shall have been given or
(y) the date a Responsible Officer of the Company shall have acquired
actual knowledge of such default; the requirement to provide "Adequate
Substitute Collateral" shall be deemed satisfied if (i) the Company
designates, in accordance with Section 2.04 of the Collateral Trust
Agreement, an Additional Percentage interest in the Export Receivables
for the benefit of such Series of SENs (thereby increasing the SENs
Total Collateral Percentage) equal to such percentage as may be
necessary to ensure that
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such Series of SENs will maintain the same interest (on a contracted
tonnage basis) in the Export Receivables (calculated without including
the Export Receivables as to which priority or perfection has ceased)
as such Series of SENs would have had but for the cessation of
perfection or priority or (ii) the Company shall provide such other
additional collateral to the Holders as may be in an amount and form
satisfactory to Holders of 51% or more of the aggregate principal
amount of the Outstanding SENs of such Series;
(ix) An Event of Default described in clause (x) of Section
603 shall have occurred and be continuing;
(x) On any date the Collateral Trustee shall fail to have
received fully executed Acknowledgements from the Company's customers
party to Export Contracts representing customers obligated to purchase
at least 80% of the aggregate amount of the Copper measured on a
tonnage basis, subject to all such Export Contracts on such date and
such failure shall continue for a period of 180 days (as measured on
the same basis during such 180 day period except the foregoing
calculation on each day during such period shall be made based on the
contracts in effect on such day); and
(xi) Any Governmental Authority of the Republic of Peru shall
have enacted any rule, regulation or law or taken any other action
which imposes restrictions on the free access to foreign exchange
affecting the Company, the Guarantor or the Peruvian Branch or which
prohibits the payment of Export Receivables into the Collection Account
and such rule, regulation, law or action shall have a Material Adverse
Effect.
(b) (i) Upon the occurrence and during the continuance of any
of the Trigger Events specified in clauses (a)(i), (a)(ii) or (a)(iii), the
Trustee on each Business Day shall retain in the SENs Collateral Account for
such Series the applicable Blocked Percentage of the Excess Collections on such
Business Day (the "Blocked Collections") as additional collateral for the SENs
of such Series.
(ii) Upon the occurrence and during the continuance of any of
the Trigger Events specified in clauses (a)(iv), (a)(v), (a)(vi),
(a)(vii), (a)(ix), (a)(x) or (a)(xi), the Trustee, if so directed by
Holders of 51% or more of the aggregate principal amount of the
Outstanding SENs of such Series, shall retain the Blocked Collections
in the SENs Collateral Account for such Series as additional collateral
for the SENs of such Series. Upon the occurrence and during the
continuance of any Trigger Event specified in clause (a)(viii), the
Trustee may and, if directed by holders of 51% or more of the aggregate
principal amount of the Outstanding SENs of such Series, shall, retain
the Blocked Collections in the SENs Collateral Account as additional
collateral for the SENs of such Series.
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(iii) A Trigger Event in respect of any Series may be
rescinded or waived by the affirmative vote of Holders of 51% or more
of the aggregate principal amount of the Outstanding SENs of such
Series.
(c) Except as provided in this paragraph (c), a Trigger Event
shall be deemed cured and not continuing if the event giving rise to such
Trigger Event is no longer continuing and the Company or the Guarantor has
provided the Trustee with a certificate of a Responsible Officer to such effect.
A Trigger Event under clause (a)(i) or (a)(ii) above shall be deemed cured and
not continuing if on the last day of any month (x) the Three Month Ratio for
such Series of SENs with respect to the immediately preceding period of three
months is at least equal to the applicable Three Month Debt Service Coverage
Ratio and (y) the Six Month Ratio for such Series of SENs with respect to the
immediately preceding period of six months is at least equal to the applicable
Six Month Debt Service Coverage Ratio and the Company or the Guarantor has
provided the Trustee with a certificate of a Responsible Officer to such effect.
A Trigger Event specified in clause (a)(iv) shall be deemed cured and not
continuing on the later of (x) the last day of a period of six months during
which Blocked Collections are retained in such SENs Collateral Account if on
such day such SENs Collateral Account contains an amount at least equal to the
principal and interest due for the next six Payment Dates under the SENs of such
Series (the "Six Month Debt Reserve Amount") and (y) the day on which the SENs
Collateral Account contains at least the Six-Month Debt Reserve Amount and the
Company or the Guarantor has provided the Trustee with a certificate of a
Responsible Officer to such effect; provided that in the case of a Trigger Event
specified in clause (a)(iv), if the Holders have elected the action set forth in
clause (ii) or (iii) of paragraph (d) below, a Trigger Event shall be deemed to
be continuing and not cured until the Guarantor is in compliance with Sections
1204 or 1205, as the case may be.
(d) Within 20 days of the day on which a Trigger Event under
clause (a)(iv) is deemed cured, the Trustee shall call a meeting of Holders of
the SENs of such Series at which the Holders shall be requested to vote to
direct the Trustee by a vote of the Holders of 51% or more of the aggregate
principal amount of the Outstanding SENs of such Series, (i) to apply the
Six-Month Debt Reserve Amount to the ratable prepayment of the SENs at the
redemption price set forth in Article Thirteen or a Supplemental Indenture
hereto or in such SEN or (ii) to declare that such Trigger Event constitutes an
Accelerated Amortization Event or (iii) to declare that such Trigger Event
constitutes an Event of Default or (iv) to release all Blocked Collections in
the SENs Collateral Account for such Series to the Company. Following the
application or release of funds under clause (i) or (iv) above, no further
breaches of Sections 1204 or 1205 shall form the basis of another Trigger Event
until such time as (x) in the case of a breach of Section 1204, Consolidated
Tangible Net Worth of the Guarantor is at least equal to US$875,000,000
following the breach of the covenant that gave rise to the Trigger Event, and
(y) in the case of a breach of Section 1205, the Capitalization Ratio of the
Guarantor is no greater than 50% following the breach of the covenant that gave
rise to the Trigger Event.
(e) On the date on which a Trigger Event is cured as specified
in paragraph (c) above (other than a Trigger Event set forth in clause (a)(iv)
above in which
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case the provisions of paragraph (d) of this Section 601 shall apply) the
amounts of Blocked Collections in the SENs Collateral Account shall be paid to
the Company.
SECTION 602. ACCELERATED AMORTIZATION EVENT; APPLICATION OF
FUNDS.
With respect to SENs of any Series, except as may be otherwise
specified in the Supplemental Indenture for the SENs of such Series, if (1) a
Trigger Event as set forth in subsection (a)(i) or (a)(ii) of Section 601 with
respect to such Series shall occur and not be cured within twelve months of the
occurrence thereof, an accelerated amortization event shall automatically occur
or (2) a Trigger Event as set forth in subsection (a)(vii) of Section 601 with
respect to such Series shall occur and be continuing and Holders of 51% or more
of the aggregate principal amount of the Outstanding SENs of such Series have
affirmatively voted (in a vote conducted separately from the vote taken to
direct the Trustee to retain Blocked Collections pursuant to Section 601(b)(ii))
to declare that such event constitutes an accelerated amortization event (in
each case, together with any Accelerated Amortization Event declared pursuant to
Section 601(d)(ii), an "Accelerated Amortization Event"), on each Payment Date
following the occurrence and continuance of an Accelerated Amortization Event,
the Company or the Guarantor shall be obligated to redeem the SENs of such
Series, together with a Make-Whole Premium on the amount redeemed, in an amount
equal to the amount on deposit in the SENs Collateral Account for such Series on
the day immediately preceding such Payment Date, after giving effect to the
payments set forth in clauses (2)(A) and (B), and clause (4)(i) through (iv) of
Section 402, minus the amount of the Make-Whole Premium with respect to such
redemption. An Accelerated Amortization Event with respect to any Series of SENs
may be rescinded or waived by affirmative vote of the Holders of 51% or more of
the aggregate principal amount of the Outstanding SENs of such Series. Following
the cure of the Trigger Event which gave rise to such Accelerated Amortization
Event, the resulting Accelerated Amortization Event shall be deemed cured and
there will be no further redemption of SENs of such Series resulting from such
Trigger Event.
SECTION 603. EVENTS OF DEFAULT. "Event of Default", with
respect to SENs of a particular Series whenever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) and such other events as
may be established with respect to the SENs of such Series as contemplated in
Section 301, continued for the period of time, if any, and after the giving of
notice, if any, designated in this Indenture or as may be established with
respect to such SENs as contemplated in Section 301, as the case may be, unless
such event is either inapplicable or is specifically deleted or modified in, or
pursuant to, the supplemental indenture under which such Series of SENs is
issued, as the case may be as contemplated in Section 301:
(i) default in the payment of any principal or premium, if
any, due on the SENs of such Series, whether at maturity, redemption or
otherwise, or default by the Company in the payment of any interest or
any Additional Amounts due on any SEN of such Series within five
business days of its scheduled payment date; or
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(ii) default in the performance or breach by the Guarantor of
any covenant set forth in Sections 1204 or 1205, and such default shall
result in a vote to declare such default an Event of Default pursuant
to Section 601(d)(iii); or
(iii) default by the Company or the Guarantor in the
performance or observance of any term, covenant or obligation contained
in Section 901 or Section 1210; or
(iv) default in the performance or breach by the Company or
the Guarantor, as the case may be, of: (a) any covenant set forth in
Sections 803, 1206, 1207, or 1209 and such failure shall continue
unremedied for a period of 45 days following the date a Company Notice
shall have been given (except that in the case of a failure to comply
with Section 803(4), such failure need only continue for a period of 10
days after the earlier of (x) the date a Company Notice shall have been
given or (y) the date a Responsible Officer of the Company shall have
acquired actual knowledge of such default), (b) the covenant contained
in Section 1211 and such failure shall continue unremedied (A) for a
period of 10 days, if the Company shall create, incur or assume any
Lien in violation of such covenant, or (B) for a period of 45 days, if
the Company shall permit to exist any Lien in violation of such
covenant, in each case after the earlier of (x) the date a Company
Notice shall have been given or (y) the date a Responsible Officer of
the Company shall have acquired actual knowledge of such default; (c)
the covenant contained in Section 1218 and such failure shall continue
unremedied (A) for a period of 15 days, with respect to the failure to
take any action required to be taken within the United States, or (B)
for a period of 45 days, with respect to the failure to take any action
required to be taken outside of the United States, after the earlier of
(x) the date a Company Notice shall have been given or (y) the date a
Responsible Officer of the Company shall have acquired actual knowledge
of such default; or (d) any other term, covenant or obligation of the
Company or the Guarantor with respect to the SENs of such Series in the
Collateral Trust Agreement, this Indenture, the Supplemental Indenture
relating to such Series, the SENs of such Series and the Guarantees
endorsed thereon not otherwise expressly defined as an Event of Default
in (i), (ii), (iii), or (iv)(a)(b) or (c) above for a period of more
than 60 days after the earlier of (x) the date a Company Notice shall
have been given or (y) the date a Responsible Officer of the Company
shall have acquired actual knowledge of such default; or
(v) any of the representations and warranties of the Company
or the Guarantor in any Transaction Document to which it is a party is
untrue or incorrect in any material respect on the date when made or
deemed made and shall not have been remedied within 45 days after a
Company Notice shall have been given; or
(vi) (a) there shall be commenced against the Guarantor, the
Company or any of their respective Material Subsidiaries, or the
Peruvian Branch, any case, proceeding or other action of a nature
referred to in clause (vii)(a) below which (A) results in the entry of
an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days,
or (b)
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53
there shall be commenced against the Guarantor, the Company or any of
their Material Subsidiaries, or the Peruvian Branch, any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (c) the
Guarantor, the Company or any of their respective Material
Subsidiaries, or the Peruvian Branch, shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (a) or (b) above;
or (d) the Guarantor, the Company or any of their respective Material
Subsidiaries, or the Peruvian Branch, shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(vii) the Guarantor, the Company or any of their respective
Material Subsidiaries, or the Peruvian Branch, shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or the Guarantor,
the Company or any of their respective Material Subsidiaries, or the
Peruvian Branch, shall make a general assignment for the benefit of its
creditors; or
(viii) the Company or the Guarantor shall fail to deliver a
Notice and Acknowledgment to any customers located outside of Peru
under Export Contracts for the purchase of Copper if such failure is
attributable to an intention by the Company or the Guarantor to avoid
the security arrangements described herein and in the Collateral Trust
Agreement and such failure shall continue unremedied for a period of 10
days after the earlier of (x) the date a Company Notice shall have been
given or (y) the date a Responsible Officer of the Company shall have
acquired actual knowledge of such default; or
(ix) the Collateral Trustee ceases for any reason to have a
perfected first priority security interest in the Collateral, other
than Liens of the type set forth in clauses (iii), (viii) and (ix) of
the definition of "Permitted Liens", or the Trustee ceases for any
reason to have a perfected first priority security interest in the SENs
Collateral relating to such Series, other than Liens of the type set
forth in clauses (iii), (viii) and (ix) of the definition of "Permitted
Liens", and any such cessation is not cured, or Adequate Substitute
Collateral (within the meaning of Section 601(a) (viii) hereof) is not
provided, within 30 days after the earlier of (x) the date a Company
Notice shall have been given or (y) the date a Responsible Officer of
the Company shall have acquired actual knowledge of such default; or
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54
(x) the Company or the Guarantor shall (a) default in the
payment of the principal of or interest on, any note, bond, or other
instrument evidencing Debt aggregating (without duplication) in excess
of $30 million (other than the SENs of such Series) issued, assumed or
guaranteed by it, when and as the same shall become due and payable, if
such default shall continue for more than the period of grace, if any,
originally applicable thereto, or (b) default in the observance of any
other terms and conditions relating to any such Debt, if the effect of
such default is to cause such Debt to become due prior to its stated
maturity other than as a result of a Mandatory Prepayment Event; or
(xi) any Governmental Authority of the Republic of Peru shall
have condemned, nationalized, seized, or otherwise expropriated (for a
period greater than 60 days) all or substantially all of the Property
of the Company or the Guarantor; or
(xii) it becomes unlawful for the Company or the Guarantor to
perform any of its obligations under the Indenture, the SENs of such
Series or the Guarantees endorsed thereon or this Indenture if the
failure to so perform would result in a Material Adverse Effect; the
SENs of such Series, or the Guarantees endorsed thereon, cease to be
valid, binding and enforceable in accordance with their terms or the
binding effect or enforceability thereof shall be contested by the
Company or the Guarantor; or the Company or the Guarantor shall deny in
writing or by public announcement that it has any further liability or
obligation hereunder or in respect hereof.
SECTION 604. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default (other than an Event of Default specified in
subparagraph (vi) and (vii) above) occurs and is continuing with respect to the
SENs of any Series, then and in every such case the Holders of not less than 51%
in aggregate principal amount of the Outstanding SENs of such Series may declare
the principal amount of all the SENs of such Series to be due and payable
immediately, by a notice in writing to the Company, the Guarantor and to the
Trustee, and upon any such declaration such principal amount and any accrued
interest shall become immediately due and payable; provided, however, that if
any of the foregoing Events of Default constituted a Trigger Event, the holders
of the SENs shall conduct a vote (separate from the vote taken to direct the
Trustee to retain Blocked Collections, unless no vote was taken in connection
with a Trigger Event described in clause (a)(viii) of Section 601) to so declare
the SENs due and payable. If an Event of Default specified in subparagraph (vi)
or (vii) above occurs, the principal of and any accrued interest on all the SENs
of such Series then Outstanding shall become immediately due and payable, and
without presentment, demand, protest or notice of any kind all of which are
hereby expressly waived by the Company. In addition, immediately upon the SENs
of a Series becoming or being declared due and payable, 100% of all Collections
deposited in the SENs Collateral Account for such Series shall be retained
therein and applied in accordance with the provisions of Section 608.
At any time after a declaration of acceleration with respect
to SENs of any Series has been made and before a judgment or decree for payment
of the money due has
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been obtained by the Trustee as hereinafter in this Article provided, a decision
made by the affirmative vote of the Holders of not less than a majority in
aggregate principal amount of the Outstanding SENs of that Series may rescind
and annul such declaration and its consequences if:
(1) the Company or the Guarantor has paid or deposited with
the Trustee a sum sufficient to pay in Dollars (except as otherwise
specified pursuant to Section 301 for the SENs of such Series),
(A) all overdue interest on all Outstanding SENs of
that Series (or of all Series, as the case may be),
(B) all unpaid principal of, premium, if any, and
Additional Amounts, if any, on any Outstanding SENs of that
Series (or of all Series, as the case may be) which has become
due otherwise than by such declaration of acceleration, and
interest on such unpaid principal at the rate or rates
prescribed therefor in such SENs,
(C) to the extent that payment of such interest is
lawful, interest on overdue interest at the rate or rates
prescribed therefor in such SENs, and
(D) all sums paid or advanced by the Trustee and the
Collateral Trustee hereunder and under the Collateral Trust
Agreement for the benefit of the Holders of SENs of such
Series and the reasonable compensation, expenses,
disbursements and advances of the Trustee and the Collateral
Trustee, their agents and counsel for the benefit of the
Holders of SENs of such Series; and
(2) all Events of Default with respect to SENs of that Series
(or of all Series, as the case may be), other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on SENs of
that Series (or of all Series, as the case may be) which have become
due solely by such declaration of acceleration, have been cured or
waived as provided in Section 615.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
The foregoing provisions shall be without prejudice to the
rights of each individual Holder to initiate an action against the Company or
the Guarantor for the payment of any principal, premium if any, Additional
Amounts and/or interest past due on any SEN, as the case may be.
SECTION 605. COLLECTION OF DEBT AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if:
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(1) default is made in the payment of any installment of
interest on any SEN as and when such interest becomes due and payable
and such default continues for a period of thirty (30) days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any SEN at the Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such SENs, the whole amount then due and payable on
such SENs for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such SENs, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company, the Guarantor or any other obligor upon
such SENs and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or the Guarantor or any other
obligor upon such SENs, wherever situated.
If an Event of Default with respect to SENs of any Series (or
of all Series, as the case may be) occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders of SENs of such Series (or of all Series, as the case may be) by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Notwithstanding anything to the contrary in this Indenture,
any Supplemental Indenture or any Transaction Document, no Realization Event and
no direction of Collections to an account other than the Collection Account may
be effected except in accordance with the Collateral Trust Agreement.
SECTION 606. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or the Guarantor or any other obligor upon
the SENs or the Property of the Company or the Guarantor or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the SENs shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company or the Guarantor for the payment of overdue principal premium, if
any, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
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(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the SENs and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding,
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the SENs of any Series in any election
of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or of a
person performing similar functions in comparable proceedings, and
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 706.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
SENs or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding, except, as aforesaid,
to vote for the election of a trustee in bankruptcy or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or of a person performing similar functions in comparable
proceedings.
SECTION 607. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SENS. All rights of action and claims under this Indenture, the SENs or the
Guarantees may be prosecuted and enforced by the Trustee without the possession
of any of the SENs or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the SENs in respect of which such judgment has
been recovered.
SECTION 608. APPLICATION OF MONEY COLLECTED. Any money
collected by the Trustee pursuant to this Article (other than pursuant to
Sections 601 and 602) shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
SENs, and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
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First: To the payment of all amounts due the Trustee under
Section 706;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the SENs in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such SENs for principal
(and premium, if any) and interest, respectively, and the payment of
any other SENs Secured Obligations relating to such SENs; and
Third: The balance, if any, to the Company.
SECTION 609. LIMITATION ON SUITS. Except as provided in the
last paragraph of Section 604, no Holder of any SEN of any Series shall have any
right to institute any proceeding, judicial or otherwise at law or in equity or
in bankruptcy, upon or under or with respect to this Indenture, or for the
appointment of a receiver or trustee in bankruptcy or other similar official, or
for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the SENs of
that Series;
(2) the Holders of not less than 51% in principal amount of
the Outstanding SENs of that Series shall have made written request to
the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for sixty (60) days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding, and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority or more in principal amount of the Outstanding SENs of that
Series;
it being understood and intended and being expressly covenanted by the Holders
of every SEN with every other Holder and the Trustee, that no one or more
Holders of SENs shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the
rights of any other Holder of SENs of the same Series, or to obtain or to seek
to obtain priority or preference over any other Holder or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable and common benefit of all Holders of SENs of the same Series. For the
protection and enforcement of the provisions of this Section, each Holder and
the Trustee shall be entitled to such relief as can be given at law or in
equity.
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SECTION 610. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision in this
Indenture, the Holder of any SEN shall have the right, which is absolute and
unconditional, to receive payment, as provided herein (including, if applicable,
Article Fifteen) and in such SEN, of the principal of (and premium, if any, on)
and interest on, such SEN on the Stated Maturity expressed in such SEN (or, in
the case of redemption, on the Redemption Date), including any interest accrued
on any grace period provided in Section 603(i), and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 611. RESTORATION OF RIGHTS AND REMEDIES. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Guarantor, the Trustee and the Holders of SENs
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights, remedies and powers of the Company, the Guarantor,
the Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 612. RIGHTS AND REMEDIES CUMULATIVE. Except as any
rights or remedies may be limited by the Collateral Trust Agreement and except
as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen SENs in the last paragraph of Section 306, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders of
SENs is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 613. DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Trustee or of any Holder of any SEN to exercise any right or
remedy accruing pursuant to this Article shall impair any such right or remedy
or constitute a waiver of any Trigger Event, Accelerated Amortization Event or
Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 614. CONTROL BY HOLDERS. Except as may be limited by
the Collateral Trust Agreement, with respect to the SENs of any Series, the
Holders of not less than 51% in principal amount of the Outstanding SENs of such
Series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, provided that (i) such direction shall not be
in conflict with any rule of law, and (ii) such Holders have provided the
Trustee with reasonable indemnity against the costs, expenses and liabilities to
be incurred in following such direction and that direction shall not be
otherwise than in
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accordance with law and the provisions of this Indenture and provided, further,
that (subject to the requirements of the Trust Indenture Act) the Trustee shall
have the right to decline to follow any such direction if the Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith by a Responsible
Officer of the Trustee shall determine that the action or proceedings so
directed would involve the Trustee in personal liability or if the Trustee in
good faith shall so determine that the actions or forbearances specified in or
pursuant to such direction would be unduly prejudicial to the interests of
Holders so affected not joining in the giving of said direction, it being
understood that (subject to Section 701) the Trustee shall have no duty to
ascertain whether or not such actions or forbearances are unduly prejudicial to
such Holders.
Nothing in this Indenture shall impair the right of the
Trustee in its discretion to take any action deemed proper by the Trustee and
which is not inconsistent with such direction or directions by Holders of SENs
or the Transaction Documents.
SECTION 615. WAIVER OF PAST DEFAULTS. The Holders of not less
than a majority in principal amount of the Outstanding SENs of any Series may on
behalf of the Holders of all the SENs of such Series waive any past default,
except a default in respect of a covenant or provision hereof that cannot be
modified or amended without the unanimous affirmative vote of each Holder
affected as provided in Section 1002.
Upon any such waiver, any such default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 616. WAIVER OF STAY OR EXTENSION LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 617. TRUSTEE TO GIVE NOTICE OF TRIGGER EVENT,
ACCELERATED AMORTIZATION EVENT OR DEFAULT, BUT MAY WITHHOLD IN CERTAIN
CIRCUMSTANCES. Immediately after receipt of written notice of, but in no event
more than ninety (90) days after a Responsible Officer assigned to the Corporate
Trust Office of the Trustee obtains actual knowledge of, the occurrence of any
Potential Trigger Event, Trigger Event, Accelerated Amortization Event or
Default hereunder with respect to SENs of any Series (or of all Series, as the
case may be), the Trustee shall transmit by mail to all Holders of such Series
(or of all Series, as the case may be) as their names shall appear on the
Security Register, in the manner and to the extent provided in TIA Section
313(c), notice of such Potential Trigger Event, Trigger Event, Accelerated
Amortization Event or Default
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hereunder, unless such Potential Trigger Event, Trigger Event, Accelerated
Amortization Event or Default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of, or interest or Additional Amounts, if any, or premium, if any, on any SEN,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interest of the Holders. In addition, promptly upon
receipt of notice of, but in no event more than fifteen days after receipt of
notice of, the occurrence of a Trigger Event with respect to SENs of any Series
(other than a Trigger Event which becomes a Blocking Event without any action by
the Holders), the Trustee shall either call a meeting of Holders of SENS of such
Series or otherwise solicit votes of such Holders for purposes of deciding
whether such Holders will take any action under Section 601(b)(ii) with respect
to such Trigger Event; provided that the Company may elect to call such meeting
or solicit votes on its own by giving notice to the Trustee within 5 days of
giving the Trustee notice of such Trigger Event and if the Company so elects it
shall call such meeting or solicit votes in the time period set forth above.
SECTION 618. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, a court
may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act; provided that
neither this Section nor the Trust Indenture Act shall be deemed to authorize
any court to require such an undertaking or to make such an assessment in any
suit instituted by the Company or Trustee.
ARTICLE SEVEN
THE TRUSTEE
SECTION 701. DUTIES AND RESPONSIBILITIES OF THE TRUSTEE;
DURING DEFAULT; PRIOR TO DEFAULT. (a) With respect to the Holders of SENs of any
Series issued hereunder, the Trustee, prior to the occurrence of a Trigger
Event, Accelerated Amortization Event or Event of Default with respect to the
SENs of such Series of which a Responsible Officer of the Trustee has actual
knowledge and after the curing or waiving of all such Trigger Events,
Amortization Events or Events of Default which may have occurred with respect to
the SENs of such Series, undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture. In case a Trigger Event,
Accelerated Amortization Event or Event of Default with respect to the SENs of
such Series has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture in respect
of the SENs of such Series, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
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(b) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:
(i) prior to the occurrence of a Trigger Event, Accelerated
Amortization Event or Event of Default with respect to the SENs of any
Series and after the curing or waiving of all such Trigger Events,
Amortization Events or Events of Default with respect to the SENs of
such Series which may have occurred and of which a Responsible Officer
of the Trustee has actual knowledge:
(A) the duties and obligations of the Trustee with
respect to the SENs of such Series shall be determined solely
by the express provision of this Indenture, and the Trustee
shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(B) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders pursuant to Section 614 relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
(c) None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.
SECTION 702. CERTAIN RIGHTS OF TRUSTEE. Subject to the
provisions of Section 701:
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(1) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting in reliance upon any
resolution, Officers' Certificate or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(2) any request, direction, order or demand of the Company or
the Guarantor mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order (with respect to the Company) or
Guarantor Request or Guarantor Order (with respect to the
Guarantor)(unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
of the Company or the Guarantor may be sufficiently evidenced to the
Trustee by a copy thereof certified by the Secretary or a Director of
the Company (with respect to the Company) or the Guarantor (with
respect to the Guarantor);
(3) the Trustee may consult with counsel of its selection and
any advice of counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(4) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders of SENs of any Series pursuant to
this Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(5) prior to the occurrence of a Trigger Event, Accelerated
Amortization Event or Event of Default hereunder and after the curing
or waiving of all Trigger Events, Accelerated Amortization Events or
Events of Default of which a Responsible Officer of the Trustee has
actual knowledge, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, appraisal, bond, debenture, security, or
other paper or document unless requested in writing so to do by the
Holders of not less than 25% of aggregate principal amount of all the
SENs of any Series affected then Outstanding; provided, that if the
payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity against such
expenses or liabilities as a condition to proceeding; and
(6) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys not regularly in its employ and the Trustee
shall not be responsible for any misconduct or
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negligence on the part of any agent or attorney appointed with due care
by it hereunder.
SECTION 703. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF SENS. Other than as specifically provided in the Trustee recitals of this
Indenture, the recitals contained herein and in the SENs, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company and the Guarantor, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of any
disclosure document or offerings materials or of the SENs or the Guarantees.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Company of SENs or the proceeds thereof.
SECTION 704. TRUSTEE MAY HOLD SENS. The Trustee, or any
Authenticating Agent, any Paying Agent, any Registrar or any other agent of the
Company or of the Trustee, in its individual or any other capacity, may become
the owner or pledgee of SENs with the same rights it would have if it were not
the Trustee or any Authenticating Agent, any Paying Agent, any Registrar or any
other agent of the Company or such agent and, subject to the requirements of the
Trust Indenture Act and Sections 708 and 712, if operative, may otherwise deal
with the Company and the Guarantor and receive, collect, hold and retain
collections from the Company and the Guarantor with the same rights it would
have if it were not the Trustee or any Authenticating Agent, any Paying Agent,
any Registrar or any other agent of the Company.
SECTION 705. MONEY HELD IN TRUST. Subject to the provisions of
Section 1203 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by law. Neither the Trustee nor any agent of the Company shall be under
any liability for interest on any moneys received by it hereunder except as
otherwise agreed with the Company.
SECTION 706. COMPENSATION AND INDEMNIFICATION OF TRUSTEE,
PAYING AGENT AND REGISTRAR AND ITS PRIOR CLAIM. (a) The Company covenants and
agrees to pay to the Trustee and to each Paying Agent and Registrar, and the
Trustee and each Paying Agent and Registrar shall be entitled to, such
compensation as set forth in any fee agreement between the Company and the
Trustee entered into in connection with the execution and delivery of this
Indenture by any party hereto or in connection with the issuance of any Series
of SENs (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) and the Company covenants and
agrees to pay or reimburse the Trustee and each Paying Agent and Registrar and
their respective predecessors upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of it in accordance
with any of the provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of their counsel and their
agents) except any such expenses, disbursement or advance as may arise from its
negligence or bad faith.
(b) The Company also covenants to indemnify the Trustee and
each Paying Agent and Registrar for, and to hold it harmless against, any and
all loss, liability, damage, claim or expense, including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of this Indenture or the trusts hereunder and its duties hereunder, including
any liability which the Trustee or Paying Agent may incur as a result of failure
to withhold, pay or report any tax, assessment or other governmental charge and
the costs and expenses of defending itself against or investigating any claim of
liability in the promises. The obligations of the Company under this Section to
compensate and indemnify the Trustee and each Paying Agent and Registrar and
their respective predecessors and to pay or reimburse the Trustee and each
Paying Agent and Registrar for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. References herein to the "Trustee" shall be
deemed to also refer to the Trustee acting in its capacity as Principal Paying
Agent.
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SECTION 707. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. The
Trustee shall at all times be a Person organized and doing business under the
laws of the United States or any State or the District of Columbia eligible to
act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least US$50,000,000. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 708. QUALIFICATION OF TRUSTEE; CONFLICTING INTERESTS.
If the Trustee has or shall acquire any conflicting interest within the meaning
of the TIA, the Trustee shall either eliminate such conflicting interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the TIA and this Indenture. To the extent permitted by the TIA,
the Trustee shall not be deemed to have a conflicting interest by virtue of
being a trustee under this Indenture with respect to SENs of more than one
Series.
SECTION 709. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
TRUSTEE OR CO-TRUSTEE. (a) The Trustee, or any Trustee or trustees hereafter
appointed, may at any time resign with respect to the SENs of one or more Series
by giving 90 days written notice of resignation to the Company and by mailing
written notice thereof by first-class mail, postage prepaid, to all Holders at
their last addresses as they shall appear on the Security Register. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees with respect to such Series by written instrument
in duplicate, executed by authority of the Board of Directors of the Company,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee or trustees. If no successor trustee shall have
been so appointed and have accepted appointment within thirty (30) days after
the mailing of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor trustee,
or any Holder who has been a bona fide Holder of a SEN or SENs for at
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least six months may, subject to the provisions of Section 618 and the Trust
Indenture Act, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In the case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provision of
Section 708 and TIA Section 310(b) after written request therefor by
the Company and the Guarantor, or by any Holder who has been a bona
fide Holder for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 708 and shall fail to resign after written
request therefor by the Company and the Guarantor, or by any Holder; or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Company may remove the Trustee with respect to all
or any Series of SENs and by written instrument, in duplicate, executed by order
of the Board of Directors of the Company, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or,
subject to the provisions of Section 709 and the Trust Indenture Act, any Holder
who has been a bona fide Holder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all SENs and the
appointment of a successor trustee.
The Company may, in its discretion, remove the Trustee with
respect to all or any Series of SENs by written instrument, in duplicate,
executed by order of the Board of Directors of the Company, one copy of which
instrument shall be delivered to the Trustee so removed, and one copy to the
successor trustee, provided that the appointment of a successor trustee with
respect to all or any Series of SENs pursuant to this paragraph will not take
effect unless (i) the Company gives written notice to the Trustee at least 45
days prior to the effective date of such appointment specifying (A) the name of
the successor trustee and (B) that the Holders of 51% or more of the aggregate
principal amount of Outstanding SENs of such Series have the right to vote
against the appointment of such successor trustee and to be effective such vote
must occur within 30 days of receipt of such notice by the Holders, (ii) the
Trustee or the Company provides a copy of such notice to the Holders of such
Series of SENs at least 30 days prior to the effective date of such appointment
and either calls a meeting of the Holders of such Series of SENs or otherwise
solicits votes of such Holders for the purpose of deciding whether such Holders
will take any action with respect to the appointment of the successor trustee
and (iii) the Holders of 51% or more of the aggregate principal amount of the
Outstanding SENs of such Series do not vote against the removal of the Trustee
within 30 days of receiving such notice from the Trustee or the Company.
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(c) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the SENs of one or more Series, the Company, by a
Board Resolution, shall promptly appoint a successor trustee or trustees with
respect to the SENs of that or those Series (it being understood that any such
successor trustee may be appointed with respect to the SENs of one or more or
all of such Series and that at any time there shall be only one Trustee with
respect to the SENs of any particular Series). If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor trustee with respect to the SENs of any Series shall be appointed by
Act of the Holders of a majority in principal amount of the Outstanding SENs of
such Series delivered to the Company and the retiring Trustee, the successor
trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor trustee with respect to the SENs of such Series and to that
extent supersede the successor trustee appointed by the Company. If no successor
trustee with respect to the SENs of any Series shall have been so appointed by
the Company or the Holders and accepted appointed in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security of such
Series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee with respect to the SENs of such Series.
(d) It is the purpose of this Indenture that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as an indenture
trustee in such jurisdiction. It is recognized that in case of litigation under
this Indenture, any indenture supplemental hereto or any other agreement,
instrument or document entered into in connection with this Indenture or any
Supplemental Indenture, and in particular in case of the enforcement of any
default, or in case the Trustee deems that by reason of any present or future
law of any jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee or hold title to any Property granted,
assigned, conveyed or otherwise transferred to the Trustee pursuant to any Lien
securing SENs of any Series, or take any other action which may be desirable or
necessary, the Trustee may appoint an additional institution as a separate
indenture trustee or co-trustee with respect to this Indenture or with respect
to the SENs of any Series issued pursuant to this Indenture. In the event that
the Trustee appoints an additional institution as a separate trustee or
co-trustee, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by this
Indenture to be exercised by or vested in or conveyed to the Trustee with
respect thereto shall be exercisable by and vest in such separate trustee or
co-trustee but only to the extent necessary to enable such separate indenture
trustee or co-trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate
trustee or co-trustee shall run to and be enforceable by either of them. Such
co-trustee may be removed by the Trustee at any time, with or without cause.
Should any instrument in writing from the Company be required by the separate
trustee or co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to it such properties, rights, powers, trusts, duties
and obligations, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Company. In case any separate
trustee or co-trustee, or a successor to either, shall become incapable of
acting, resign or be removed, all the estates, properties, rights, powers,
trusts, duties and obligations of such
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separate trustee or co-trustee, so far as permitted by law, shall vest in and be
exercised by the Trustee until the appointment of a new trustee or successor to
such separate trustee or co-trustee.
(e) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the SENs of any Series and each
appointment of a successor trustee or co-trustee with respect to the SENs of any
Series to the Holders of SENs of such Series in the manner provided for in
Section 106 and to the Rating Agencies. Each notice shall include the name of
the successor trustee or co-trustee with respect to the SENs of such Series and
the address of its Corporate Trust Office.
(f) The Holders of a majority in aggregate principal amount of
Outstanding SENs of any Series may at any time remove the Trustee or any
co-trustee and appoint a successor trustee or co-trustee by delivering to the
Trustee or co-trustee so removed, to the successor trustee or co-trustee so
appointed and to the Company the evidence provided for in Section 104 of the
action in that regard taken by the Holders.
(g) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to any of the provisions of this
Section 709 shall become effective until the acceptance of appointment by the
successor trustee as provided in Section 710.
SECTION 710. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In
case of the appointment hereunder of a successor trustee with respect to all
SENs, every such successor trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
trustee with respect to the SENs of one or more (but not all) Series, the
Company, the Guarantor, the retiring Trustee and each successor trustee with
respect to the SENs of one or more Series shall execute and deliver a
Supplemental Indenture wherein each successor trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor trustee all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the SENs of that or those Series to which the appointment of such successor
trustee relates, (2) if the retiring Trustee is not retiring with respect to all
SENs, shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the SENs of that or those Series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the
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administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such Supplemental Indenture shall
constitute such Trustees as co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such Supplemental Indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the SENs of that or those Series to
which the appointment of such successor trustee relates; but, on request of the
Company or the Guarantor, or any successor trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such retiring Trustee hereunder with respect to the SENs of that
or those Series to which the appointment of such successor trustee relates.
Whenever there is a successor trustee with respect to one or more (but less than
all) Series of SENs issued pursuant to this Indenture, the terms "Indenture" and
"SENs" shall have the meanings specified in the provisos to the respective
definitions of those terms in Section 101 which contemplate such situation. The
Trustee shall not be liable for the actions of any successor Trustee. The
Trustee shall be paid all amounts owing to it upon its resignation or removal.
(c) Upon request of any such successor trustee, the Company
and the Guarantor as required, shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
rights, powers and trusts referred to in paragraph (a) or (b) of this Section,
as the case may be.
(d) No successor trustee shall accept its appointment unless
at the time of such acceptance such successor trustee shall be qualified and
eligible under this Article.
SECTION 711. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder;
provided that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any SENs shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the SENs so authenticated with the same effect
as if such successor trustee had itself authenticated such SENs; and in case at
that time any of the SENs shall not have been authenticated, any successor
trustee may authenticate such SENs either in the name of any predecessor
hereunder or in the name of the successor trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the SENs or in
this Indenture; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate SENs in the name of
any predecessor trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
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SECTION 712. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. If and when the Trustee shall be or become a creditor of the Company or
the Guarantor (or any other obligor under the SENs), the Trustee shall be
subject to the provisions of the TIA regarding the collection of claims against
the Company or the Guarantor (or any such other obligor).
SECTION 713. APPOINTMENT OF AUTHENTICATING AGENT. At any time
when any of the SENs remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more Series of SENs which
shall be authorized to act on behalf of the Trustee to authenticate SENs of such
Series and the Trustee shall give written notice of such appointment to all
Holders of SENs of the Series with respect to which such Authenticating Agent
will serve, in the manner provided for in Section 106. SENs so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder. Any
such appointment shall be evidenced by an instrument in writing signed by a
Responsible Officer of the Trustee, and a copy of such instrument shall be
promptly furnished to the Company and the Guarantor. Wherever reference is made
in this Indenture to the authentication and delivery of SENs by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and the Guarantor and shall at all times be a
corporation organized and doing business under the laws of the United States,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than US$50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect specified in this Section.
Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any corporation succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee, the Company and the Guarantor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent, the Company and the
Guarantor. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee may
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appoint a successor Authenticating Agent which shall be acceptable to the
Company and the Guarantor and shall give written notice of such appointment to
all Holders of SENs of the Series with respect to which such Authenticating
Agent will serve, in the manner provided for in Section 106. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 706.
If an appointment with respect to one or more Series is made
pursuant to this Section, the SENs of such Series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the SENs of the Series designated therein
referred to in the within-mentioned Indenture.
Citibank, N.A., as Trustee
By
--------------------------------
as Authenticating Agent
By
--------------------------------
Authorized Officer
SECTION 714. REGISTRAR AND PAYING AGENTS. Insofar as such
provisions may be applicable, the Registrar, Principal Paying Agent and any
other Paying Agent shall enjoy without duplication the same protections,
immunities and indemnities as are provided for in this Article Seven with
respect to the Trustee.
ARTICLE EIGHT
HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTOR
SECTION 801. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of SENs, by receiving and holding the same, agrees with the
Company, the Guarantor and the Trustee that none of the Company, the Guarantor
or the Trustee or any agent of either of them shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders in accordance with TIA Section 312, regardless of the source from
which such information was derived, and that the Trustee
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shall not be held accountable by reason of mailing any material pursuant to a
request made under TIA Section 312(b).
SECTION 802. REPORTS BY TRUSTEE. (a) Within sixty (60) days
after May 15 of each year commencing with the first May 15 after the first
issuance of SENs pursuant to this Indenture, the Trustee shall transmit to the
Holders of SENs, in the manner and to the extent provided in TIA Section 313(c),
a brief report dated as of such May 15 if required by TIA Section 313(a). A copy
of each such report shall, at the time of such transmission to Holders, be filed
by the Trustee with each stock exchange upon which the SENs are listed, with the
Commission and with the Company and the Guarantor. The Company and the Guarantor
shall promptly notify the Trustee when any SENs are listed on any stock
exchange.
(b) The Trustee shall deliver to each Rating Agency a copy of
any written statement received from the Collateral Trustee listing
Acknowledgements received by the Collateral Trustee during the immediately
preceding calendar month.
(c) Upon receipt thereof, the Trustee shall provide copies to
each Rating Agency of all reports, notices and other documents that are provided
to the Trustee by the Company or the Guarantor pursuant to the provisions of
Section 803 hereof.
SECTION 803. REPORTS. The Company and the Guarantor shall:
(1) file with the Trustee, within thirty (30) days after the
Company and/or the Guarantor are required to file the same with the
Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company and the Guarantor may be
required to file with the Commission pursuant to Section 13 or Section
15(d) of the Exchange Act; or, if the Company and the Guarantor are not
required to file information, documents or reports pursuant to either
of such Sections, then they shall file with the Trustee and the
Commission in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a
security listed and registered on a national securities exchange as may
be prescribed from time to time in such rules and regulations (whether
or not the SENs of any Series are so listed);
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company and the Guarantor with the
conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations, but only to the extent the same
are not satisfied by delivery of the certificate required by clause (5)
below;
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(3) transmit or cause the Trustee to transmit to all Holders,
in the manner and to the extent provided in TIA Section 313(c), such
summaries of any information, documents and reports, if any, required
to be filed by the Company and the Guarantor pursuant to paragraphs (1)
and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission;
(4) furnish to the Trustee written notice of the occurrence of
any Trigger Event, Accelerated Amortization Event or Event of Default
or any event which after notice or lapse of time or both would become a
Trigger Event, Accelerated Amortization Event or Event of Default and a
description of the nature and period of existence thereof and the
action, if any, the Company is taking or proposes to take with respect
thereto within five Business Days of a Responsible Officer becoming
aware of any such event;
(5) furnish to the Trustee concurrently with the delivery of
quarterly and annual financial statements referred to in Section 803(1)
above, a certificate of a Responsible Officer of the Guarantor (i)
stating that, to the best of such Responsible Officers' knowledge,
during such period (A) neither the Guarantor nor the Company has
changed its name, its principal place of business or its chief
executive office without complying with the requirements of this
Indenture and the Transaction Documents with respect thereto and (B) no
Default, Potential Trigger Event, Trigger Event or Event of Default has
occurred which is then continuing except as specified in such
certificate and (ii) setting forth in reasonable detail the
calculations required to determine compliance with Sections 1204 and
1205 hereof and any other financial covenant set forth in the
Supplemental Indenture for such Series and not contained herein;
(6) furnish to the Trustee promptly following any request
therefor, such other information regarding the operations, business
affairs and financial condition of the Guarantor or the Company, or
compliance with the terms of this Indenture, as the Trustee may
reasonably request; and
(7) promptly notify the Rating Agencies of (x) any change in
the Collateral Trustee or the Trustee with respect to any Series of
SENs and (y) any transaction under Section 901 of the Indenture.
ARTICLE NINE
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 901. COMPANY AND GUARANTOR MAY CONSOLIDATE, ETC., ONLY
ON CERTAIN TERMS. Neither the Company nor the Guarantor shall enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets (including, in the case of the Guarantor, the Capital Stock
of the Company), except that (a) so long as no Default, Potential Trigger
<PAGE> 87
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Event, Trigger Event or Event of Default would result therefrom, the Guarantor
and the Company may merge, consolidate or amalgate with or into each other,
provided that, if the Guarantor is the surviving entity in such merger,
consolidation or amalgamation the Guarantor shall have complied with the
applicable requirements of clause (b)(ii) below, and (b) the Guarantor or the
Company may merge, consolidate or amalgamate with another Person if (i) no
Default, Potential Trigger Event, Trigger Event or Event of Default shall have
then occurred and be continuing or would result therefrom, (ii) the Guarantor or
the Company, as the case may be, is the surviving entity in such consolidation
or merger or, if such other Person is the surviving entity in such consolidation
or merger, such other Person (the "Successor Corporation") shall (A) be
organized under the laws of the United States of America or any State thereof
and shall expressly assume by a supplemental indenture satisfactory in form to
the Trustee executed and delivered to the Trustee by the Successor Corporation
the due and punctual payment of the principal of, premium, if any, and interest
and Additional Amounts, if any, on all of the SENs according to their terms,
and, in the case of a Successor Corporation to the Company, the due and punctual
performance of all of the covenants and obligations of the Company under the
SENs and the Indenture, and in the case of a Successor Corporation to the
Guarantor, the due and punctual performance of all of the covenants and
obligations of the Guarantor under the Guarantees and the Indenture and (B) the
Successor Corporation, if any, succeeds to and becomes substituted for the
Company or the Guarantor, as the case may be, with the same effect as if it had
been named in the SENs as the Company or in the Guarantees as the Guarantor and
(iii) the Trustee shall have received a certificate of a Responsible Officer of
the Guarantor or the Company, as the case may be, to the effect that each of the
conditions set forth in clauses (i) and (ii) above have been satisfied.
In the case of any such consolidation, merger or amalgamation,
such changes in phraseology and form (but not in substance) may be made in the
SENs thereafter to be issued as may be appropriate.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 1001. SUPPLEMENTAL INDENTURES WITHOUT VOTE OF HOLDERS.
Without the vote or approval of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, the Guarantor, when authorized by or pursuant to
a Board Resolution and the Trustee, at any time and from time to time, may enter
into one or more Supplemental Indentures, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the
Company or the Guarantor and the assumption by any such successor of
the covenants of the Company or the Guarantor contained herein, in the
SENs, or in the Guarantees or
<PAGE> 88
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(2) to add to the covenants of the Company or the Guarantor
for the benefit of the Holders of all or any Series of SENs (and if
such covenants are to be for the benefit of less than all Series of
SENs, stating that such covenants are being included solely for the
benefit of such Series) or to surrender any right or power herein
conferred upon the Company or the Guarantor; or
(3) to add any additional Trigger Events, Accelerated
Amortization Events or Events of Default (and applicable grace periods
with respect to such additional events and to specify the remedies
available to the Trustee upon the occurrence of any such additional
event) (and if such Trigger Events, Accelerated Amortization Events or
Events of Default are to be for the benefit of less than all Series of
SENs, stating that such Trigger Events, Accelerated Amortization Events
or Events of Default are being included solely for the benefit of such
Series); or
(4) to add to or change or eliminate any of the provisions of
this Indenture; provided that any such addition, change or elimination
shall neither apply to any SEN of any Series created prior to the
execution of such supplemental indenture and entitled to the benefits
of such provision nor modify the rights of the Holder of any such SEN
with respect to such provision and shall become effective with respect
to any particular Series of SENs only when there is no SEN Outstanding
of such Series created prior to the execution of such Supplemental
Indenture which is entitled to the benefit of such provision; or
(5) to secure the SENs or the Guarantees; or
(6) to establish the form or terms of SENs and the applicable
accounts of any Series as permitted by Sections 201 and 301, and
Article Four or of the related Guarantees as permitted by Section 203;
or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the SENs of one or
more Series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 709(d); or
(8) to close this Indenture with respect to the authentication
and delivery of additional Series of SENs; or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein or to make any other provisions with respect to
matters or questions arising under this Indenture; provided such action
shall not adversely affect the interests of the Holders of SENs of any
Series in any material respect; or
(10) to comply with requirements of the Commission in order to
effect or maintain the qualification under the TIA; or
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76
(11) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any Series of SENs pursuant to Sections
501, 1502 and 1503; provided that any such action shall not adversely
affect the interests of the Holders of SENs of such Series or any other
Series of SENs in any material respect.
SECTION 1002. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the Consent of the Holders of not less than 51% of the aggregate principal
amount of all Outstanding SENs of any Series, the Company, when authorized by or
pursuant to a Board Resolution, the Guarantor, when authorized by or pursuant to
a Board Resolution, and the Trustee may enter into a Supplemental Indenture or
Indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture which affect such Series
of SENs or of modifying in any manner the rights of the Holders of SENs of such
Series under this Indenture; provided, however, that no such Supplemental
Indenture shall, without the consent of the Holder of each Outstanding SEN of
such Series affected thereby,
(i) change the Stated Maturity of any installment of principal
of, or any installment of interest on, any SEN;
(ii) reduce the principal amount or rate of interest on or any
premium payable upon the redemption or prepayment of any SEN including
discharge of repayment of principal of or interest on any SEN;
(iii) reduce the percentage in principal amount of Outstanding
SENs of any Series the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iv) change the percentage rules established for the Holders
which are entitled to request the calling of a Holder's meeting,
adopting resolutions at meetings of Holders or regarding the quorum
necessary to constitute a meeting;
(v) modify any of the provisions of this Section and Section
614, except to increase any such percentage;
(vi) change the place for payment of principal of, or premium
or interest on, any SEN to a place outside of the United States of
America;
(vii) impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity thereof or any
Redemption Date or Repayment Date therefor; or
(viii) change the requirement to pay Additional Amounts.
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A Supplemental Indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular Series of SENs, or which
modifies the rights of the Holders of SENs of such Series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of SENs of any other Series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed Supplemental Indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 1003. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or accepting the additional trusts created by, any Supplemental
Indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
Supplemental Indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 1004. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any Supplemental Indenture under this Article, this Indenture shall
be modified in accordance therewith, and such Supplemental Indenture shall form
a part of this Indenture for all purposes; and every Holder of SENs theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 1005. CONFORMITY WITH TIA. Every Supplemental
Indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
SECTION 1006. REFERENCE IN SENS TO SUPPLEMENTAL INDENTURES.
SENs of any Series authenticated and delivered after the execution of any
Supplemental Indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such Supplemental Indenture. If the Company and the Guarantor
shall so determine, new SENs of any Series so modified as to conform, in the
opinion of the Trustee, the Company, and the Guarantor, to any such Supplemental
Indenture, may be prepared and executed by the Company (with the Guarantees
endorsed thereon by the Guarantor) and authenticated and delivered by the
Trustee in exchange for Outstanding SENs of such Series.
SECTION 1007. NOTICE OF SUPPLEMENTAL INDENTURES. Promptly
after the execution by the Company and the Trustee of any Supplemental Indenture
pursuant to the provisions of Section 1002, the Company shall give notice
thereof to the Holders of each Outstanding SEN affected, in the manner provided
for in Section 106, setting forth in general terms the substance of such
Supplemental Indenture. Any failure of the Company to give such notice, or any
defect therein, shall not, however, in any way, impair or affect the
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validity of any such Supplemental Indenture. The Trustee shall provide each
Rating Agency with a copy of each Supplemental Indenture.
ARTICLE ELEVEN
REPRESENTATIONS AND WARRANTIES
Each of the Company and the Guarantor represents and warrants
(as to itself) to the Trustee on the date hereof and for the benefit of the
holders of SENs of a Series on the Issue Date for such Series, as follows:
SECTION 1101. CORPORATE ORGANIZATION AND EXISTENCE. Each of
the Company and the Guarantor (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right (including under the
Concessions), to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged, and (c)
is duly qualified as a foreign corporation and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified and/or in good standing could not, in the aggregate reasonably
be expected to result in a Material Adverse Effect, and (d) is in compliance
with all Requirements of Law (other than Environmental Laws) except to the
extent that the failure to comply therewith would not, in the aggregate, result
in a Material Adverse Effect. All obligations of the Company under this
Indenture and the other Transaction Documents are also (without any further
action by the Company or the Peruvian Branch) obligations of the Peruvian
Branch, and such obligations, and the security interests created under the
Transaction Documents, are enforceable against the Peruvian Branch (and its
assets), subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditor's rights generally.
SECTION 1102. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. (a) The execution, delivery and performance by each of the
Company and the Guarantor of each of the Transaction Documents to which it is a
party are within each of the Company's and the Guarantor's corporate powers,
have been duly authorized by all necessary corporate action, and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation of each of the Company and the
Guarantor or of any material agreement or other material instrument binding upon
each of the Company or the Guarantor or result in the creation or imposition of
any Lien on any asset of each of the Company or the Guarantor, except for Liens
created by the Transaction Documents.
SECTION 1103. NO CONSENTS. No consent or authorization of,
approval by, notice to, filing with or other act by or in respect of, any
governmental authority or any other Person is required in connection with the
execution, delivery, performance, validity or enforceability of the Transaction
Documents, other than such as have been obtained and are
<PAGE> 92
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in full force and effect and except to the extent that the failure to obtain any
such consent or authorization, to make any such filing, give any such notice or
take any such action would not, in the aggregate, result in a Material Adverse
Effect.
SECTION 1104. BINDING EFFECT. Each of the Transaction
Documents (other than the SENs and the Guarantees thereon) to which the Company
is a party has been duly executed and delivered by the Company; and the SENs of
each Series and the Guarantees will be duly executed by the Company and the
Guarantor; and each constitutes a legal, valid and binding agreement (or in the
case of the SENs or the Guarantees, will constitute when executed and delivered,
a legal, valid and binding obligation) of the Company, enforceable in accordance
with its terms except as may be limited by bankruptcy, insolvency,
reorganization and other similar laws affecting the enforcement of creditors'
rights generally and general equitable principles (whether enforcement is sought
by proceedings in equity or at law).
SECTION 1105. [INTENTIONALLY OMITTED]
SECTION 1106. FINANCIAL STATEMENTS. The consolidated balance
sheet of the Guarantor and its consolidated subsidiaries as at December 31, 1996
and the related consolidated statements of earnings, cash flows and changes in
common stockholders' equity for the fiscal year ended on such date, reported on
by Coopers & Lybrand LLP, fairly present in all material respects the
consolidated financial position of the Guarantor and its consolidated
subsidiaries as at such date, and the consolidated results of their operations
and consolidated cash flows for the fiscal year then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with U.S. GAAP applied consistently throughout the
periods involved (except as disclosed therein).
SECTION 1107. PAYMENT OF TAXES. Each of the Company and the
Guarantor has filed or caused to be filed all tax returns which, to their
knowledge, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority, other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with U.S. GAAP have been provided
on the books of the Company and the Guarantor, as the case may be, and except to
the extent any such failure would not, individually or in the aggregate, result
in a Material Adverse Effect.
SECTION 1108. ENVIRONMENTAL MATTERS. Each of the Company and
the Guarantor is in compliance with the terms of the Environmental Laws to the
extent applicable to it from time to time, except to the extent that any failure
to so comply would not result in a Material Adverse Effect or such compliance is
being contested in good faith by appropriate proceedings.
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SECTION 1109. OWNERSHIP AND LEASES OF PRINCIPAL PROPERTIES.
The Company owns, or has valid and enforceable rights to use or operate, each of
the Principal Properties.
ARTICLE TWELVE
COVENANTS
SECTION 1201. PAYMENT OF PRINCIPAL AND INTEREST. The Company
covenants and agrees for the benefit of each Series of SENs that it will duly
and punctually pay the principal of and interest and Additional Amounts, if any,
and premium, if any, on the SENs of that Series in accordance with the terms of
SENs of such Series, this Indenture and any Supplemental Indenture.
SECTION 1202. MAINTENANCE OF OFFICE OR AGENCY. The Company
shall maintain in the Borough of Manhattan, The City of New York, and in each
Place of Payment specified for each Series of SENs, an office or agency where
SENs of that Series may be presented or surrendered for payment, where SENs of
that Series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the SENs of that
Series and this Indenture may be served.
The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the SENs of one or more Series may be presented
or surrendered for any or all such purposes and may from time to time rescind
any such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for SENs of any
Series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 1203. MONEY FOR SENS PAYMENTS TO BE HELD IN TRUST. The
Company will cause each Paying Agent (other than the Trustee) for any Series of
SENs to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any, on) and interest on SENs of such Series in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
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(2) give the Trustee notice of any default by the Company (or
any other obligor upon the SENs of such Series) in the making of any
payment of principal of (or premium, if any, on) or interest on the
SENs of such Series; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which sums were held by such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such sums.
Except as provided in the SENs of any Series, any money
deposited with the Trustee or any Paying Agent in trust for the payment of the
principal of (and premium, if any, on) or interest on any SEN of any Series, and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall be paid to the Company on Company
Request, or shall be discharged from such trust; and the Holder of such SEN
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in an Authorized Newspaper,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1204. CONSOLIDATED TANGIBLE NET WORTH. The Guarantor
shall not permit or cause its Consolidated Tangible Net Worth at any time to be
less than US$750,000,000.
SECTION 1205. CAPITALIZATION RATIO. The Guarantor shall not
permit or cause its Capitalization Ratio at any time to be greater than 0.50 to
1.00.
SECTION 1206. COMPLIANCE WITH LAWS AND PAMA.
(a) Each of the Company and the Guarantor shall comply with
all Requirements of Law (other than Environmental Laws) except where
(i) the failure to comply therewith would not result in a Material
Adverse Effect or (ii) the need to comply is being contested in good
faith by appropriate proceedings.
(b) Each of the Company and the Guarantor shall comply with
all applicable Environmental Laws and obtain and comply with and
maintain any and all licenses, authorizations, approvals,
notifications, registrations or permits required by applicable
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Environmental Laws, except where (i) the failure to do so would not
result in a Material Adverse Effect or (ii) the need to comply
therewith is being contested in good faith by appropriate proceedings.
SECTION 1207. CONDUCT OF BUSINESS AND MAINTENANCE OF
EXISTENCE. Each of the Company and the Guarantor shall continue to engage in
business of the same general type as now conducted by it and preserve, renew and
keep in full force and effect its corporate existence and maintain all material
rights, privileges, Concessions and franchises necessary or desirable in the
normal conduct of its business except as otherwise permitted pursuant to Article
Nine and except to the extent that the failure to maintain any such rights,
privileges, Concessions and franchises would not, individually or in the
aggregate, result in a Material Adverse Effect.
SECTION 1208. AGGREGATE PROGRAM OUTSTANDINGS AND ADDITIONAL
SECURED OBLIGATIONS; TOTAL COLLATERAL PERCENTAGES. Neither the Company nor the
Guarantor shall permit, at any time (including, without limitation, as a result
of the application of the provisions of Section 2.02(c) of the Collateral Trust
Agreement or Section 1214 hereof), (a) the sum of (i) the Outstanding Principal
Amount at such time and (ii) the Attributable Principal Amount of Additional
Secured Obligations then outstanding to exceed the Program Amount then in effect
or (b) the sum of (i) the SENS Total Collateral Percentage, (ii) the Credit
Facility Total Collateral Percentage and (iii) the aggregate Designated Total
Collateral Percentages for all Additional Secured Obligations to exceed 100% at
any time.
SECTION 1209. MAINTENANCE OF PROPERTY; INSURANCE. Each of the
Company and the Guarantor shall keep all material property necessary for the
conduct of its business in good working order and condition (ordinary wear and
tear excepted); maintain such insurance with financially sound and reputable
insurance companies (including captive or affiliated insurance companies) or, to
the extent consistent with prudent business practice, through programs of self
insurance, as the Company and the Guarantor shall determine to be adequate
(taking into account both the commercial availability and cost of such
insurance); and furnish to the Trustee, upon written request, full information
as to the insurance carried.
SECTION 1210. LIMITATION ON CERTAIN SALES OF ASSETS. Except to
the extent permitted under Section 901 or 1211, neither the Company nor the
Guarantor shall convey, sell, lease, assign, transfer or otherwise dispose of
(a) any Principal Property (an "Asset Disposition") to any party (other than to
the Guarantor or the Company, as the case may be, provided that no Principal
Property may be conveyed, sold, assigned, transferred or otherwise disposed of
to the Guarantor, unless the Guarantor shall have executed and delivered such
amendments and supplements to the Transaction Documents and such other
agreements and documents as the Trustee may reasonably require in connection
with the assumption by the Guarantor of all or a portion of the obligations of
the Company (including in respect of Liens on any Export Receivables generated
by the operation of such Principal Property) under this Indenture and the other
Transaction Documents with respect to such Principal Property (all such
amendments, supplements and other agreements and documents to be in form and
substance satisfactory to the Trustee)), if such Asset Disposition would
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have a Material Adverse Effect or (b) except as otherwise permitted in the
Collateral Trust Agreement, any Export Receivables.
SECTION 1211. LIENS. (a) Neither the Company nor the Guarantor
shall create, incur, assume, or permit to exist any Liens on any Principal
Property, except for Permitted Liens.
(b) Neither the Company nor the Guarantor shall create, incur,
assume or permit to exist any Liens on the Export Receivables, other than Liens
in favor of the Collateral Trustee pursuant to the Collateral Trust Agreement
and Liens of the type set forth in clauses (iii), (viii) and (ix) of the
definition of "Permitted Liens."
(c) Neither the Company nor the Guarantor shall create, incur,
assume or permit to exist any Liens on its Copper inventory other than (i) liens
securing working capital financings or similar obligations (provided that the
aggregate principal amount of Debt secured by such Liens shall not exceed $100
million at any time outstanding) and (ii) Liens of the type set forth in clauses
(iii), (viii) and (ix) of the definition of "Permitted Liens."
SECTION 1212. MAINTENANCE OF BOOKS AND RECORDS. The Guarantor
shall maintain books, accounts and records in accordance with U.S. GAAP and the
applicable rules and regulations of the Commission.
SECTION 1213. INSPECTION OF PROPERTY; BOOKS AND RECORDS;
DISCUSSIONS. Each of the Company and the Guarantor shall, upon reasonable
advance notice, permit representatives of the Trustee, to visit and inspect any
of its properties and examine and make abstracts from any of its books and
records at a reasonable time and as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Company and the Guarantor with officers and employees of the Company and the
Guarantor and with its independent certified public accountants, provided that
prior to the occurrence and continuance of a Trigger Event or an Event of
Default, such visits shall not occur more than once a year.
SECTION 1214. EXPORT SALES. On or prior to January 15 of each
calendar year, the Company shall deliver to the Collateral Trustee and the
Trustee a certificate of a Responsible Officer (the "Annual Sales Certificate")
certifying for such calendar year (i) the budgeted amount of short tons of
Copper to be sold to customers located within Peru (other than sales effected
through any Peruvian Governmental Authority to customers located outside Peru)
("Domestic Sales"), (ii) the budgeted amount of short tons of Copper to be sold
to customers located outside Peru (including sales effected through any Peruvian
Governmental Authority to customers located outside Peru, but excluding Copper
to be sold under Excluded Export Contracts for such year) (the "Certified Export
Sales") and (iii) the aggregate budgeted amount of short tons of Copper to be
sold pursuant to Excluded Export Contracts (the sum of clauses (i), (ii) and
(iii) (the "Total Sales")). If, in any calendar year when the Certified Export
Sales are less than 320,000 short tons, the ratio of Domestic Sales to Total
Sales, expressed as a percentage (the "Domestic Percentage") exceeds 20% (such
percentage, to the extent exceeding 20%, shall hereinafter be referred to as the
"Excess
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Domestic Percentage"), then the Program Amount in effect for such year shall be
reduced for such year by an amount equal to the product of the Excess Domestic
Percentage and the Program Amount which would otherwise have been in effect on
the first day of such year (after giving effect to the application of Section
2.02 of the Collateral Trust Agreement). If during any calendar year the Company
becomes aware that the Domestic Percentage will be increased as a result of an
increase in Domestic Sales in excess of the budgeted amount set forth on the
Annual Sales Certificate previously delivered for such calendar year (calculated
on a pro rata basis for the portion of the calendar year remaining) and the
Domestic Percentage will, as a result thereof, exceed 20% (or increase further
above 20%), then, within 5 Business Days of becoming so aware, the Company shall
deliver to the Collateral Trustee and the Trustee a certificate of a Responsible
Officer in replacement for the Annual Sales Certificate previously delivered and
the Program Amount shall be recalculated on a pro rata basis as set forth in the
preceding sentence for the remainder of the calendar year; provided, however,
that for purposes of this sentence the increase in Domestic Sales shall be
deemed to equal the amount by which the increase in the Domestic Sales exceeds
the increase, if any, in the amount of the Total Sales, each as set forth in the
Annual Sales Certificate previously delivered for such calendar year.
SECTION 1215. DESIGNATION AND TERMINATION OF DESIGNATION OF
ADDITIONAL PERCENTAGES UNDER THE COLLATERAL TRUST AGREEMENT. (a) At any time
after the occurrence and during the continuation of a Trigger Event, Default or
Event of Default with respect to a Series of SENs, the Company shall not
designate any Additional Percentage for the benefit of any Secured Parties
(other than for such Series of SENs) pursuant to Section 2.04(a) of the
Collateral Trust Agreement unless the Company shall designate a ratable
(calculated on the basis of the Basic Collateral Percentages of the Secured
Parties) Additional Percentage for the benefit of such Series of SENs pursuant
to such Section.
(b) If the Company shall designate any Additional Percentage
for the benefit of any Series of SENS pursuant to Section 2.04(a) of the
Collateral Trust Agreement, the Company shall not notify the Collateral Trustee
pursuant to Section 2.04(b) of the Collateral Trust Agreement that such
Additional Percentage shall no longer be designated for the benefit of such
Series of SENs unless (a) at least five Business Days prior to the delivery of
such notice, the Company shall have delivered a certificate of a Responsible
Officer to the Trustee and the Collateral Trustee demonstrating that, as of the
last day of the immediately preceding month, the ratio of (x) aggregate
Collections transferred to the SENs Collateral Account for such Series during
the three month period ending on such day to (y) the sum of all scheduled
payments of principal of, and interest (including Additional Amounts) on, such
SENs for such three month period (calculated after giving effect to the removal
of such additional percentage) would have been at least 3.00 to 1.00, and such
certificate of a Responsible Officer shall include a certification of such
calculations and (b) no Event of Default with respect to such Series shall have
then occurred and be continuing.
SECTION 1216. LIMITATION ON ADDITIONAL DEBT SECURED BY EXPORT
RECEIVABLES. Neither the Company nor the Guarantor shall issue any Debt secured
by Export Receivables which would cause the aggregate outstanding principal
amount of Debt issued on or after the date hereof secured by the Export
Receivables to exceed $750 million
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(not including the aggregate principal amount of Debt secured by Export
Receivables arising under Export Contracts covering an aggregate annual amount
up to 10,000 short tons of copper) unless prior to the issuance of such Debt
each of the Rating Agencies then rating any Series of SENs confirms that such
issuance shall not cause a downgrading in their respective then current rating
of such Series of SENs.
SECTION 1217. ADDITIONAL AMOUNTS. The Company will pay to the
Holder of any SEN of a Series additional amounts as provided in this Section
1217 and will also pay any other additional amounts provided for in the SENs of
a Series and in accordance with Section 301 (such additional amounts provided in
this Section 1217 and any such other additional amounts provided for in the SENs
of a Series and in accordance with Section 301 being herein referred to as
"Additional Amounts").
All payments in respect of the SENs, including, without
limitation, payments of principal, interest, and premium, if any, shall be made
by the Company without withholding or deduction for or on account of any present
or future taxes, duties, levies, or other governmental charges of whatever
nature (collectively "Taxes") now or hereafter imposed or established by or on
behalf of Peru or any political subdivision thereof or taxing authority therein
(any such tax, a "Peruvian Tax"), unless the Company is required to withhold or
deduct a Peruvian Tax by law (or, if the Company by law may elect to withhold or
deduct a Peruvian Tax or to pay such Peruvian Tax directly, the Company has
elected to withhold such Peruvian Tax). In the event any Peruvian Taxes are so
imposed or established, the Company shall pay such Additional Amounts as may be
necessary in order that the net amounts receivable by the holders after any
withholding or deduction in respect of such Peruvian Tax shall equal the
respective amounts of principal, interest and premium, if any, which would have
been receivable in respect of the SENs in the absence of such withholding or
deduction; provided, however, that no such Additional Amounts shall be payable
(i) to, or on behalf of, a holder who is not (a) a corporation, partnership or
trust organized under the laws of the United States or a State thereof or (b) a
corporation or other entity organized or established under the laws of any other
jurisdiction outside Peru, (ii) to, or on behalf of, a holder for or on account
of any such Peruvian Taxes that have been imposed by reason of such holder (or a
fiduciary or settlor of, or possessor of a power over, such holder if such
holder is an estate or a trust), having some present or former connection with
Peru, any political subdivision of Peru or any territory or possession of Peru
or area subject to its jurisdiction, other than the mere holding or owning of
such SEN or the receipt of principal or interest or premium, if any, in respect
thereof, including, without limitation, such holder (or such fiduciary, settlor
or possessor of power over) being or having been a citizen or resident thereof,
or being or having been present therein, or being or having been engaged in
trade or business therein, or having had a permanent establishment therein,
(iii) to, or on behalf of, a holder for or on account of any such Peruvian Taxes
that would not have been imposed but for the presentation by the holder of a SEN
for payment (where presentation is required) on a date more than 30 days after
the date on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to such Additional Amounts on
presenting such SEN for payment on the last date of such period of 30 days, (iv)
with respect to any estate, inheritance, gift, sales, transfer, asset or
personal
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property tax or any similar tax, assessment or governmental charge, (v) to, or
on behalf of, a holder for or on account of any such Peruvian Taxes which are
actually paid otherwise than by withholding or deduction from payments on or in
respect of any SEN, (vi) to, or on behalf of, a holder of any SEN to the extent
that such holder is liable for such Peruvian Taxes that would not have been
imposed but for the failure of such holder to comply with any certification,
identification, information, documentation or other reporting requirements if
(a) such compliance is required by Peruvian law, regulation or administrative
practice or any applicable treaty as a precondition to relief or exemption from,
or reduction in the rate of, deduction or withholding of, such Peruvian Taxes,
(b) at least 30 days prior to the first Payment Date with respect to which such
requirements shall apply, the Company notifies or causes the Paying Agent to
notify all holders of the SENs of such Series or their nominees that such
holders will be required to comply with such requirements and (c) such
requirements are not materially more onerous to such holders (in form, in
procedure or in the substance of information disclosed) than comparable
information or other reporting requirements imposed under United States tax law,
regulation and administrative practice (such as IRS Forms 1001, W-8 and W-9),
(vii) to, or on behalf of, a holder for or on account of any such Peruvian Taxes
imposed because the holder is a significant stockholder of the Company or the
Guarantor, or (viii) with respect to any combination of items (i), (ii), (iii),
(iv), (v), (vi) and (vii) above. Furthermore, no Additional Amounts shall be
paid with respect to any payment on a SEN to a holder that is a fiduciary or
partnership or other than the sole beneficial owner of such payment to the
extent that a beneficiary or settlor with respect to such fiduciary or a member
of such partnership or beneficial owner would not have been entitled to receive
the Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder.
Whenever in this Indenture there is a reference, in any
context, to the payment of the principal of or interest on, or in respect of,
any SEN, such payment shall be deemed to include the payment of Additional
Amounts provided for in this Section to the extent that, in such context,
Additional Amounts are, were or would be payable in respect of such payment
pursuant to the provisions of this Section and express mention of the payment of
Additional Amounts (if applicable) in any provision hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
At least 10 days prior to the first Payment Date with respect
to that Series of SENs, and at least 10 days prior to each date of payment of
principal and any premium or interest if there has been any change in the
percentage of withholding set forth in the below-mentioned certificate of a
Responsible Officer, the Company will furnish the Trustee and the Company's
principal Paying Agent or Paying Agents, if other than the Trustee, with a
certificate of a Responsible Officer instructing the Trustee and such Paying
Agent or Paying Agents whether such payment of principal of and any premium or
interest on the SENs of that Series shall be made to holders of SENs of that
Series (or, if applicable, in the case of Taxes imposed or established by the
United States or any political subdivision thereof or taxing authority therein,
holders of SENs of that Series who are United States Aliens) without withholding
for or on account of any Taxes described in this Section 1217 or in the SENs of
that Series. If any such withholding shall be required, then such certificate of
a
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Responsible Officer shall specify by country the amount, if any, required to be
withheld on such payments to such holders of SENs and the Company or the
Guarantor will pay to the Trustee or such Paying Agent the Additional Amounts
required by or pursuant to this Section 1217. The Company covenants to indemnify
the Trustee and any Paying Agent for, and to hold them harmless against, any
loss, liability or expense reasonably incurred without negligence or bad faith
on their part arising out of or in connection with actions taken or omitted by
any of them in reliance on any certificate of a Responsible Officer furnished
pursuant to this Section.
In addition, the Company shall pay any stamp, issue,
registration, documentary or other similar taxes and duties, including interest
and penalties, payable in Peru or the United States or any political subdivision
thereof or taxing authority of or in the foregoing in respect of the creation,
issue and offering of the SENs. The Company shall also pay and indemnify the
holders from and against all court taxes or other taxes and duties, including
interest and penalties, paid by any of them in any jurisdiction in connection
with any action permitted to be taken by the holders to enforce the obligations
of the Company under the SENs or this Indenture.
References to "holders" of SENs in this Section 1217 or in
Section 1308 shall include the beneficial owners of such SENs.
SECTION 1218. PRESERVATION OF SECURITY INTEREST. The Company
shall, at its own cost and expense, make all filings and recordings in the
United States, Peru, if any, and any other applicable jurisdictions (including,
without limitation, financing statements and continuation statements) and take
all other steps in the United States, Peru, if any, and any other applicable
jurisdictions necessary to preserve, perfect and protect the Collateral
Trustee's interest in the Collateral and the Trustee's interest in the SENs
Collateral for each Series, and will defend, at its own cost and expense, the
right, title and interest of the Collateral Trustee in and to the Collateral and
the right, title and interest of the Trustee in and to the SENs Collateral for
each Series.
SECTION 1219. FURTHER ASSURANCES. (a) Each of the Company and
the Guarantor will, at its own cost and expense, promptly perform or cause to be
performed any and all acts and execute or cause to be executed any and all
documents, instruments and agreements as may be reasonably required, in the
opinion of the Trustee, to enable the Trustee to exercise and enforce its rights
under this Indenture and the other Transaction Documents and to carry out the
intent of the Transaction Documents.
(b) In the event that any direct or indirect Subsidiary (other
than the Company) of the Guarantor sells Copper (which is produced at any of the
Principal Properties or the SX/EW Facility (as defined in the Collateral Trust
Agreement) from copper mined or leached at any of the Principal Properties or
from purchased copper (each such Subsidiary, a "Copper Subsidiary")), the
Guarantor shall cause, immediately after any such sale, each Copper Subsidiary
to enter into an amendment to the Collateral Trust Agreement to grant a security
interest to the Collateral Trustee (for the benefit of the Secured Parties) in
such Copper Subsidiary's Export Contracts, Export Receivables and Proceeds
thereof and
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any other interests described in Section 2.01(a) of the Collateral Trust
Agreement and to take the other actions with respect to such Copper Subsidiary's
Export Receivables, Export Contracts and proceeds thereof required to be taken
by the Issuer under the Collateral Trust Agreement with respect to Export
Receivables, Export Contracts and the Proceeds therof, including, without
limitation, the notification obligations and obligations with respect to
Acknowledgments set forth in Section 3.02 of the Collateral Trust Agreement, and
the obligations to perfect the security interest granted under the Collateral
Trust Agreement.
ARTICLE THIRTEEN
REDEMPTION OF SENS
SECTION 1301. APPLICABILITY OF ARTICLE. SENs of any Series
which are redeemable before their Stated Maturity shall be redeemable in
accordance with the terms of such SENs and (except as otherwise specified as
contemplated by Section 301 for SENs of any Series) in accordance with this
Article. The Company may redeem the SENs of any Series at any time, in whole or
in part, at a Redemption Price equal to (i) the outstanding principal amount of
the SENs so redeemed plus (ii) accrued and unpaid interest to the date of
redemption plus (iii) the Make-Whole Premium.
SECTION 1302. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The
election of the Company to redeem any SENs shall be evidenced by or pursuant to
a Board Resolution. In case of any redemption at the election of the Company,
the Company shall, at least sixty (60) days prior to the Redemption Date fixed
by the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of SENs
of such Series to be redeemed and shall deliver to the Trustee such
documentation and records as shall enable the Trustee to select the SENs to be
redeemed pursuant to Section 1303. In the case of any redemption of SENs prior
to the expiration of any restriction on such redemption provided in the terms of
such SENs or elsewhere in this Indenture, the Company shall furnish the Trustee
with an Officers' Certificate evidencing compliance with such restriction.
SECTION 1303. SELECTION BY TRUSTEE OF SENS TO BE REDEEMED. If
less than all the SENs of any Series are to be redeemed, the particular SENs to
be redeemed shall be selected not more than sixty (60) days prior to the
Redemption Date by the Trustee, from the Outstanding SENs of such Series not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions of the principal of SENs of such Series; provided, however, that no
such partial redemption shall reduce the portion of the principal amount of a
SEN not redeemed to less than the minimum authorized denomination for SENs of
such Series established pursuant to Section 301.
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The Trustee shall promptly notify the Company and the
Guarantor in writing of the SENs selected for redemption and, in the case of any
SENs selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of SENs shall
relate, in the case of any SEN redeemed or to be redeemed only in part, to the
portion of the principal amount of such SEN which has been or is to be redeemed.
SECTION 1304. NOTICE OF REDEMPTION. Except as otherwise
specified as contemplated by Section 301, notice of redemption shall be given in
the manner provided for in Section 106 not less than thirty (30) nor more than
sixty (60) days prior to the Redemption Date, to each Holder of SENs to be
redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding SENs of any Series are to
be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular SENs to be
redeemed,
(4) that on the Redemption Date the Redemption Price (together
with accrued interest, if any, to the Redemption Date payable as
provided in Section 1306) will become due and payable upon each SEN, or
the portion thereof, to be redeemed and, if applicable, that interest
thereon will cease to accrue on and after said date,
(5) the place or places where such SENs maturing after the
Redemption Date, are to be surrendered for payment of the Redemption
Price,
(6) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of SENs to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request made not
less than 15 days prior to the latest date such notice of redemption may be
given, by the Trustee in the name and at the expense of the Company.
SECTION 1305. DEPOSIT OF REDEMPTION PRICE. Not later than one
Business Day before any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent an amount of money in Dollars (except as
otherwise specified pursuant to Section 301 for the SENs of such series and
except, if applicable, as provided in Sections 307(a), 307(b) and 307(c))
sufficient to pay the Redemption Price of, and accrued interest on, all the SENs
which are to be redeemed on that date.
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SECTION 1306. SENS PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the SENs so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified in Dollars (except as otherwise specified pursuant to Section 301 for
the SENs of such series and except, if applicable, as provided in Sections
307(a), 307(b) and 307(c)) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such SENs shall
cease to bear interest. Upon surrender of any such SEN for redemption in
accordance with said notice maturing after the Redemption Date, such SEN shall
be paid by the Company at the Redemption Price, together with accrued interest,
if any, to the Redemption Date; provided, however, that installments of interest
on SENs whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such SENs, or one or more Predecessor SENs, registered
as such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 307.
If any SEN called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate of interest set
forth in the SEN.
SECTION 1307. SENS REDEEMED IN PART. Any SEN which is to be
redeemed only in part (pursuant to the provisions of this Article) shall be
surrendered at a Place of Payment therefor (with, if the Company, the Guarantor
or the Trustee so requires, due endorsement with signature medallion guarantee
by, or a written instrument of transfer in form satisfactory to the Company, the
Guarantor and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing with signature medallion guarantee), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such SEN without service charge, a new SEN or SENs of the same Series
(with Guarantee or Guarantees duly endorsed thereon), of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the SEN so
surrendered.
SECTION 1308. REDEMPTION FOR TAX REASONS. (a) In addition to
any redemption provisions that may be specified as contemplated by Section 301
with respect to SENs of any Series (except as otherwise provided in a
Supplemental Indenture for such Series), if, at any time the Company or the
Guarantor is or will become obligated for any reason (i) to pay any Additional
Amounts in excess of those attributed to the Peruvian tax of 1% imposed on
interest payments to holders of SENs of such Series that are not domiciled in
Peru for Peruvian tax purposes ("Excess Additional Amounts") or (ii) to pay a
tax in excess of 1% on payments of interest to holders of SENs of such Series
that are not domiciled in Peru for Peruvian tax purposes directly to the
applicable Peruvian taxing authority (an "Interest Tax"; and any such excess
Interest Tax, "Excess Interest Tax"), and such obligation cannot be avoided by
the Company or the Guarantor taking reasonable measures available to it, then,
subject to subsection (e) of this Section 1308, the SENs of such Series will be
redeemable as a whole (or as a part, as provided in subsection (d) of this
Section 1308) at the option of the Company or the Guarantor at any time upon not
less than thirty (30) nor more than sixty (60) days' notice given to the Holders
in an amount equal to the sum of (i) the
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principal amount outstanding at the time, plus (ii) accrued interest to the date
of prepayment, plus (iii) any Additional Amounts. The Company or the Guarantor,
as the case may be, will be considered to be obligated to pay such Excess
Additional Amounts despite the fact that the Company or the Guarantor, as the
case may be, could have, in lieu of withholding from payments of interest and
paying Additional Amounts, paid the tax directly to the applicable Peruvian
taxing authority.
(b) In order to effect a redemption of the SENs of any Series
under this Section, the Company shall deliver to the Trustee an Opinion of
Peruvian counsel (which shall be outside counsel) reasonably acceptable to the
Trustee confirming the tax obligation at least 45 days prior to redemption. No
notice of redemption pursuant to this Section 1308 may be given earlier than
ninety (90) days prior to the earliest date on which the Company or the
Guarantor would be obligated to pay such Excess Additional Amounts or Excess
Interest Tax in respect of SENs of such Series.
(c) If the holders of two-thirds or more of the aggregate
principal amount of the Outstanding SENs of such Series waive their rights if
any to Excess Additional Amounts payable by the Company or the Guarantor, then
(i) the Company or the Guarantor shall not be obligated to pay Excess Additional
Amounts to any holders of SENs of such Series and (ii) the Company or the
Guarantor may not redeem the SENs of such Series pursuant to this Section 1308.
In the case of Excess Interest Tax, if the holders of two-thirds or more of the
aggregate principal amount of the Outstanding SENs of such Series agree to
receive payments net of Excess Interest Tax, then (i) payments of interest to
all holders will be reduced by the Excess Interest Tax and (ii) the Company or
the Guarantor may not redeem the SENs pursuant to this Section 1308.
(d) Subject to subsection (e) of this Section 1308, the SENs
of a Series may be redeemed in part at the option of the Company or the
Guarantor if, with respect to the SENs of such Series, the Company or the
Guarantor would be obligated to pay Excess Additional Amounts or Excess Interest
Tax aggregating at least $1,000,000 per annum. Except as provided in subsection
(e) of this Section 1308, any partial redemption of SENs of any Series pursuant
to this Section 1308 shall be limited to no more than the aggregate principal
amount of SENs of such Series necessary to be redeemed in order to reduce the
Company's or the Guarantor's payment of Additional Amounts or Interest Tax in
respect of SENs to an amount equal to the Additional Amounts, or Interest Tax,
as the case may be, payable with respect to the 1% Peruvian tax imposed on
interest payments on such Series of SENs (calculated without giving effect to
such partial redemption).
(e) If with respect to the SENs of any Series, the Company or
the Guarantor is or will become obligated to pay Excess Additional Amounts or
Excess Interest Tax only with respect to SENs held by a certain type (or types)
of holders (the "Affected Holders"), the Company and the Guarantor may not
redeem pursuant to this Section 1308 the SENs of such Series held by holders who
are not Affected Holders, but at the option of the Company or the Guarantor the
SENs of such Series held by Affected Holders may be redeemed in accordance with
the procedures set forth in this Section 1308. If the Company or the Guarantor,
as the case may be, seeks to redeem the SENs of a Series held by any Affected
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Holders as provided in this subsection (e), such Affected Holders will cooperate
with the Company or the Guarantor, as the case may be, to effect such a
redemption. Furthermore, if the SENs of such Series are held in a Global
Security, the Company or the Guarantor, as the case may be, may, to the extent
necessary, exchange the SENs of such Series for certificated SENs in order to
effect a redemption pursuant to this subsection (e), provided that the Company
or the Guarantor, as the case may be, will as promptly as practicable
subsequently exchange such certificated SENs for SENs held in a Global Security,
except for the SENs held by the Affected Holders.
ARTICLE FOURTEEN
[INTENTIONALLY OMITTED]
ARTICLE FIFTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1501. COMPANY'S OPTION TO EFFECT DEFEASANCE OR
COVENANT DEFEASANCE. Except as otherwise specified as contemplated by Section
301 for SENs of any Series, the provisions of this Article Fifteen shall apply
to each Series of SENs, and the Company may, at its option by Board Resolution,
effect defeasance of the SENs of or within a Series under Section 1502, or
covenant defeasance of or within a Series under Section 1503 in accordance with
the terms of such SENs and in accordance with this Article.
SECTION 1502. DEFEASANCE AND DISCHARGE. Upon the Company's
exercise of the above option applicable to this Section with respect to any SENs
of or within a Series, the Company and the Guarantor shall be deemed to have
been discharged from their respective obligations with respect to such
Outstanding SENs on the date the conditions set forth in Section 1504 are
satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means
(i) that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Outstanding SENs, which shall thereafter be
deemed to be "Outstanding" only for the purposes of Section 1505 and the other
Sections of this Indenture referred to in (A) and (B) below, and to have
satisfied all its other obligations under such SENs and this Indenture insofar
as such SENs are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), and (ii) the Guarantor
shall be released from the Guarantees, except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of such Outstanding SENs to receive, solely from the trust fund
described in Section 1504 and as more fully set forth in such Section, payments
in respect of the principal of and interest and Additional Amounts, if any, on
such SENs when such payments are due, (B) the Company's obligations with respect
to such SENs under Sections 304, 305, 306, 1202 and 1203 and with respect to the
payment of Additional Amounts, if any, on such SENs as contemplated by Section
1217, (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, and (D) this Article Fifteen. Subject to compliance with this Article
Fifteen, the Company
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may exercise its option under this Section 1502 notwithstanding the prior
exercise of its option under Section 1503 with respect to such SENs.
SECTION 1503. COVENANT DEFEASANCE. Upon the Company's exercise
of the above option applicable to this Section with respect to any SENs of or
within a Series, (i) the Company and the Guarantor shall be released from their
respective obligations under Sections 601, 602, 604, 1204, 1205, 1206, 1207,
1208, 1209, 1210, 1211, 1213, 1214, 1215, 1216 and 1218 with respect to such
Outstanding SENs and (ii) the occurrence of any event specified in any such
Sections shall not be deemed to be a Trigger Event, an Accelerated Amortization
Event or an Event of Default on or after the date the conditions set forth in
Section 1504 are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to such Outstanding
SENs, the Company and the Guarantor may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or clause, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or clause or by reason of reference in any
such Section or clause to any other provision herein or in any other document,
the remainder of this Indenture and such SENs shall be unaffected thereby.
SECTION 1504. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section 1502 or
Section 1503 to any Outstanding SENs of or within a Series:
(1) The Company or the Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 708 who shall agree to
comply with the provisions of this Article Fifteen applicable to it) as
trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such SENs, (A) an amount (in Dollars), or (B)
Government Obligations applicable to such SENs (determined in Dollars)
which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later
than one day before the due date of any payment of principal (including
any premium) and interest, if any, under such SENs, money in an amount,
or (C) a combination thereof, sufficient, in the opinion of an
internationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, (i) the principal of
and installment of interest on such Outstanding SENs on the Stated
Maturity (or Redemption Date, if applicable) of such principal (and
premium, if any) or installment of interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to such
Outstanding SENs on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such SENs.
(2) In the case of an election under Section 1502, the Company
and the Guarantor shall have delivered to the Trustee an Opinion of
Counsel (which shall be outside counsel) stating that (x) the Company
and the Guarantor have received from, or there has been published by,
the Internal Revenue Service a ruling, or (y) since the
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date of execution of this Indenture, there has been a change in the
applicable United States federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the
Holders of such Outstanding SENs will not recognize income, gain or
loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance had not occurred.
(3) In the case of an election under Section 1503, the Company
and the Guarantor shall have delivered to the Trustee an Opinion of
Counsel (which shall be outside counsel) to the effect that the Holders
of such Outstanding SENs will not recognize income, gain or loss for
United States federal income tax purposes as a result of such covenant
defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred.
(4) The Company and the Guarantor shall have delivered to the
Trustee an Officers' Certificate to the effect that such SENs, if then
listed on any securities exchange, will not be delisted as a result of
such deposit.
(5) No Default or Event of Default with respect to such SENs
shall have occurred and be continuing on the date of such deposit or,
insofar as paragraphs (vi) and (vii) of Section 603 are concerned, at
any time during the period ending on the 121st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(6) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 708 and
for purposes of the Trust Indenture Act with respect to any securities
of the Company.
(7) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the Company or
the Guarantor is a party or by which it is bound.
(8) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with
any additional or substitute terms, conditions or limitations in
connection therewith pursuant to Section 301.
(9) The Company and the Guarantor shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to either
the defeasance under Section 1502 or the covenant defeasance under
Section 1503 (as the case may be) have been complied with.
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(10) Such defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an investment
company as defined in the U.S. Investment Company Act of 1940, as
amended, or such trust shall be qualified under such act or exempt from
regulation thereunder.
SECTION 1505. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of
Section 1203, all money and Government Obligations (or other property as may be
provided pursuant to Section 301) (including the proceeds thereof) deposited
with the Trustee or other qualifying trustee (collectively for purposes of this
Section 1505, the "Trustee") pursuant to Section 1504 in respect of such
Outstanding SENs shall be held in trust and applied by the Trustee, in
accordance with the provisions of such SENs and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company or the
Guarantor acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such SENs of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company and the Guarantor shall pay and indemnify the
Trustee against any tax fee or other charge imposed on or assessed against the
Government Obligations deposited pursuant to Section 1504 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of such Outstanding SENs.
Anything in this Article Fifteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money or Government Obligations (or other property
and any proceeds therefrom) held by it as provided in Section 1504 which, in the
opinion of an internationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1506. REINSTATEMENT. If the Trustee or any Paying
Agent is unable to apply any money in accordance with Section 1505 by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the obligations of
the Company and the Guarantor under this Indenture and such SENs and the
Guarantees shall be revived and reinstated as though no deposit had occurred
pursuant to Section 1502 or 1503, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 1505; provided, however, that if the Company or the Guarantor, as the
case may be, makes any payment of principal of (or premium, if any, on) or
interest on any such SEN following the reinstatement of its obligations, the
Company or the Guarantor shall be subrogated to the rights of the Holders of
such SENs to receive such payment from the money held by the Trustee or Paying
Agent.
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ARTICLE SIXTEEN
GUARANTEES
SECTION 1601. GUARANTEES.
The Guarantor hereby unconditionally guarantees to each Holder
of a SEN authenticated and delivered by the Trustee, the due and punctual
payment of the principal of (and premium, if any) and interest, on such SEN
(including all Additional Amounts payable by the Company or the Guarantor in
respect thereof pursuant to Section 1217), when and as the same shall become due
and payable, whether at the Stated Maturity, by declaration of acceleration,
call for redemption or otherwise, in accordance with the terms of such SEN and
of this Indenture. In case of the failure of the Company punctually to make any
such payment, the Guarantor hereby agrees to cause such payment to be made
punctually when and as the same shall become due and payable, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise, and as if such payment were made by the Company, and to pay any and
all Additional Amounts payable by the Guarantor in respect thereof pursuant to
Section 1217.
The Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of such SEN or this Indenture, the absence of any action to
enforce the same, any waiver or consent by the Holder of such SEN or by the
Trustee with respect to any provisions thereof or of this Indenture, the
obtaining of any judgment against the Company or any action to enforce the same
or any other circumstances which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. The Guarantor hereby waives the benefits of
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest or notice with respect to such SEN
or the indebtedness evidenced thereby or with respect to any sinking fund
payment required pursuant to the terms of such SEN and all demands whatsoever,
and covenants that this Guarantee will not be discharged in respect of such SEN
except by payment in full of the principal of (and premium, if any) and interest
on such SEN (including all Additional Amounts payable in respect thereof
pursuant to Section 1217). The Guarantor hereby agrees that, in the event of a
default in payment of principal (or premium, if any) or interest on such SEN,
legal proceedings may be instituted by the Trustee on behalf of, or by, the
Holder of such SEN thereto, on the terms and conditions set forth in this
Indenture, directly against the Guarantor to enforce this guarantee without
first proceeding against the Company.
The Guarantor shall be subrogated to all rights of the Holders
of the SENs of a particular Series against the Company in respect of any amounts
paid by it on account of such SEN pursuant to the provisions of this Guarantee
or this Indenture; provided, however, that the Guarantor shall not be entitled
to enforce or to receive any payments arising out of, or based upon, such right
of subrogation until the principal of (and premium, if any) and interest, on all
SENs of such Series issued hereunder (including all Additional Amounts
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payable by the Company or the Guarantor in respect thereof pursuant to Section
1217) shall have been paid in full or duly provided for.
The Guarantees set forth in this Section shall not be valid or
become obligatory for any purpose with respect to a SEN of any Series until the
certificate of authentication on such SEN shall have been signed by the Trustee
by manual signature of one of its authorized officers.
SECTION 1602. EXECUTION AND DELIVERY OF THE GUARANTEES. The
Guarantees to be endorsed on the SENs of each series (the "Guarantees") shall
include the terms of the Guarantee set forth in Section 1601 and any other terms
that may be set forth in the form established pursuant to Section 203 with
respect to such Series. The Guarantor hereby agrees to execute the Guarantees,
in a form established pursuant to Section 203, to be endorsed on each SEN
authenticated and delivered by the Trustee.
The Guarantees shall be executed on behalf of the Guarantor by
its Chairman of the Board, a Vice Chairman of the Board, its President, a Vice
President, its Treasurer or its Comptroller. The signature of any of these
officers on the Guarantees may be manual or facsimile.
Guarantees bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Guarantor shall bind
the Guarantor, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such Guarantees
or did not hold such offices at the date of such Guarantees.
The delivery of any SEN by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
endorsed thereon on behalf of the Guarantor. The Guarantor hereby agrees that
its Guarantee set forth in Section 1601 shall remain in full force and effect
notwithstanding any failure to endorse a Guarantee on any SEN.
ARTICLE SEVENTEEN
MEETINGS OF HOLDERS OF SENS
SECTION 1701. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A
meeting of Holders of SENs of any Series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of SENs of such Series.
SECTION 1702. CALL NOTICE AND PLACE OF MEETINGS. The Trustee
shall, upon the written request of the Holders of at least ten percent in
aggregate principal amount of the SENs of any Series at the time Outstanding, or
the Company, the Guarantor, or the Trustee may, at its discretion, call a
meeting of the Holders at any time and from time to
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time, to make, give or take any request, demand, authorization, direction,
notice, consent, waiver or other action provided by the SENs of such Series to
be made, given or taken by the Holders. In any case, meetings shall be held at
such time and at such place as the Trustee shall determine. If a meeting is
being held pursuant to a written request of Holders, the agenda for the meeting
shall be as determined in the request and such meeting shall be convened within
forty (40) days from the date such request is received by the Trustee, the
Company or the Guarantor, as the case may be. Notice of any meeting of Holders
(which shall include the date, place and time of the meeting, the agenda
therefor and the requirements to attend) shall be given not less than ten (10)
days nor more than thirty (30) days prior to the date fixed for the meeting in
the manner provided in Section 106 and any publication thereof shall be for five
consecutive business days in each place of publication.
SECTION 1703. PERSONS ENTITLED TO VOTE AT MEETINGS. To be
entitled to vote at any meeting of Holders of SENs of any Series, a Person shall
be (1) a Holder of one or more Outstanding SENs of such Series, or (2) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding SENs of such Series by such Holder or Holders. Directors,
officers, managers and employees of the Company cannot be appointed as proxies.
The only Persons who shall be entitled to be present or to speak at any meeting
of Holders of SENs of any Series shall be the Person entitled to vote at such
meeting and their counsel, any representatives of the Trustee and its counsel
and any representatives of the Company, the Guarantor and their counsel.
SECTION 1704. QUORUM; ACTION. The quorum of any meeting called
to adopt a resolution will be Persons holding or representing not less than 51%
in aggregate principal amount of the SENs of a Series at the time Outstanding;
provided, however, that any such reconvened meeting adjourned for lack of the
requisite quorum, the quorum will be Persons holding or representing not less
than 30% in aggregate principal amount of such SENs at the time Outstanding. In
the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of SENs of
such Series, be dissolved. In any other case the meeting may be adjourned for a
period of not less than ten (10) days as determined by the chairman of the
meeting prior to the adjournment of such meeting. In the absence of a quorum at
any such adjourned meeting, such adjourned meeting may be further adjourned for
a period of not less than ten (10) days as determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided in Section 1702,
except that such notice need be given only once not less than five (5) days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of any adjourned meeting shall state expressly the percentage,
as provided above, of the principal amount of the Outstanding SENs of such
Series which shall constitute a quorum.
Except as limited by the proviso to Section 1002, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding SENs of that Series
present and represented at such meeting; provided, however, that, except as
limited by the proviso to Section 1002, any resolution with respect
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to any request, demand, authorization, direction, notice, consent, waiver or
other action which this Indenture expressly provides may be made, given or taken
by the Holders of not less than 51% in principal amount of the Outstanding SENs
of a Series may be adopted at a meeting or an adjourned meeting duly reconvened
and at which a quorum is present as aforesaid only by the affirmative vote of
the Holders of at least 51% in principal amount of the Outstanding SENs of that
Series; and provided, further, that, except as limited by the proviso to Section
1002, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding SENs of a Series may be adopted at a meeting or any adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding SENs of that Series.
Any resolution passed or decision taken at any meeting of
Holders of SENs of any Series duly held in accordance with this Section shall be
binding on all the Holders of SENs of such Series coupons, whether or not
present or represented at the meeting.
SECTION 1705. DETERMINATION OF VOTING RIGHTS; CONDUCT AND
ADJOURNMENT OF MEETINGS. (a) Notwithstanding any provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of SENs of a Series in regard to proof of the holding of
SENs of such Series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as its shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of SENs shall be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified in Section 104.
Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 104 or other proof.
(b) The Trustee, the Company or the Guarantor, as the case may
be, shall by an instrument in writing appoint a temporary chairman of the
meeting. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount
of the Outstanding SENs of such Series represented at the meeting.
(c) At any meeting each Holder of a SEN of such Series or
proxy shall be entitled to one vote for each $1,000 principal amount of
Outstanding SENs of such Series held or represented by him (determined as
specified in the definition of "Outstanding" in Section 101); provided, however,
that no vote shall be cast or counted at any meeting in respect of any SEN
challenged as not Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of a SEN of such Series or proxy.
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(d) Any meeting of Holders of SENs of any Series duly called
pursuant to Section 1702 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote a majority in principal amount of the
Outstanding SENs of such Series represented at the meeting; and the meeting may
be held as so adjourned without further notice.
SECTION 1706. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of SENs of any
Series shall be by written ballots on which shall be subscribed the signatures
of the Holders of SENs of such Series or of their representatives by proxy and
the principal amounts and serial numbers of the Outstanding SENs of such Series
held or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of each meeting of
Holders of SENs of any Series shall be prepared by the Secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was given as provided in Section 1702
and, if applicable, Section 1704. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
<PAGE> 114
101
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
SOUTHERN PERU LIMITED
By:/s/ Thomas J. Findley, Jr.
------------------------------------
Name: Thomas J. Findley, Jr.
Title:Treasurer
SOUTHERN PERU COPPER CORPORATION
By:/s/ Thomas J. Findley, Jr.
------------------------------------
Name: Thomas J. Findley, Jr.
Title:Treasurer
CITIBANK, N.A.
Trustee, Principal Paying Agent and
Registrar
By:/s/ Peter Pavlyshin
------------------------------------
Name: Peter Pavlyshin
Title: Trust Officer
<PAGE> 115
Exhibit A
Guarantee
For value received, SOUTHERN PERU COPPER CORPORATION, a
company organized under the laws of Delaware, (the "Guarantor", which term
includes any successor corporation under the Indenture referred to in the SEN
upon which this Guarantee is endorsed), hereby unconditionally guarantees to the
Holder of the SEN upon which this Guarantee is endorsed, the due and punctual
payment of the principal of (and premium, if any) and interest, if any, on such
SEN (including all Additional Amounts payable by the Company in respect thereof
pursuant to such SEN), any other amount due and payable pursuant to the terms of
the Indenture when and as the same shall become due and payable, whether at the
Stated Maturity, by declaration of acceleration, call for redemption or
otherwise, according to the terms thereof and of the Indenture referred to
therein. In case of the failure of the Company punctually to make any such
payment, the Guarantor hereby agrees to cause such payment to be made punctually
when and as the same shall become due and payable, whether at the Stated
Maturity or by declaration of acceleration or otherwise, and as if such payment
were made by the Company, and to pay any and all Additional Amounts payable in
respect thereof pursuant to such SEN and Section 1217 of such Indenture.
The Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of such SEN or the Indenture, the absence of any action to
enforce the same, any waiver or consent by the Holder of such SEN or the Trustee
or either of them with respect to any provisions thereof or of the Indenture,
the obtaining of any judgment against the Company or any action to enforce the
same or any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. The Guarantor hereby waives the
benefits of diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest or notice with respect
to such SEN or the indebtedness evidenced thereby and all demands whatsoever,
and covenants that this Guarantee will not be discharged except by payment in
full of the principal of (and premium, if any) and interest on such SEN. The
Guarantor hereby agrees that, in the event of a default in payment of principal
(or premium, if any) or interest on such SEN, legal proceedings may be
instituted by the Trustee on behalf of, or by, the Holder of such SEN, on the
terms and conditions set forth in the Indenture, directly against the Guarantor
to enforce this Guarantee without first proceeding against the Company.
The Guarantor shall be subrogated to all rights of the Holder
of the SEN upon which this Guarantee is endorsed against the Company in respect
of any amounts paid by the Guarantor on account of such SEN pursuant to the
provisions of this Guarantee or the Indenture; provided, however, that the
Guarantor shall not be entitled to enforce or to receive any payments arising
out of, or based upon, such right of subrogation until the principal of (and
premium, if any) and interest on such SEN and all other SENs of the same Series
issued under the Indenture (including all Additional Amounts payable in respect
thereof) shall have been paid in full.
A-1
<PAGE> 116
All terms used in this Guarantee which are defined in the
Indenture referred to in the SEN upon which this Guarantee is endorsed shall
have the meanings assigned to them in such Indenture.
All references in this Guarantee to principal, premium or
interest in respect of any SEN shall be deemed to mean and include all
Additional Amounts, if any, payable in respect of such principal, premium or
interest, unless the context otherwise requires, and express mention of the
payment of Additional Amounts in any provision hereof shall not be construed as
excluding reference to Additional Amounts in those provisions hereof where such
express mention is not made.
This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
No recourse for the payment of the principal of, premium, if
any, or interest under this Guarantee, or for any claim based hereon or
otherwise in respect hereof, and no recourse under or upon any obligation,
covenant or agreement of the Guarantor in the Indenture or in any supplemental
indenture, or in this Guarantee, or because of the creation of any indebtedness
represented hereby, shall be had against any incorporator or stockholder or any
officer or director, as such, past, present or future, of the Guarantor or of
any successor corporation thereof, either directly or through the Guarantor or
any successor of the Guarantor in the Indenture or in any supplemental
indenture, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of the Indenture and the
issue of the SEN on which this Guarantee is endorsed.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the SEN upon which this
Guarantee is endorsed shall have been executed by the Trustee under the
Indenture by manual signature of one of its authorized officers.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed.
SOUTHERN PERU COPPER CORPORATION
By:
------------------------------------
Attest:
- -----------------------------------
Each Guarantee shall be dated the date of the SEN upon which
it is endorsed. Reference is made to Article Sixteen for further provisions with
respect to the Guarantees.
A-2
<PAGE> 1
Exhibit 4.1(b)
CONFORMED COPY
================================================================================
SUPPLEMENTAL INDENTURE
Dated as of May 30, 1997
among
SOUTHERN PERU LIMITED
Company,
SOUTHERN PERU COPPER CORPORATION,
Guarantor
and
CITIBANK, N.A.
as Trustee under the Indenture
dated as of May 30, 1997
relating to Secured Export Notes
-----------------------
Providing for the creation of an issue of
$150,000,000 of 7.90% Series A Secured Export Notes due 2007
-----------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION................. 2
1.1 Definitions............................................................ 2
ARTICLE II
SECURITY INTERESTS........................... 5
2.1 Grant of Security Interest............................................. 5
ARTICLE III
THE SERIES A SENs........................... 6
3.1 Title, Term and Form Generally......................................... 6
3.2 Restrictive Legends.................................................... 7
3.3 Interest on the Series A SENs.......................................... 9
3.4 Principal of the Series A SENs......................................... 9
3.5 Redemption; Defeasance................................................. 10
3.6 Regular Record Date; Payment Date...................................... 10
3.7 Method of Payment...................................................... 10
3.8 Trustee, Registrar and Principal Paying Agent.......................... 10
3.9 Global Series A SENs; Certificated Series A SENs....................... 11
3.10 Exchange of Initial Notes for Exchange Notes.......................... 12
3.11 Available Information................................................. 12
3.12 Transfer and Exchange................................................. 12
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES............... 14
4.1 Security Interest...................................................... 14
4.2 Protection of Security Interest........................................ 15
4.3 Litigation............................................................. 15
ARTICLE V
ADDITIONAL PROVISIONS RELATING TO TRUSTEE............... 15
5.1 Trustee's Appointment as Attorney-in-Fact.............................. 15
5.2 Execution of Financing Statements...................................... 16
i
<PAGE> 3
ARTICLE VI
REMEDIES................................ 16
6.1 Remedies of Trustee as Secured Party................................... 16
ARTICLE VII
MISCELLANEOUS............................. 17
7.1 Execution of Supplemental Indenture.................................... 17
7.2 Conflicts ............................................................ 17
7.3 Supplemental Indenture................................................. 17
7.4 Counterparts........................................................... 17
7.5 GOVERNING LAW.......................................................... 17
ii
<PAGE> 4
SCHEDULES AND EXHIBITS
Schedule 3.4 - Amortization Schedule
Schedule 4.3 - Litigation
Exhibit A - Form of Series A SEN
Exhibit B - Form of Letter to Be Delivered by Institutional Accredited
Investors
Exhibit C - Form of Certificate for Transfer from Restricted Global SEN,
Private Exchange Global SEN, Certificated Initial SEN or
Certificated Private Exchange SEN Bearing a Securities Act
Legend to Regulation S Global SEN or Certificated SEN Not
Bearing a Securities Act Legend
Exhibit D - Form of Certificate for Removal of the Securities Act Legend on
a Certificated SEN
Exhibit E - Form of Transfer Certificate for Transfer from Regulation S
Global SEN or Certificated Initial SEN Not Bearing a Securities
Act Legend to Restricted Global SEN or Certificated Initial SEN
Bearing a Securities Act Legend
Exhibit F - Form of Transfer Notice
<PAGE> 5
SUPPLEMENTAL INDENTURE
This SUPPLEMENTAL INDENTURE dated as of May 30, 1997 among
Southern Peru Limited, a corporation organized under the laws of Delaware (the
"Company"), Southern Peru Copper Corporation, a corporation organized under the
laws of Delaware, as Guarantor (the "Guarantor"), and Citibank, N.A., a national
banking association, as trustee (the "Trustee"), registrar ("Registrar") and
principal paying agent (the "Principal Paying Agent").
RECITALS
WHEREAS, the Company and the Guarantor have entered into an
Indenture (the "Original Indenture") dated as of May 30, 1997, with the
Indenture Trustee, the Registrar and the Principal Paying Agent providing for
the issuance by the Company and guarantee by the Guarantor from time to time in
one or more series of up to $750,000,000 aggregate principal amount of secured
export notes and the Collateral Trust Agreement pursuant to which security has
been granted for, among other indebtedness of the Company, the secured export
notes;
WHEREAS, the Company has duly authorized the execution and
delivery of this Supplemental Indenture to provide for the issuance of
$150,000,000 aggregate principal amount of its secured export notes authorized
pursuant to the Original Indenture designated as its 7.90% Series A Secured
Export Notes due 2007 (the "Initial SENs") and, if and when issued pursuant to a
registered exchange offer for Initial SENs, its 7.90% Series A-1 Secured Export
Notes due 2007 (the "Exchange SENs") and, if and when issued pursuant to a
private exchange for Initial SENs, its 7.90% Series A-1 Secured Export Notes due
2007 (the "Private Exchange SENs" and together with the Initial SENs and the
Exchange SENs, the "Series A SENs") and the granting of security for the Series
A SENs;
WHEREAS, the Trustee has accepted the trusts and security
created by this Supplemental Indenture and in evidence thereof has joined in the
execution hereof;
WHEREAS, all things necessary to make the Series A SENs when
issued and authenticated by the Trustee as provided in this Supplemental
Indenture, the legal, valid and binding obligations of the Company, have been
done and performed;
WHEREAS, the Guarantor has duly authorized the execution and
delivery of this Supplemental Indenture to provide for the Guarantees by it with
respect to the Series A SENs as set forth in the Original Indenture and this
Supplemental Indenture; and
WHEREAS, all things necessary to make the Guarantees, when
duly authorized and executed by the Guarantor and delivered hereunder, the valid
obligations of
<PAGE> 6
2
the Guarantor, and to make this Supplemental Indenture a valid agreement of the
Guarantor, in accordance with its terms, have been done and performed.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, that
in consideration of the premises, of the acceptance by the Trustee of the trusts
hereby created, and of the purchase and acceptance of the Series A SENs by the
Holders, the receipt and sufficiency of which is hereby acknowledged, for the
equal and ratable benefit of all Holders of the Series A SENs or of any Series
thereof, as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions. For all purposes of this Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Supplemental Indenture
as a whole and not to any particular Article, Section or other
subdivision;
(4) as used herein and in any Series A SEN, and any
certificate or other document made or delivered pursuant
hereto, accounting terms relating to the Company and the
Guarantor not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined,
shall have the respective meanings given to them under U.S.
GAAP;
(5) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as
the case may be, of this Supplemental Indenture; and
(6) the terms which are defined in the Original Indenture have
the respective meanings assigned therein.
"Applicable Procedures" means the applicable procedures of DTC
(or any other Depository), Euroclear and Cedel, in each case to the extent
applicable.
"Authorized Denominations" has the meaning set forth in
Section 3.1.
<PAGE> 7
3
"Cedel" means Cedel Bank, societe anoyme.
"Certificated Initial SEN" has the meaning set forth in
Section 3.1.
"Certificated Series A SENs" has the meaning set forth in
Section 3.9.
"Depository" means, when used with respect to the Series A
SENs, issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as depository by the Company pursuant to
Section 3.9 of this Supplemental Indenture which must be a clearing agency
registered under the Exchange Act.
"DTC" means The Depository Trust Company.
"Euroclear" means the Morgan Guaranty Trust Company of New
York, Brussels Office, as operator of the Euroclear System.
"Exchange SENs" has the meaning specified in the recitals to
this Supplemental Indenture and shall contain terms substantially identical to
the Initial SENs (except that (i) such Exchange SENs shall not contain terms
with respect to transfer restrictions and shall be registered under the
Securities Act, and (ii) certain provisions relating to an increase in the
stated rate of interest thereon shall be eliminated) and be issued and exchanged
for the Initial SENs in accordance with the Registered Exchange Offer.
"Exchange Offer" means, collectively, the Registered Exchange
Offer and the Private Exchange Offer.
"Fee Agreement" means that certain Fee Agreement dated as of
May 2, 1997 between the Company and the Trustee, as amended, modified or
supplemented from time to time.
"Global Series A SEN" has the meaning set forth in Section
3.1.
"Indenture" means the Original Indenture, as supplemented by
this Supplemental Indenture, and as the same may be in effect and as may be
further amended, modified or supplemented from time to time with reference to
the Series A SENs by one or more supplemental indentures or other written
instruments entered into by the Company and the Indenture Trustee pursuant to
the terms thereof.
"Initial Deposit" means, with respect to the Series A SENs,
$2,962,500.
"Initial Purchasers" means Credit Suisse First Boston
Corporation, Chase Securities Inc., Citicorp Securities, Inc., Deutsche Morgan
Grenfell Inc., Goldman Sachs & Co. and J.P. Morgan Securities Inc.
"Initial SENs" has the meaning specified in the recitals to
this Supplemental Indenture.
<PAGE> 8
4
"Institutional Accredited Investors" means institutional
accredited investors as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation
D under the Securities Act and who are not qualified institutional buyers (as
defined under Rule 144A) (excluding non-United States persons).
"Issue Date" means May 30, 1997.
"Original Indenture" has the meaning specified in the recitals
to this Supplemental Indenture.
"Participants" means institutions that have accounts with the
Depository or its nominee.
"Payment Date" means the 30th day of each month (or the 28th
day of February), or if such day is not a Business Day, the next Business Day.
"Permitted Account Liens": (a) Liens created pursuant to this
Supplemental Indenture, (b) Liens for taxes, assessments, governmental charges,
other governmental obligations (other than Indebtedness) or levies and statutory
Liens, in each case with respect to sums that are not yet due or are being
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Company in
conformity with GAAP and (c) any Lien incurred in the ordinary course of
business in connection with social security, workers' compensation, unemployment
insurance and similar types of laws or regulations.
"Private Exchange Offer" means the offer by the Company to the
Initial Purchasers to exchange the Initial SENs held by the Initial Purchasers
as part of their initial distribution for a like aggregate principal amount of
Private Exchange SENs, as provided for in the Registration Rights Agreement.
"Private Exchange SENs" has the meaning specified in the
recitals to this Supplemental Indenture.
"Registered Exchange Offer" means the offer by the Company to
the Holders of the Initial SENs to exchange all of the Initial SENs for Exchange
SENs, as provided for in the Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 30, 1997, among the Company, the Guarantor and the
Initial Purchasers , for the benefit of the Holders of the Series A SENs.
"Regular Record Date" shall have the meaning set forth in
Section 3.6.
"Regulation S Global SEN" has the meaning set forth in Section
3.1.
<PAGE> 9
5
"Required Balance" means, as of any date, an amount equal to
the aggregate Scheduled Debt Service for the Series A SENs with respect to the
three next succeeding Payment Dates.
"Required Installment Payment" shall have the meaning set
forth in Section 3.4.
"Restricted Global SEN" has the meaning set forth in Section
3.1.
"Securities Act Legend" has the meaning set forth in Section
3.2.
"Series A Collateral" has the meaning specified in Section 2.1
of the Supplemental Indenture.
"Series A Holder" or "Holder of any Series A SEN" means any
Person in whose name a Series A SEN is registered in the Security Register
relating to the Series A SENs.
"Series A SENs" has the meaning specified in the recitals to
this Supplemental Indenture.
"Series A SENs Obligations" means the SENs Secured Obligations
in respect of the Series A SENs.
"Series A SENs Collateral Account" shall mean the SENs
Collateral Account for the Series A SENs established at the Trustee's offices in
New York and designated as the Citibank, N.A./Southern Peru Limited Series A
SENs Collateral Trust Account (# 102820), or any replacement SENs Collateral
Account for the Series A SENs.
"Series A SENs Reserve Account" shall mean the SENs Reserve
Account for the Series A SENs established at the Trustee's offices in New York
and designated as the Citibank, N.A./Southern Peru Limited Series A SENs Reserve
Account (# 102821), or any replacement SENs Reserve Account for the Series A
SENs.
ARTICLE II
SECURITY INTERESTS
Section 2.1 Grant of Security Interest. In order to secure the
full and punctual payment of the Series A SENs Obligations and to secure the
performance of all of the obligations of the Company under the Series A SENs,
the Guarantees endorsed thereon, the Indenture and any other Transaction
Documents, the Company hereby pledges and grants a continuing, lien and security
interest to the Trustee (for the benefit of the Holders of the Series A SENs,)
upon, in and to all of the rights, revenues and properties of the Company listed
in clauses (a), (b), (c) and (d) of this Section 2.1, inclusive, whether now
owned or existing or hereafter acquired or arising and regardless of where
located (all being
<PAGE> 10
6
collectively referred to as the "Series A Collateral"), and the Company
collaterally assigns to the Trustee (for the benefit of the Holders of the
Series A SENs):
(a) the Series A SENs Collateral Account and the Series A SENs
Reserve Account now or hereafter established pursuant to this
Supplemental Indenture or otherwise for the benefit of the Holders of
the Series A SENs,
(b) all cash, instruments, securities and funds deposited from
time to time in the Series A SENs Collateral Account and the Series A
SENs Reserve Account;
(c) all investments of funds in Series A SENs Collateral
Account and the Series A SENs Reserve Account and all instruments,
securities and general intangibles evidencing such investments,
including, without limitation, all Eligible Investments; and
(d) all interest, dividends, cash, instruments, securities and
other property received in respect of, or as proceeds of, or in
substitution or exchange for, any of the foregoing.
The Series A SENs Collateral Account and the Series A SENs
Reserve Account shall be administered and maintained in accordance with, and
shall be subject in all respects to the provisions of Article IV of the Original
Indenture and the Trustee shall apply all funds deposited therein in accordance
with the provisions of Article IV and Article VI of the Indenture.
ARTICLE III
THE SERIES A SENs
Section 3.1 Title, Term and Form Generally.
The aggregate principal amount of Series A SENs which may be
authenticated and delivered under this Supplemental Indenture shall be limited
to US$150,000,000, except for Series A SENs authenticated and delivered upon
registration or transfer of, or in exchange for, or in lieu of, other Series A
SENs pursuant to Section 304, 305, 306, 1006 or 1307 of the Original Indenture
or pursuant to an Exchange Offer. The Initial SENs, the Exchange SENs and the
Private Exchange SENs shall for all purposes of the Indenture be treated as a
single Series of SENs. All Series A SENs shall be equally and ratably secured as
provided in the Indenture and the Collateral Trust Agreement. The Initial SENs
shall be known as the "7.90% Series A Secured Export Notes due 2007" and the
Exchange SENs and the Private Exchange SENs shall be known as the "7.90% Series
A-1 Secured Export Notes due 2007", in each case, of the Company. The Series A
SENs shall be in substantially the forms set forth in Exhibit A hereto, with
appropriate inclusions and exclusions set forth therein depending on whether
such Series A SEN is (i) an Initial SEN, an Exchange SEN, or a Private Exchange
SEN, and (ii) a Global Series A SEN or a Certificated Series A SEN,
<PAGE> 11
7
and shall be issued in the forms hereinafter provided. The terms and provisions
contained in the Series A SENs shall constitute and are hereby expressly made a
part of this Supplemental Indenture and the Company, the Guarantor and the
Trustee by their execution and delivery of this Supplemental Indenture expressly
agree to such terms and provisions and to be bound thereby. The Series A SENs
shall bear interest as provided in Section 3.3 hereof. Principal on the Series A
SENs shall be payable as provided in Section 3.4 hereof and as otherwise
provided in the Indenture. The Series A SENs shall be subject to redemption as
provided in Section 3.5 hereof and in Article 13 of the Original Indenture. The
Series A SENs shall be entitled to the benefits of the Registration Rights
Agreement.
Initial SENs offered and sold in reliance on Rule 144A shall
be issued initially in the form of one or more Global Securities (the
"Restricted Global SENs") registered in the name of the Depository or a nominee
of the Depository. Initial SENs offered and sold in reliance on Regulation S
shall be issued initially in the form of one or more Global Securities (the
"Regulation S Global SENs") registered in the name of the Depository or a
nominee of the Depository. Initial SENs offered and sold other than as described
in the preceding two sentences shall be issued in definitive certificated form
(the "Certificated Initial SENs"). Exchange SENs shall be issued initially in
the form of one or more Global Securities (the "Exchange Global SENs")
registered in the name of the Depository or a nominee of the Depository. Private
Exchange SENs shall be issued in the form of one or more Global Securities (the
"Private Exchange Global SENs", and together with the Exchange Global SENs, the
Restricted Global SENs, and the Regulation S Global SENs, the "Global Series A
SENs") registered in the name of the Depository or a nominee of the Depository.
The aggregate principal amount of Global Series A SENs may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository or its nominee, as hereinafter provided.
Series A SENs shall be issued in amounts of US$250,000 and
integral multiples of US$1,000 in excess thereof (each an "Authorized
Denomination").
Section 3.2 Restrictive Legends.
Unless and until an Initial SEN or a Private Exchange SEN is
sold under an effective Shelf Registration Statement (as defined in the
Registration Rights Agreement), subject to Section 3.12(b) hereof, each Initial
SEN and Private Exchange SEN shall bear the following legend (the "Securities
Act Legend") on the face thereof:
"THIS NOTE OR ITS PREDECESSOR HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED
THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
<PAGE> 12
8
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES FOR THE BENEFIT
OF THE COMPANY THAT THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR
ANY PREDECESSOR OF THIS NOTE) EXCEPT (i) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING THE NOTES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), (iii) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (iv) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER
THE SECURITIES ACT OR (v) TO AN INSTITUTIONAL ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3), OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNTS OF OTHER INSTITUTIONAL ACCREDITED INVESTORS HAVING A
MINIMUM PURCHASE PRICE OF NOT LESS THAN US$250,000 AND IN EACH OF CASES
(i) THROUGH (v) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. IN CONNECTION
WITH ANY TRANSFER PURSUANT TO CLAUSE (v) ABOVE, THE PURCHASER WILL
DELIVER TO THE TRUSTEE, SOUTHERN PERU COPPER CORPORATION, SOUTHERN PERU
LIMITED, THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND
OPINIONS AND OTHER INFORMATION AS THEY OR ANY OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
Each Global Series A SEN, whether or not an Initial SEN or
Private Exchange SEN, shall also bear the following legend on the face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
REPRESENTATIVE OF DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL
<PAGE> 13
9
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE."
Section 3.3 Interest on the Series A SENs. The Company shall
pay interest on the unpaid principal amount of the Series A SENs from the Issue
Date to the date on which such Series A SENs are repaid in full at the rate of
7.90% per annum. Accrued interest on each Series A SEN shall be calculated on
the basis of a 360-day year of twelve 30-day months and shall be payable monthly
in arrears on each Payment Date to the holder thereof as of the Regular Record
Date as provided in Section 3.6. With respect to the Initial SENs, the Company
also agrees to pay the amount of any additional interest required pursuant to
the terms of the Initial SENs and the Registration Rights Agreement in the
manner provided above. In addition, if the Company shall fail to pay when due
any principal of or interest on any Series A SEN or any other amount (whether of
interest, fees or otherwise) owing to any Series A Holder under any Transaction
Document, then the Company will pay to such Holder on demand interest on the
amount in default from the date such payment became due until payment in full at
the rate of 8.90% per annum.
Section 3.4 Principal of the Series A SENs. The Company shall
pay principal of the Series A SENs on each Payment Date, commencing June 30,
2000, in the amount (as adjusted as provided below, a "Required Installment
Payment") which is specified with respect to such Payment Date on Schedule 3.4
hereto; provided that in any event and in all circumstances the final Required
Installment Payment shall be in an amount sufficient to pay all unpaid principal
of the Outstanding Series A SENs. The amount of each Required Installment
Payment shall be subject to adjustment as provided in this Section 3.4. Each
Required Installment Payment shall be allocated to all Outstanding Series A SENs
in proportion to the respective outstanding principal amount thereof. In the
event of any partial redemption of the Series A SENs as provided in Section 3.5
hereof and Article 13 of the Original Indenture, all remaining Required
Installment Payments shall be reduced by an amount equal to the product of (x)
the amount of such Required Installment Payment divided by the aggregate
principal amount of the Outstanding Series A SENs and (y) the principal amount
of the Series A SENs redeemed. In the event that following prepayment of the
Series A SENs required as a result of the occurrence of an Accelerated
Amortization Event pursuant to Section 602 of the Original Indenture, such
Accelerated Amortization Event is cured as provided in Section 602 of the
Original Indenture, each Required Installment Payment to be made after the date
of such cure shall be reduced by an amount equal to the product of (x) the
amount of such Required Installment Payment divided by the aggregate principal
amount of the Outstanding Series A SENs and (y) the aggregate amount prepaid as
a result of such Accelerated Amortization Event. The Trustee shall promptly
deliver to the
<PAGE> 14
10
Company and each Holder of the Series A SENs a revised Schedule 3.4 promptly
after any adjustment is required to be made to the Required Installment Payments
as provided above.
Section 3.5 Redemption; Defeasance. (a) The Company may redeem
the Series A SENs in whole or in part at any time at the Redemption Price as
provided in Article 13 of the Original Indenture, provided that the SENs Reserve
Account contains funds in an amount equal to the Required Balance on the date of
such redemption after giving effect to all payments to be made on such date in
accordance with Article 13 of the Original Indenture. Except as provided in
Section 1308(d) or Section 1308(e) of the Original Indenture, each such
redemption must be in a minimum amount of $5,000,000 (or such lesser amount of
the Series A SENs as is then Outstanding). Except as provided in Section 1308(e)
of the Original Indenture, notwithstanding anything to the contrary contained in
the Original Indenture, the principal amount of Series A SENs to be so redeemed
shall be allocated to all Series A SENs at the time outstanding in proportion to
the respective outstanding principal amounts thereof immediately prior to such
redemption. If any Certificated Initial SEN is to be redeemed in part as set
forth in the Original Indenture, a new Certificated Initial SEN will be issued
for surrender of the original Certificated Initial SEN. Upon redemption of a
portion of any Global Series A SENs, such Global Series A SENs will be marked to
reflect the appropriate reduction of its principal amount.
(b) The Series A SENs shall be subject to defeasance as
provided in Article 15 of the Original Indenture.
Section 3.6 Regular Record Date; Payment Date. The Regular
Record Date to determine the Series A Holders entitled to receive a payment of
principal and interest with respect to any Payment Date shall be the 15th day of
the calendar month in which such Payment Date occurs (the "Regular Record
Date"), without regard to whether or not such 15th day of the month is a
Business Day.
Section 3.7 Method of Payment. Payments of principal, interest
and premium, if any, in respect of each Series A SEN will be made by Dollar
check drawn on a bank in the United States and mailed to the Holder of such
Series A SEN at its address appearing in the Register; provided, that upon
application by the Holder of a Series A SEN to the Trustee or a Paying Agent not
less than 10 days before any Payment Date, such payment shall be made by wire
transfer to a Dollar account maintained by the payee with a bank in the United
States. Unless such application is revoked, any such application made by such
Holder with respect to such Series A SEN will remain in effect with respect to
any future payments with respect to such Series A SEN payable to such Holder.
Neither the Company nor the Trustee shall impose any charge on any Holder in
connection with payments made by wire transfer.
Section 3.8 Trustee, Registrar and Principal Paying Agent. The
Company hereby appoints Citibank, N.A. as Trustee, Principal Paying Agent and
Registrar under the Indenture with respect to the Series A SENs and Citibank,
N.A. hereby accepts such appointments. The Company and the Guarantor covenant
and agree to pay to the Trustee the fees and expenses pursuant to the Fee
Agreement.
<PAGE> 15
11
Section 3.9 Global Series A SENs; Certificated Series A SENs.
Each Global Series A SEN shall be registered in the name of the Depository or a
nominee for the Depository. The Depository shall be DTC unless the Company
appoints a successor depository by delivery of a Company Order to the Trustee
specifying such successor depository.
All payments on a Global Series A SEN will be made to the
Depository or its nominee, as the case may be, as the registered owner and
holder of such Global Series A SEN and the Company will be fully discharged by
payment to the Depository from any responsibility or liability in respect of
each amount so paid. Upon receipt of any such payment in respect of a Global
Series A SEN, the Depository will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Series A SEN as shown on the records of the Depository.
The registered holder of each Global Series A SEN may grant
proxies and otherwise authorize any person, including Participants and persons
that may hold interests through Participants, to take any action which a Holder
is entitled to take under this Supplemental Indenture or the Series A SENs.
Beneficial interests in the Global Series A SEN will be shown
on, and transfers thereof will be effected only through, records maintained by
the Depository or its nominee and its direct and indirect participants,
including Euroclear and Cedel. Transfers between participants in the Depository
will be effected in the ordinary way in accordance with the Applicable
Procedures and will be settled in same-day funds. Transfers between participants
in Euroclear and Cedel will be effected in the ordinary way in accordance with
Applicable Procedures.
On or prior to the 40th day after the later of the
commencement of the offering of the Initial SENs and the Issue Date, beneficial
interests in the Regulation S Global SEN may be held only through Euroclear or
Cedel, unless delivery is made through the Restricted Global SEN in accordance
with Section 3.12(c) hereof.
Unless and until it is exchanged in whole or in part for
Series A SENs in definitive certificated form ("Certificated Series A SENs"), a
Global Series A SEN may not be transferred except as a whole by the Depository
to another nominee of the Depository or to a successor depository or a nominee
of such successor.
Owners of beneficial interests in Global Series A SENs shall
be entitled or required, as the case may be, under the circumstances described
in this Section 3.9, to receive physical delivery of Certificated Series A SENs.
Interests in a Global Series A SEN shall be exchangeable for
Certificated Series A SENs if (i) the Depository notifies the Company that it is
unwilling or unable to continue as depository for such Global Series A SEN, or
(ii) the Depository ceases to be a "Clearing Agency" registered under the
Exchange Act, and a successor depository is not appointed by the Company within
ninety (90) days, or (iii) a Trigger Event, Accelerated
<PAGE> 16
12
Amortization Event or Event of Default has occurred and is continuing with
respect to the Series A SENs, or (iv) such exchange is required pursuant to
Section 1308 of the Original Indenture. Upon the occurrence of any of the events
described in the preceding sentence, the Company shall cause the appropriate
Certificated Series A SENs to be delivered to the owners of beneficial interests
in the Global Series A SEN in accordance with the instructions of the
Depository. Certificated Series A SENs shall be transferable or exchangeable as
described in Section 305 of the Original Indenture. Except as set forth in this
Section 3.9 and in Sections 3.1 and 3.12 hereof, the Series A SENs shall only be
issued as Global Series A SENs.
Section 3.10 Exchange of Initial Notes for Exchange Notes.
Exchanges of Initial SENs for Exchange SENs and the Private Exchange SENs shall
be made in accordance with the provisions of Section 305 of the Original
Indenture and the Registered Exchange Offer and the Private Exchange Offer, as
the case may be; provided that no such exchange for Exchange SENs shall occur
until an Exchange Offer Registration Statement (as defined in the Registration
Rights Agreement) shall have been declared effective by the Commission and the
Trustee shall have received an Officers' Certificate confirming that the
Exchange Offer Registration Statement has been declared effective by the
Commission.
Section 3.11 Available Information. So long as any Initial
SENs remain outstanding or any Private Exchange SENs remain outstanding and have
not been sold pursuant to an effective Shelf Registration Statement, each of the
Company and the Guarantor will take all action necessary to provide information
to permit resales of the Initial SENs pursuant to Rule 144A, including
furnishing to any Holder of an Initial SEN or holder of a beneficial interest in
a Global Series A SEN, or to any prospective purchaser designated by such a
Holder or holder of a beneficial interest, upon request of such Holder,
financial and other information required to be delivered under paragraph (d)(4)
of Rule 144A (as amended from time to time and including any successor
provision) unless, at the time of such request, the Guarantor is subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act (as
amended from time to time and including any successor provision).
Section 3.12 Transfer and Exchange. (a) Beneficial interests
in a Restricted Global SEN and a Regulation S Global SEN (collectively, the
"Initial Global SENs") and a Private Exchange Global SEN will be exchangeable
for Certificated Initial SENs or Private Exchange SENs in definitive
certificated form (the "Certificated Private Exchange SENs"), as the case may
be, if a holder of a beneficial interest in an Initial Global SEN or Private
Exchange Global SEN, as the case may be, wishes at any time to transfer its
interest in such Initial Global SEN or Private Exchange Global SEN, as the case
may be, to an Institutional Accredited Investor, subject to compliance with the
Securities Act Legend.
Each Institutional Accredited Investor that acquires a
Certificated Initial SEN or Certificated Private Exchange SEN shall execute and
deliver to the Trustee and the selling holder a letter in the form of Exhibit B.
Holders of Certificated Initial SENs or Certificated Private
Exchange SENs may exchange such Initial SENs or Private Exchange SENs for a
beneficial interest in an
<PAGE> 17
13
Initial Global SEN or Private Exchange Global SEN, as the case may be, if such
holder wishes at any time to transfer its interest in such Certificated Initial
SENs or Certificated Private Exchange SENs to a person who wishes to take
delivery thereof in the form of an interest in an Initial Global SEN or Private
Exchange Global SEN, as the case may be, or the holder wishes to exchange its
Certificated Initial SENs or Certificated Private Exchange SENs for a beneficial
interest in an Initial Global SEN or Private Exchange Global SEN, as the case
may be (in each case so long as such transferee or holder, as the case may be,
is not required to hold a Certificated Initial SEN or Certificated Private
Exchange SEN), subject, in the case of transfer, to compliance with the
Securities Act Legend.
(b) In the case of Certificated Initial SENs or Certificated
Private Exchange SENs issued in exchange for interests in the Restricted Global
SEN or Private Exchange Global SEN, as the case may be, such Certificated
Initial SENs or Certificated Private Exchange SENs will bear the Securities Act
Legend. Upon the transfer, exchange or replacement of Initial SENs or Private
Exchange SENs bearing such Securities Act Legend, or upon specific request for
removal of the Securities Act Legend on an Initial SEN or Private Exchange SEN,
the Trustee will deliver only Initial SENs or Private Exchange SENs, as the case
may be, that bear such Securities Act Legend, or will refuse to remove such
Securities Act Legend, as the case may be, unless there is delivered to the
Trustee a certificate in the form of Exhibit D or an Opinion of Counsel, that
neither the Securities Act Legend nor the restrictions on transfer set forth
therein are required to ensure compliance with the provisions of the Securities
Act.
(c) Before the 40th day after the later of the commencement of
the offering of the Initial SENs and the Issue Date, transfers by an owner of a
beneficial interest in the Regulation S Global SEN to a transferee who wishes to
take delivery of such interest through the Restricted Global SEN will be made
only in Authorized Denominations in accordance with the Applicable Procedures
and upon receipt by the Trustee or Transfer Agent of a written certification
from the transferor of the beneficial interest in the form of Exhibit E to the
effect that such transfer is being made to a Person who the transferor
reasonably believes is a "qualified institutional buyer" within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United States
or any other jurisdiction. After such 40th day, such certification requirement
will no longer apply to such transfers.
(d) Transfers by an owner of a Certificated Initial SEN
bearing the Securities Act Legend or of a beneficial interest in the Restricted
Global Certificate to a transferee who takes delivery of such interest through
the Regulation S Global SEN will be made only in Authorized Denominations upon
receipt by the Trustee or any Transfer Agent of a written certification from the
transferor in the form of Exhibit C to the effect that such transfer is being
made in accordance with Regulation S.
(e) Certificated Initial SENs and Certificated Private
Exchange SENs may be exchanged or transferred in whole or in part in the
principal amount of Authorized Denominations by surrendering such Certificated
Initial SENs or Certificated Private Exchange SENs, as the case may be, at the
office of the Trustee or any Transfer Agent with
<PAGE> 18
14
a written instrument of transfer with signature medallion guaranteed as provided
in this Supplemental Indenture in the form of Exhibit F hereto duly completed
and executed by the holder thereof or such holder's attorney duly authorized in
writing with signature medallion guaranteed, subject to compliance with the
Securities Act Legend.
(f) Beneficial interests in the Initial Global SENs and the
Certificated Initial SENs shall be exchangeable for interests in the Exchange
Global SEN pursuant to the Registered Exchange Offer. In addition, beneficial
interests in the Restricted Global SEN shall be exchangeable for interests in
the Private Exchange Global SEN pursuant to the Private Exchange Offer.
(g) Upon any such exchange or transfer of all or a portion of
any Initial Global SEN for a Certificated Initial SEN or a Private Exchange
Global SEN for a Certificated Private Exchange SEN or an interest in either a
Restricted Global SEN or a Regulation S Global SEN for an interest in the other
Initial Global SEN, an Exchange Global SEN or a Private Exchange Global SEN, as
the case may be, the Initial Global SEN or Private Exchange Global SEN, as the
case may be, to be so exchanged or transferred will be marked to reflect the
reduction of its principal amount by the aggregate principal amount of such
Certificated Initial SEN or Certificated Private Exchange SEN, as the case may
be, or the interest to be so exchanged or transferred for an interest in a
Regulation S Global Initial SEN, a Restricted Global SEN, an Exchange Global
SEN, or a Private Exchange Global SEN, as the case may be. Upon any such
exchange or transfer for an interest in an Initial Global SEN, an Exchange
Global SEN, or a Private Exchange Global SEN, such an Initial Global SEN,
Exchange Global SEN or Private Exchange Global SEN, as the case may be, will be
marked to reflect the increase in its principal amount by the principal amount
to be so exchanged or transferred.
(h) Except as contemplated by subsection (f) of this Section
3.12 and Section 3.10, (i) upon the exchange or transfer of any Initial SENs,
only other Initial SENs shall be issued in respect of such exchange or transfer,
(ii) upon the exchange or transfer of any Exchange SENs, only other Exchange
SENs shall be issued in respect of such exchange or transfer, and (iii) upon the
exchange or transfer of any Private Exchange SENs, only other Private Exchange
SENs shall be issued in respect of such exchange or transfer.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES
Section 4.1 Security Interest. The Company represents and
warrants to the Trustee that this Supplemental Indenture creates in favor of the
Trustee a perfected security interest in the Series A Collateral, enforceable in
accordance with its terms, (except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing) and prior to all other Liens
and rights of others, except for Permitted Account Liens.
<PAGE> 19
15
Section 4.2 Protection of Security Interest. The Company
covenants and agrees that:
(a) the Company will not (1) sell, assign, transfer, exchange,
or otherwise dispose of, or grant any option with respect to, the Series A
Collateral, or (2) create, incur or permit to exist any Lien or option in favor
of, or any claim of any person with respect to, any of the Series A Collateral,
or any interest therein, except for the security interest created by this
Supplemental Indenture and for Permitted Account Liens.
(b) The Company will maintain the security interest created by
this Supplemental Indenture as a perfected security interest and defend the
right, title and interest of the Trustee, for the benefit of the Holders of the
Series A SENs, in and to the Series A Collateral against the claims and demands
of all persons whomsoever (other than the beneficiaries of Permitted Account
Liens). At any time and from time to time, upon the written request of the
Trustee, and the sole expense of the Company, the Company will promptly and duly
execute and deliver such further instruments and documents and take such further
actions as the Trustee reasonably may request as required for the purposes of
obtaining or preserving the full benefits of the Indenture and of the rights and
powers herein granted, including, without limitation, the execution of financing
statements under the Uniform Commercial Code.
Section 4.3 Litigation. Each of the Company and the Guarantor
represents and warrants (as to itself) to the Trustee on the date hereof and for
the benefit of the holders of the Series A SENs that except as set forth on
Schedule 4.3, no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Company or the Guarantor, threatened by or against the Company or the Guarantor
which, if adversely determined, would have a material adverse effect on the
financial condition or results of operations of the Company, the Guarantor and
their respective Subsidiaries, taken as a whole, or on the validity or
enforceability of the Indenture or any of the other Transaction Documents or
would enjoin or prevent any of the transactions contemplated hereby.
ARTICLE V
ADDITIONAL PROVISIONS RELATING TO TRUSTEE
Section 5.1 Trustee's Appointment as Attorney-in-Fact. (a) The
Company hereby irrevocably constitutes and appoints the Trustee and any officer
or agent of the Trustee, with full power of substitution, as its true and lawful
attorney-in-fact and with full power and authority in the place and stead of the
Company and in the name of the Company or in the Trustee's own name, from time
to time in the Trustee's discretion at any time after the occurrence of and
during the continuation of an Event of Default, for the purpose of carrying out
the terms of this Supplemental Indenture, to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this
<PAGE> 20
16
Supplemental Indenture, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) The Company hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
this Section 5.1. All powers, authorizations and agencies contained in this
Supplemental Indenture are coupled with an interest and are irrevocable until
this Supplemental Indenture is terminated and the security interests created
hereby are released.
Section 5.2 Execution of Financing Statements. Pursuant to
Section 9-402 of the Uniform Commercial Code, the Company authorizes the Trustee
to file financing statements with respect to the Series A Collateral without the
signature of the Company (other than the financing statements delivered on the
Issue Date with respect to the Series A SENs) in such form and in such filing
offices as the Trustee reasonably determines appropriate to perfect the security
interests of the Trustee under this Supplemental Indenture. A carbon,
photographic or other reproduction of this Supplemental Indenture shall be
sufficient as a financing statement for filing in any jurisdiction.
ARTICLE VI
REMEDIES
Section 6.1 Remedies of Trustee as Secured Party. Upon the
occurrence of an Event of Default, the Trustee shall apply the Series A
Collateral in accordance with Section 604 of the Original Indenture. In addition
to the rights, powers and remedies granted to it under this Supplemental
Indenture, the Original Indenture, the Collateral Trust Agreement and in any
other Transaction Document relating to the Series A SENs Obligations, the
Trustee, subject to any limitations contained in the foregoing, shall have all
the rights, powers and remedies available at law, including, without limitation,
the rights and remedies of a secured party under the Uniform Commercial Code. To
the extent permitted by law, the Company waives any presentment, demand, protest
and all notices of any kind and all claims, damages and demands it may acquire
against the Trustee arising out of the exercise by them of any rights hereunder.
Notwithstanding anything to the contrary in this Supplemental Indenture, the
Original Indenture or any other Transaction Document, no Realization Event (as
defined in the Collateral Trust Agreement) may be effected with respect to the
Collateral (as defined in the Collateral Trust Agreement) except in accordance
with the Collateral Trust Agreement.
Section 6.2 The Company shall remain liable for any deficiency
if the proceeds of the Series A Collateral are insufficient to pay the Series A
SENs Obligations and the fees and disbursements of any attorneys employed by the
Trustee or any Holder to collect such deficiency.
<PAGE> 21
17
ARTICLE VII
MISCELLANEOUS
Section 7.1 Execution of Supplemental Indenture. This
Supplemental Indenture is executed and shall be construed as an indenture
supplemental to the Original Indenture and, as provided in the Original
Indenture, this Supplemental Indenture forms a part thereof.
Section 7.2 Conflicts. In the case of a conflict between a
provision of this Supplemental Indenture (a "Supplemental Provision") and any
other provision of the Original Indenture, the Supplemental Provision shall
control.
Section 7.3 Supplemental Indenture. The Company and the
Guarantor may enter into Supplemental Indentures hereto only in accordance with
Article 10 of the Original Indenture.
Section 7.4 Counterparts. This Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
Section 7.5 GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE AND THE
SERIES A SENS ISSUED HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
<PAGE> 22
18
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the day and year first above
written.
SOUTHERN PERU LIMITED
By: /s/ Thomas J. Findley, Jr.
--------------------------------
Name: Thomas J. Findley, Jr.
Title: Treasurer
SOUTHERN PERU COPPER CORPORATION
By: /s/ Thomas J. Findley, Jr.
--------------------------------
Name: Thomas J. Findley, Jr.
Title: Treasurer
CITIBANK, N.A.,
as Trustee, Principal Paying Agent
and Registrar
By: /s/ Peter Pavlyshin
--------------------------------
Name: Peter Pavlyshin
Title: Trust Officer
<PAGE> 23
19
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The following instrument was acknowledged before me this ___
day of May, 1997, by _____________, the _____________ of Southern Peru Limited,
a Delaware corporation.
-----------------
Notary Public
My commission expires
---
<PAGE> 24
20
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The following instrument was acknowledged before me this ___
day of May, 1997, by _____________, the _____________ of Southern Peru Copper
Corporation, a Delaware corporation.
-----------------
Notary Public
My commission expires
---
<PAGE> 25
SCHEDULE 3.4
TO SUPPLEMENTAL INDENTURE
Amortization Schedule
<TABLE>
<CAPTION>
Date Aggregate Principal Payment
---- ---------------------------
<S> <C>
Prior to June 30, 2000 $ 0
June 30, 2000 1,342,965.96
July 30, 2000 1,351,807.16
August 30, 2000 1,360,706.55
September 30, 2000 1,369,664.54
October 30, 2000 1,378,681.50
November 30, 2000 1,387,757.82
December 30, 2000 1,396,893.89
January 30, 2001 1,406,090.11
February 28, 2001 1,415,346.87
March 30, 2001 1,424,664.57
April 30, 2001 1,434,043.61
May 30, 2001 1,443,484.40
June 30, 2001 1,452,987.33
July 30, 2001 1,462,552.83
August 30, 2001 1,472,181.31
September 30, 2001 1,481,873.17
October 30, 2001 1,491,628.83
November 30, 2001 1,501,448.72
December 30, 2001 1,511,333.26
January 30, 2002 1,521,282.87
February 28, 2002 1,531,297.98
March 30, 2002 1,541,379.03
April 30, 2002 1,551,526.44
May 30, 2002 1,561,740.66
June 30, 2002 1,572,022.12
July 30, 2002 1,582,371.26
August 30, 2002 1,592,788.54
September 30, 2002 1,603,274.40
October 30, 2002 1,613,829.29
November 30, 2002 1,624,453.66
December 30, 2002 1,635,147.98
January 30, 2003 1,645,912.71
February 28, 2003 1,656,748.30
March 30, 2003 1,667,655.22
April 30, 2003 1,678,633.95
May 30, 2003 1,689,684.96
</TABLE>
<PAGE> 26
2
SCHEDULE 3.4 (CONT'D)
<TABLE>
<CAPTION>
Date Aggregate Principal Payment
---- ---------------------------
<S> <C>
June 30, 2003 $1,700,808.72
July 30, 2003 1,712,005.71
August 30, 2003 1,723,276.42
September 30, 2003 1,734,621.32
October 30, 2003 1,746,040.91
November 30, 2003 1,757,535.68
December 30, 2003 1,769,106.12
January 30, 2004 1,780,752.74
February 29, 2004 1,792,476.03
March 30, 2004 1,804,276.49
April 30, 2004 1,816,154.65
May 30, 2004 1,828,111.00
June 30, 2004 1,840,146.06
July 30, 2004 1,852,260.36
August 30, 2004 1,864,454.40
September 30, 2004 1,876,728.73
October 30, 2004 1,889,083.86
November 30, 2004 1,901,520.33
December 30, 2004 1,914,038.67
January 30, 2005 1,926,639.43
February 28, 2005 1,939,323.14
March 30, 2005 1,952,090.35
April 30, 2005 1,964,941.61
May 30, 2005 1,977,877.47
June 30, 2005 1,990,898.50
July 30, 2005 2,004,005.25
August 30, 2005 2,017,198.28
September 30, 2005 2,030,478.17
October 30, 2005 2,043,845.49
November 30, 2005 2,057,300.80
December 30, 2005 2,070,844.70
January 30, 2006 2,084,477.76
February 28, 2006 2,098,200.57
March 30, 2006 2,112,013.73
April 30, 2006 2,125,917.82
May 30, 2006 2,139,913.44
June 30, 2006 2,154,001.20
July 30, 2006 2,168,181.71
August 30, 2006 2,182,455.58
September 30, 2006 2,196,823.41
October 30, 2006 2,211,285.83
November 30, 2006 2,225,843.46
</TABLE>
<PAGE> 27
3
SCHEDULE 3.4 (CONT'D)
<TABLE>
<CAPTION>
Date Aggregate Principal Payment
---- ---------------------------
<S> <C>
December 30, 2006 $2,240,496.93
January 30, 2007 2,255,246.87
February 28, 2007 2,270,093.91
March 30, 2007 2,285,038.70
April 30, 2007 2,300,081.87
May 30, 2007 2,315,223.87
</TABLE>
<PAGE> 28
EXHIBIT A
TO SUPPLEMENTAL INDENTURE
[FORM OF NOTE]
[THIS NOTE OR ITS PREDECESSOR HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND
THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES FOR THE BENEFIT OF THE
COMPANY THAT THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) EXCEPT (i)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING THE
NOTES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (iv) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (v) TO AN
INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(A)(1), (2),
(3), OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNTS OF OTHER INSTITUTIONAL ACCREDITED INVESTORS HAVING A
MINIMUM PURCHASE PRICE OF NOT LESS THAN US$250,000 AND IN EACH OF CASES (i)
THROUGH (v) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND OTHER JURISDICTIONS. IN CONNECTION WITH ANY TRANSFER
PURSUANT TO CLAUSE (v) ABOVE, THE PURCHASER WILL DELIVER TO THE TRUSTEE,
SOUTHERN PERU COPPER CORPORATION, SOUTHERN PERU LIMITED, THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OPINIONS AND OTHER INFORMATION AS THEY OR
ANY OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF
<PAGE> 29
CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF DTC AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 3.12 OF THE SUPPLEMENTAL INDENTURE.]
SOUTHERN PERU LIMITED
7.90% [Series A/Series A-1]
Secured Export Notes Due 2007
AGGREGATE AMOUNT OF THE ISSUE $150,000,000
Serial No. R- New York, New York
$ , 1997
CUSIP No._________________
SOUTHERN PERU LIMITED, a corporation organized under the laws
of the state of Delaware (the "Company" which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value
received, hereby promises to pay to ____________, or registered assigns, the
principal amount of _________ DOLLARS ($__________) as provided below or on such
other date or dates as the relevant principal sum may become payable in
accordance with the provisions hereof and in the Indenture.
The principal on this [Series A/Series A-1] 7.90% Secured
Export Note Due 2007 shall be payable on the 30th (or in the case of February,
the 28th) of each month, or if such day is not a Business Day (as defined in the
Indenture (as defined herein)), on the next Business Day (each such date, a
"Payment Date"), commencing June 30, 2000, in the amount equal to the Note's pro
rata portion (pro rata portion meaning the percentage of the principal amount of
all outstanding Series A SENs represented by the Note) of the amount (as
adjusted as provided below, a "Required Installment Payment") which is specified
with respect to such Payment Date on Schedule 3.4 to the Supplemental Indenture
(as defined herein); provided that in any event and in all circumstances the
final Required Installment Payment shall be in an amount sufficient to pay all
unpaid principal of this Note. In the event of any partial redemption of this
Note as provided in Section 3.5 of the Supplemental Indenture and Article 13 of
the Original Indenture (as defined herein), all remaining Required Installment
Payments hereon shall be reduced as provided in the Indenture. In the event that
following redemptions of this Note required as a result of the occurrence of an
Accelerated
<PAGE> 30
Amortization Event pursuant to Section 602 of the Original Indenture, such
Accelerated Amortization Event is cured as provided in Section 602 of the
Original Indenture, each Required Installment Payment to be made after the date
of such cure shall be reduced as provided in the Indenture.
The Company promises to pay interest on the unpaid principal
amount hereof from May 30, 1997 to the date on which this Note is repaid in full
at the rate of 7.90% per annum, payable monthly in arrears on each Payment Date,
commencing June 30, 1997, to the Holder hereof as of the Regular Record Date for
such Payment Date as provided in the Indenture. Accrued interest hereon shall be
calculated on the basis of a 360-day year of twelve 30-day months. [The Company
also promises to pay the amount of additional interest, if any, on this Note
pursuant to the terms of the Registration Rights Agreement dated as of May 30,
1997 between the Company and the initial purchasers named therein in the manner
provided therein and herein.] In addition, if the Company shall fail to pay when
due any principal of or interest hereon or any other amount (whether of
interest, fees or otherwise) owing hereon when due, then the Company shall pay
to the holder hereof on demand interest on the amount in default from the date
such payment became due until payment in full at the rate of 8.90% per annum.
All such principal and interest shall be payable in lawful money of the United
States of America as provided in the Indenture.
The date and amount of each repayment and redemption of
principal hereof shall be endorsed by the holder hereof on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof, provided that the failure to make or any error in making any such
endorsement on such schedule shall not limit, extinguish or in any way modify
the obligation of the Company to repay this Note strictly in accordance with the
terms hereof and the Indenture.
The Company hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
Reference is hereby made to the further provisions of the Note
set forth on the reverse hereof, which further provisions will for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by
the Trustee or Authenticating Agent by the manual signature of one of its
authorized signatories, the Note will not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
<PAGE> 31
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed.
Dated ________________, _______
SOUTHERN PERU LIMITED
By: ________________________
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the SENs of the Series designated herein and
referred to in the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By: ______________________________
Title: Authorized Signatory
<PAGE> 32
(Reverse of Note)
This Note is one of the Company's Secured Export Notes
designated as the "7.90% [Series A] [Series A-1] Secured Export Notes due 2007"
(together with any of the Company's outstanding 7.90% [Series A] [Series A-1]
Secured Export Notes due 2007 the "Series A SENs"), originally issued in the
aggregate principal amount of $150,000,000 pursuant to the Indenture (the
"Original Indenture"), dated as of May 30, 1997, among the Company, Southern
Peru Copper Corporation, as Guarantor, and Citibank, N.A., as trustee thereunder
(the "Trustee"), and the Supplemental Indenture related thereto dated as of May
30, 1997 among the Company, the Guarantor and the Trustee (the "Supplemental
Indenture", and together with the Original Indenture, the "Indenture"). The
terms of the Series A SENs include those stated in the Indenture. The Holder of
this Note is entitled to the benefits of, be bound by and be deemed to have
notice of, all provisions of the Indenture and, subject to the terms thereof,
may enforce the agreements of the Company and the Guarantor contained therein
and exercise the remedies provided for thereby or otherwise available in respect
thereof. All terms used in this Note that are defined in the Indenture will have
the meanings assigned to them in the Indenture.
The Series A SENs are secured pursuant to the terms of the
Indenture and the Collateral Trust Agreement, dated as of March 31, 1997 between
the Company and Deutsche Bank AG, New York Branch, as collateral trustee (the
"Collateral Trustee"), and the Holder, by its acceptance of this Note, consents
to the Trustee and the Collateral Trustee acting on its behalf under the
Indenture and the Collateral Trust Agreement, respectively.
Payments on the Series A SENs shall be made as provided in the
Indenture.
Each Series A SEN is registered and is transferable only upon
its surrender for registration or transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed by the holder hereof or his
attorney duly authorized in writing in all respects in accordance with the terms
and limitations of the Indenture. Except as provided in the Indenture or herein,
references in this Note to a "Holder" shall mean the person in whose name this
Note is at the time registered on the register kept by the Trustee as provided
in the Indenture and the Company and the Trustee may treat such person as the
owner of this Note for the purpose of receiving payment and for all other
purposes, and the Company and the Trustee shall not be affected by any notice to
the contrary.
The holders of the Series A SENs may be entitled to the
payment of Additional Amounts in respect of payments of principal, interest (and
premium, if any) on the Series A SENs as provided in, and subject to the terms
and limitations of, the Indenture. All references in this Note to principal,
premium or interest in respect of this Note shall be deemed to mean and include
all Additional Amounts, if any, payable in respect of such principal, premium or
interest, unless the context otherwise requires, and express mention of the
payment of Additional Amounts in any provision hereof shall not be construed as
excluding reference to Additional Amounts in those provisions hereof where such
express mention is not made. References to the term holder in this paragraph
shall include the beneficial owner of this Note.
<PAGE> 33
The Series A SENs shall be issued in amounts of US$250,000 and
integral multiples of US$1,000 in excess thereof.
The Series A SENs are subject to optional redemption, in whole
or in part, all as specified in the Indenture, and not otherwise.
In case an Accelerated Amortization Event shall occur and be
continuing, the Series A SENs are subject to redemption as provided in the
Indenture.
In case an Event of Default shall occur and be continuing, the
unpaid balance of the principal of the Series A SENs may become due and payable
in the manner and with the effect provided in the Indenture.
Subject to the terms of the Indenture, the Company and the
Guarantor at any time may terminate some or all of its obligations under the
Series A SENs and the Indenture by depositing with the Trustee cash or
Government Obligations, or a combination thereof, in the amount specified in the
Indenture.
Subject to certain exceptions set forth in the Indenture, the
Company, the Guarantor and the Trustee may enter into supplemental indentures to
the Original Indenture and the Supplemental Indenture as provided therein with
the consent of Holders of not less than 51% of the aggregate principal amount of
all Outstanding SENs of the Series A SENs. The Company, the Guarantor and the
Trustee may also enter into supplemental indentures to the Original Indenture
and the Supplemental Indenture in certain circumstances set forth therein
without the consent of any Holder.
This Note is made and delivered in New York, New York, and
shall be governed by, and construed in accordance with, the laws of the State of
New York.
<PAGE> 34
EXHIBIT B
TO SUPPLEMENTAL INDENTURE
[FORM OF LETTER TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS]
Southern Peru Limited
and
Southern Peru Copper Corporation
180 Maiden Lane
New York, New York 10038
Citibank, N.A., as Trustee
120 Wall Street, 13th Floor
New York, New York 10043
Dear Ladies and Gentlemen:
We are delivering this letter in connection with our proposed purchase
of $__________ principal amount of 7.90% Secured Export Notes Due 2007 (the
"Notes") of Southern Peru Limited.
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are accredited
investors within the meaning of Rule 501(a)(1), (2) or (3) under the Securities
Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of the Notes by us will be for our own account or
for the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which we exercise sole investment discretion or (B) we are a "bank",
within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and
loan association" or other institution described in Section 3(a)(5)(A) of the
Securities Act that is acquiring the Notes as fiduciary for the account of one
or more institutions for which we exercise sole investment discretion;
(iii) we will acquire Notes having a minimum purchase price of not less
than $250,000 for our own account or for any separate account for which we are
acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of purchasing the
Notes;
(v) we are not acquiring the Notes with a view to any offer, sale or
distribution thereof, except inside the United States in accordance with Rule
144A under the Securities Act or outside the United States in accordance with
Regulation S under the Securities Act, as provided below; provided that the
disposition of our property and the property of any
<PAGE> 35
accounts for which we are acting as fiduciary shall remain at all times within
our control; and
(vi) we have received the information, if any, requested by us, have
had full opportunity to review such information and have received all additional
information necessary to verify such information.
We understand that the Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes have not been and will not be registered under
the Securities Act, and we agree, on our own behalf and on behalf of each
account for which we acquire any Notes, that if in the future we decide to
resell, pledge or otherwise transfer such Notes, such Notes may be offered,
resold, pledged or otherwise transferred only (i) to a person who we reasonably
believe is a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) acquiring the notes for its own account or for the account of a
qualified institutional buyer in a transaction meeting the requirements of Rule
144A, or (ii) in an offshore transaction complying with the provisions of Rule
903 or Rule 904 under the Securities Act, (iii) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 thereunder (if
available), (iv) pursuant to an effective registration statement under the
Securities Act or (v) to an "institutional accredited investor" within the
meaning of Rule 501(A)(1), (2), (3) or (7) under the Securities Act that is
acquiring the Note for its own account or for the accounts of other
institutional accredited investors having a minimum purchase price of not less
than $250,000 and in each of cases (i) through (v) in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction. In connection with any transfer pursuant to clause (v)
above, the purchaser will deliver to the Trustee, SP Limited, Southern Peru
Copper Corporation, the Registrar and the Transfer Agent such certificates and
opinions and other information as they or any of them may reasonably require to
confirm that the transfer complies with the foregoing restrictions. We further
understand that any Notes acquired by us will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph.
We acknowledge that each of SP Limited, Southern Peru Copper
Corporation, the Trustee and the transfer agent reserves the right to require
such certificates, legal opinions or other information satisfactory to it to
confirm that the transfer proposed to be made pursuant to the terms of this
letter is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. We understand
that the transfer agent will not be required to accept for registration of
transfer any Notes acquired by us, except upon presentation of evidence
satisfactory to SP Limited, Southern Peru Copper Corporation, the Trustee and
the transfer agent that the foregoing restrictions on transfer have been
complied with.
We acknowledge that each of SP Limited, Southern Peru Copper
Corporation, the Trustee and others will rely upon our confirmations,
acknowledgments, representations and agreements set forth herein, and we agree
to notify each of you promptly in writing if any of our representations or
warranties ceases to be accurate and complete.
<PAGE> 36
We represent to each of you that we have full power to make the
foregoing confirmations, acknowledgments, representations and agreements on our
own behalf and on behalf of any investor account for which we are acting as a
fiduciary or agent.
Each of you is entitled to reply upon this letter, and each of you is
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Date:_________________
______________________________________________________
(Name of Purchaser)
By:___________________________________________________
Name:
Title:
Address:
<PAGE> 37
EXHIBIT C
TO SUPPLEMENTAL INDENTURE
FORM OF CERTIFICATE
FOR TRANSFER FROM RESTRICTED GLOBAL
SEN, PRIVATE EXCHANGE GLOBAL SEN, CERTIFICATED INITIAL SEN OR
CERTIFICATED PRIVATE EXCHANGE SEN BEARING
A SECURITIES ACT LEGEND TO REGULATION S
GLOBAL SEN OR CERTIFICATED SEN
NOT BEARING A SECURITIES ACT LEGEND
Citibank, N.A., as Trustee
120 Wall Street, 13th Floor
New York, New York 10043
Re: Southern Peru Limited (the "Company")
7.90% Series [A/A-1] Secured Export Notes due 2007
Reference is hereby made to the Indenture, dated as of May 30,
1997 (the "Indenture"), among the Company, Southern Peru Copper Corporation (the
"Guarantor") and Citibank, N.A., as trustee (the "Trustee") (the "Original
Indenture") and the Supplemental Indenture, dated as of May 30, 1997 among the
Company, the Guarantor and the Trustee (the "Supplemental Indenture", and
together with the Original Indenture, the "Indenture"). Capitalized terms used
but not defined herein will have the meanings given to them in the Indenture.
This letter relates to US$__________ principal amount of
[Initial/Private Exchange] SENs which are held in the form of a beneficial
interest in the [Restricted Global SEN/Private Exchange Global SEN] with DTC in
the name of the undersigned [or in the form of a Certificated Initial
SEN/Certificated Private Exchange SEN bearing a Securities Act Legend].
The undersigned has requested a transfer of such beneficial
interest to a Person who will take delivery thereof in the form of a beneficial
interest of equal principal amount in the [Regulation S Global SEN] [or a
Certificated SEN not bearing a Securities Act Legend] (CINS No. U84392 AA 4) to
be held with [Euroclear][Cedel]* through DTC. In connection with such transfer,
the undersigned does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the Indenture and the
[Initial SENs/Private Exchange SENs] and pursuant to and in accordance with Rule
903 or 904 of Regulation S under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, the undersigned further certifies
that:
(i) the offer of the [Initial SENs/Private Exchange SENs] was
not made to a U.S. Person (as defined under Regulation S);
- -------------
* Indicate appropriate entity.
<PAGE> 38
[(ii) at the time the buy order was originated, the transferee
was outside the United States or the undersigned and any Person acting
on behalf of the undersigned reasonably believed that the transferee
was outside the United States;]*
(ii) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither the
undersigned nor any Person acting on behalf of the undersigned knows
that the transaction was prearranged with a buyer in the United
States;]*
(iii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable;
(iv) the undersigned is not the Trustee, a distributor, an
affiliate of either the Trustee or a distributor, or a Person acting on
behalf of any of the foregoing; and
(v) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
This certificate and the statements contained herein are made
for your benefit and for the benefit of the Trustee. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S.
[INSERT NAME OF TRANSFEROR]
By: ____________________________
Name:
Title:
Dated: __________,___
- ------------
* Insert one of the two provisions.
<PAGE> 39
EXHIBIT D
TO THE SUPPLEMENTAL INDENTURE
FORM OF CERTIFICATE FOR REMOVAL
OF THE SECURITIES ACT LEGEND ON A CERTIFICATED SEN
Citibank, N.A., as Trustee
120 Wall Street, 13th floor
New York, New York
Attention: Corporate Trust Administration
Re: Southern Peru Limited (the "Company")
7.90% Series [A/A-1] Secured Export Notes Due 2007
Reference is hereby made to the Indenture, dated as of May 30,
1997 (the "Indenture"), among the Company, Southern Peru Copper Corporation (the
"Guarantor") and Citibank, N.A. (the "Trustee") (the "Original Indenture") and
the Supplemental Indenture, dated as of May 30, 1997 among the Company, the
Guarantor and the Trustee (the "Supplemental Indenture" and together with the
Original Indenture, the "Indenture"). Capitalized terms used but not defined
herein will have the meanings given to them in the Indenture.
This letter relates to US$________ principal amount of Series
A SENs which are held in the form of [a beneficial interest in the [Restricted
Global SEN/Private Exchange Global SEN] (CUSIP No. 843612 AA 0) with DTC]* [a
Certificated Initial SEN/Certificated Private Exchange SEN]* in the name of the
undersigned].
[The undersigned has requested for the restrictive Securities
Act Legend on the Certificated Initial SEN/Certificated Private Exchange SEN to
be removed].**
In connection with such transfer, the undersigned does hereby
certify that such transfer has been effected only (i) in an offshore transaction
in accordance with Rule 904 under the Securities Act, (ii) pursuant to an
exemption from registration under the Securities Act provided by Rule 144
thereunder (if available) or (iii) pursuant to an effective registration
statement under the Securities Act, in each of cases (i) through (iii) in
accordance with any applicable securities laws of any State of the United
States.
- ------------
* Indicate form in which [Initial SENs/Private Exchange SENs] are held.
** Indicate what action is being requested.
<PAGE> 40
This certificate and the statements contained herein are made
for your benefit and for the benefit of the Trustee.
[NAME OF UNDERSIGNED]
By:___________________________
Name:
Title:
Dated:____________________
<PAGE> 41
EXHIBIT E
TO THE SUPPLEMENTAL INDENTURE
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER FROM REGULATION S GLOBAL
SEN OR CERTIFICATED INITIAL SEN NOT BEARING
A SECURITIES ACT LEGEND TO RESTRICTED GLOBAL
SEN OR CERTIFICATED INITIAL SEN BEARING
A SECURITIES ACT LEGEND
(PRIOR TO 40TH DAY AFTER LATER
OF COMMENCEMENT OF OFFERING OF
THE INITIAL SENs AND THE CLOSING DATE)
Citibank, N.A., as Trustee
120 Wall Street, 13th floor
New York, New York
Attention: Corporate Trust Administration
Re: Southern Peru Limited (the "Company")
7.90% Series A Secured Export Notes Due 2007
Reference is hereby made to the Indenture, dated as of May 30,
1997 (the "Indenture"), among the Company, Southern Peru Copper Corporation (the
"Guarantor") and Citibank, N.A., as trustee (the "Trustee") (the "Original
Indenture") and the Supplemental Indenture, dated as of May 30, 1997 among the
Company, the Guarantor and the Trustee (the "Supplemental Indenture" and
together with the Original Indenture, the "Indenture"). Capitalized terms used
but not defined herein will have the meanings given to them in the Indenture.
This letter relates to US$________ principal amount of
[Initial/Private Exchange] SENs which are held in the form of a beneficial
interest in the [Regulation S Global SEN (CINS No. U84392 AA 4)] with DTC in the
name of the undersigned [or in the form of a Certificated Initial SEN not
bearing the Securities Act Legend].
The undersigned has requested a transfer of such beneficial
interest in the [Initial SENs/Private Exchange SENs] to a Person who will take
delivery thereof in the form of a beneficial interest in the [Restricted Global
SEN (CUSIP No. 843612 AA 0)] [or a Certificated Initial SEN bearing the
Securities Act Legend (CUSIP No. 843612 AB 8)].* In connection with such
transfer, the undersigned does hereby confirm that such transfer has been
effected in accordance with the transfer restrictions set forth in the Indenture
and the [Initial SENs/Private Exchange SENs] and pursuant to and in accordance
with Rule 144A under the U.S. Securities Act of 1933, as amended, and
accordingly, the undersigned represents that:
- --------
* Describe form in which [Initial SENs/Private Exchange SENs] are and
will be held.
<PAGE> 42
(1) the [Initial SENs/Private Exchange SENs] are being
transferred to a transferee that the undersigned reasonably believes is
purchasing the [Initial SENs/Private Exchange SENs] for its own account
or one or more accounts with respect to which the transferee exercises
sole investment discretion; and
(2) the transferee and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A, in a transaction
meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any
other jurisdiction.
This certificate and the statements contained herein are made
for your benefit and for the benefit of the Trustee.
[NAME OF UNDERSIGNED]
By:_____________________________
Name:
Title:
Dated:____________________________
<PAGE> 43
EXHIBIT F
TO THE SUPPLEMENTAL INDENTURE
FORM OF
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned Holder of [an Initial
SEN/a Private Exchange SEN] hereby sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address, including postal zip code, of
assignee
________________________________________________________________________________
this [Initial SEN/Private Exchange SEN] and all rights hereunder, hereby
irrevocably constituting and appointing
____________________________attorney to transfer said [Initial SEN/Private
Exchange SEN] of [ ], as trustee, with full power of substitution in the
premises.
____________________
In connection with any transfer of this [Initial SEN/Private
Exchange SEN] occurring prior to the date which is three years after the
original issue date of the Initial SENs, the undersigned confirms that:
[Check one]
/_/ (a) This [Initial SEN/Private Exchange SEN] is being
transferred to a person whom the Holder of the [Initial
SEN/Private Exchange SEN] reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the U.S.
Securities Act of 1933, as amended (the "Securities Act")), in
a transaction meeting the requirement of Rule 144A;
/_/ (b) This [Initial SEN/Private Exchange SEN] is being
transferred in an offshore transaction in accordance with Rule
904 under the Securities Act;
/_/ (c) This [Initial SEN/Private Exchange SEN] is being
transferred pursuant to an exemption from registration under
the Securities Act provided by Rule 144 thereunder (if
available); or
/_/ (d) [This Initial SEN/Private Exchange SEN] is being
transferred pursuant to an effective registration statement
under the Securities Act;
<PAGE> 44
in each of cases (a) through (d) above, in accordance with any applicable
securities laws of any State of the United States.
If none of the foregoing boxes is checked, the Transfer Agent
will not be obligated to register this [Initial SEN/Private Exchange SEN] in the
name of any Person other than the holder hereof unless and until the conditions
to any such transfer of registration set forth herein and in Section 3.12 of the
Supplemental Indenture dated as of May 30, 1997, among Southern Peru Limited,
Southern Peru Copper Corporation and Citibank, N.A., as trustee, will have been
satisfied.
Date:_________________________
_____________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
this instrument in every particular, without
alteration, enlargement or any other change whatever.
<PAGE> 1
Exhibit 4.1(c)
AMENDED AND RESTATED
COLLATERAL TRUST AND SECURITY AGREEMENT
DATED AS OF JULY 15, 1997
BETWEEN
SOUTHERN PERU LIMITED,
ISSUER
AND
DEUTSCHE BANK AG, NEW YORK BRANCH,
COLLATERAL TRUSTEE
<PAGE> 2
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
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<S> <C>
ARTICLE 1
DEFINITIONS
ARTICLE 2
SECURITY INTERESTS
SECTION 2.01. Grant of Security Interest....................................... 14
SECTION 2.02. Excluded Export Receivables...................................... 15
SECTION 2.03. Preservation of Rights; Shared Security Interest................. 16
SECTION 2.04. Additional Percentage Interest................................... 17
ARTICLE 3
ACCOUNTS
SECTION 3.01. Proceeds of Export Receivables................................... 18
SECTION 3.02. Collection Account............................................... 19
SECTION 3.03. Supplemental Agreements for Additional Secured Obligations....... 20
SECTION 3.04. Determination of Series Total Collateral Percentage, Credit
Facility Total Collateral Percentage and Designated Total Collateral
Percentage............................................................. 20
SECTION 3.05. Designation of Secured Letters of Credit and Secured Hedge
Agreements; Supplemental Agreements for Subordinated Secured
Obligations............................................................ 21
ARTICLE 4
PERFECTION
SECTION 4.01. Delivery and Other Perfection.................................... 23
SECTION 4.02. Other Financing Statements and Liens............................. 24
SECTION 4.03. Representations and Warranties................................... 24
SECTION 4.04. Issuer Remains Liable............................................ 25
</TABLE>
i
<PAGE> 3
<TABLE>
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<S> <C>
ARTICLE 5
REMEDIES
SECTION 5.01. Notices of Default; Remedies Subject to Intercreditor
Arrangements and Issuer's Interest in the Collateral................... 25
SECTION 5.02. General Authority of the Collateral Trustee over the Collateral.. 26
SECTION 5.03. Remedies Generally; Right to Initiate Judicial Proceedings....... 27
SECTION 5.04. Right to Appoint a Receiver...................................... 28
SECTION 5.05. Waiver and Estoppel.............................................. 28
SECTION 5.06. Limitation on Collateral Trustee's Duty in Respect of Collateral. 29
SECTION 5.07. Payments......................................................... 29
SECTION 5.08. Stamp and Other Similar Taxes.................................... 29
SECTION 5.09. Filing Fees, Excise Taxes, Etc................................... 29
SECTION 5.10. Indemnification.................................................. 29
SECTION 5.11. Deficiency....................................................... 30
SECTION 5.12. Removals, Etc.................................................... 30
SECTION 5.13. Termination...................................................... 30
SECTION 5.14. Further Assurances............................................... 30
ARTICLE 6
INTERCREDITOR ARRANGEMENTS
SECTION 6.01. Limitations Concerning Collateral................................ 31
SECTION 6.02. Exercise of Powers; Instructions of Required Secured Parties..... 31
SECTION 6.03. Subordination.................................................... 32
ARTICLE 7
THE COLLATERAL TRUSTEE
SECTION 7.01. Acceptance of Trust.............................................. 33
SECTION 7.02. Exculpatory Provisions........................................... 33
SECTION 7.03. Delegation of Duties............................................. 34
SECTION 7.04. Reliance by Collateral Trustee................................... 34
SECTION 7.05. Limitations on Duties of Collateral Trustee...................... 35
SECTION 7.06. Moneys to Be Held in Trust....................................... 36
SECTION 7.07. Resignation and Removal of the Collateral Trustee................ 36
SECTION 7.08. Status of Successor Collateral Trustee........................... 38
SECTION 7.09. Merger of the Collateral Trustee................................. 38
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 7.10. Treatment of Payee or Indorsee by Collateral Trustee;
Representatives of Secured Parties..................................... 38
SECTION 7.11. Reports by Collateral Trustee.................................... 38
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. No Waiver........................................................ 39
SECTION 8.02. Notices.......................................................... 39
SECTION 8.03. Expenses......................................................... 40
SECTION 8.04. Amendments, Etc.................................................. 40
SECTION 8.05. Successors and Assigns........................................... 41
SECTION 8.06. Captions......................................................... 41
SECTION 8.07. Counterparts..................................................... 41
SECTION 8.08. Governing Law.................................................... 42
SECTION 8.09. Agents and Attorneys-in-Fact..................................... 42
SECTION 8.10. Severability..................................................... 42
SECTION 8.11. Jurisdiction and Process......................................... 42
SECTION 8.12. Secured Parties Bound............................................ 43
SECTION 8.13. Effectiveness.................................................... 43
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED
COLLATERAL TRUST AND SECURITY AGREEMENT
AMENDED AND RESTATED COLLATERAL TRUST AND SECURITY AGREEMENT dated as
of July 15, 1997 between SOUTHERN PERU LIMITED, a Delaware corporation (together
with its successors and assigns, the "Issuer"), and DEUTSCHE BANK AG, NEW YORK
BRANCH, as collateral trustee for the Secured Parties (as hereinafter defined)
(together with its successors in such capacity the "Collateral Trustee").
The Issuer is a party to the Credit and Guarantee Agreement, dated as
of March 31, 1997 (as amended, refinanced or replaced from time to time, the
"Credit Facility Agreement"), among Southern Peru Copper Corporation, a Delaware
corporation, as Guarantor ("together with its successors and assigns, SPCC"),
the Issuer, the several banks and other financial institutions from time to time
parties thereto (collectively, the "Credit Facility Lenders"), Morgan Guaranty
Trust Company of New York, as Administrative Agent for the Lenders (together
with its successors, in such capacity, the "Administrative Agent"), The Chase
Manhattan Bank, as Documentation Agent for the Lenders (in such capacity, the
"Documentation Agent"), Citicorp Securities, Inc., as Syndication Agent (in such
capacity, the "Syndication Agent"), and Deutsche Bank AG, New York Branch, as
Security and Collateral Agent for the Lenders (together with its successors, in
such capacity, the "Collateral Agent"; together with the Administrative Agent,
the Documentation Agent and the Syndication Agent, the "Credit Facility
Agents").
The Issuer is a party to an Indenture, dated as of May 30, 1997, among
the Issuer, SPCC and Citibank, N.A., as Trustee (the "Original Indenture")
establishing the Issuer's Secured Export Note Program (the "Program") under
which the Issuer may issue up to an aggregate amount of $750,000,000 of Secured
Export Notes (the "SENS").
The Issuer may also issue or incur Additional Secured Obligations (as
hereinafter defined) as contemplated by this Collateral Trust and Security
Agreement.
To induce the Indenture Trustee (as hereinafter defined) to enter into
the Indenture and to induce the Noteholders (as hereinafter defined) to purchase
the SENS issued pursuant to the Indenture, and the Credit Facility Lenders to
make loans under the Credit Facility Agreement, and the holders of Additional
Secured Obligations to purchase (or make loans in respect of) such Additional
Secured Obligations and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Issuer has agreed to
pledge and grant a security interest in the Export Contracts, the Export
Receivables, the Proceeds of the Export Contracts and Export Receivables and the
<PAGE> 6
Collection Account (as hereinafter defined) as security for the Credit Facility
Secured Obligations, the SENS Secured Obligations, and the Additional Secured
Obligations (as hereinafter defined), if any. Accordingly, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Accounts" means the Collection Account, the Series Collateral
Account for each Series of SENS, the Credit Facility Collateral
Account, and any other applicable account established in connection
with the issuance of any Senior Secured Obligations.
"Additional Percentage" means, for any date with respect to
any Secured Parties, such additional percentage interest (in excess of
such Secured Parties' Basic Percentage) in the Collateral as may be
designated by the Issuer for the benefit of such Secured Parties in
accordance with Section 2.04 hereof.
"Additional Secured Obligations" means any debt issued by the
Issuer or loan made to the Issuer, after the date hereof but prior to
the termination of this Agreement, secured by a security interest in
the Collateral pursuant to Section 3.03 hereof; provided that the SENS
Secured Obligations and Credit Facility Secured Obligations may not be
designated as "Additional Secured Obligations" pursuant to this
Agreement.
"Affiliate" means, with respect to the Issuer, any Person
which, directly or indirectly, is in control of, is controlled by, or
is under common control with, the Issuer.
"Agreement" means this Amended and Restated Collateral Trust
and Security Agreement, as amended, supplemented or otherwise modified
from time to time.
"Attributable Principal Amount" means, with respect to any
Additional Secured Obligations, the product of (a) the Designated Total
Collateral Percentage for such Additional Secured Obligations times (b)
the Program Amount then in effect.
2
<PAGE> 7
"Basic Percentage" means, at any time with respect to any
Secured Parties, (a) if such Secured Parties are the holders of any
Series of SENS and the Indenture Trustee, the Series Basic Collateral
Percentage for such Series at such time, (b) if such Secured Parties
are the Credit Facility Lenders and Credit Facility Agents, the Credit
Facility Basic Collateral Percentage at such time and (c) if such
Secured Parties are the holders of Additional Secured Obligations, the
Designated Basic Collateral Percentage for such Additional Secured
Obligations at such time.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or
required by law to close.
"Collateral" shall have the meaning set forth in Section 2.01
hereof.
"Collection Account" shall have the meaning set forth in
Section 3.02 hereof.
"Collections" means all collections and other Proceeds
received in respect of Export Contracts and Export Receivables
(including as a result of the exercise of any remedies hereunder).
"Commitment Termination Date" means March 31, 2001 or such
other date on which all commitments under the Credit Facility Agreement
shall terminate as provided therein.
"Copper" means anode copper, blister copper, cathodes, copper
concentrates, and electrolytic and electrowon cathodes.
"Credit Facility" means the credit facilities provided
pursuant to the Credit Facility Agreement.
"Credit Facility Basic Collateral Percentage" means, at any
time, the percentage equivalent of a fraction, the numerator of which
shall be the aggregate principal amount of loans outstanding under the
Credit Facility at such time and the denominator of which shall be the
Program Amount then in effect; provided that, from the Commitment
Termination Date until the payment in full of all Credit Facility
Secured Obligations, the numerator of such fraction shall be (a) the
aggregate principal amount of loans outstanding under the Credit
Facility Agreement on the Commitment Termination Date minus (b) the
aggregate principal amount of such loans that have been permanently
optionally prepaid or
3
<PAGE> 8
permanently mandatorily prepaid as a result of the issuance of SENS or
Additional Secured Obligations (to the extent that the sum of the
aggregate principal amount so prepaid plus the aggregate principal
amount of all scheduled principal payments (after giving effect to any
reduction in such scheduled payments as a result of such prepayment)
made prior to such time exceeds the aggregate principal payments
originally scheduled to have been made by such time) subsequent to the
Commitment Termination Date.
"Credit Facility Secured Obligations" shall mean the
collective reference to the unpaid principal of and interest on the
loans under the Credit Facility Agreement and all other obligations and
liabilities of the Issuer (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Facility
Agreement after the maturity of such loans and interest accruing at the
then applicable rate provided in the Credit Facility Agreement after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to the Issuer,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to the Administrative Agent, the Collateral
Agent, any other Credit Facility Agent or any Credit Facility Lender,
whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Facility Agreement, the other
Loan Documents (as defined in the Credit Facility Agreement) or any
other document made, delivered or given in connection therewith, in
each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel
to the Administrative Agent, the Collateral Agent or any other Credit
Facility Agent or to the Credit Facility Lenders that are required to
be paid by the Issuer pursuant to the terms of any of the foregoing
agreements).
"Credit Facility Total Collateral Percentage" means, at any
time, the percentage interest in the Collateral of the Credit Facility
Lenders, which shall be equal to the Credit Facility Basic Collateral
Percentage at such time plus the Additional Percentage applicable to
the Credit Facility, if any, at such time.
"Designated Basic Collateral Percentage" means, with respect
to any Additional Secured Obligations, the percentage interest in the
Collateral of the holders of such Additional Secured Obligations
designated by the Issuer pursuant to Section 3.03 hereof in connection
with the issuance or incurrence of such Additional Secured Obligations,
as such percentage may, subject to the provisions of this Agreement, be
adjusted from time to time pursuant to the Senior Secured Instruments
under which such Additional Secured Obligations were issued.
4
<PAGE> 9
"Designated Total Collateral Percentage" means, at any time
with respect to any Additional Secured Obligations, the Designated
Basic Collateral Percentage for such Additional Secured Obligations at
such time plus the Additional Percentage applicable to such Additional
Secured Obligations, if any, at such time.
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
"Eligible Investments" means the following investments:
(1) any indebtedness, issued by, or fully guaranteed by or insured
by, the United States of America, or any agency or
instrumentality of the United States of America;
(2) demand and time deposits in, certificates or deposit of,
bankers' acceptances issued by, or Federal funds sold by any
commercial bank, depository institution or trust company, so
long as at the time of such investment or contractual
commitment providing for such investment the unsecured
commercial paper or other unsecured short-term debt
obligations of such commercial bank, depositary institution or
trust company have a credit rating of at least A-1 from
Standard & Poor's and P-1 from Moody's, and at least D-1 from
Duff & Phelps, if rated by Duff & Phelps;
(3) unsecured debt securities bearing interest or sold at a
discount issued by (i) a corporation (other than an Affiliate
of the Issuer) incorporated under the laws of the United
States of America or any State thereof or the District of
Columbia or (ii) any commercial bank, depository institution
or trust company, which have, at the time of such investment,
a credit rating of at least A-1 by S&P and at least P-1 by
Moody's and at least D-1 from Duff & Phelps, if rated by Duff
& Phelps;
(4) unsecured commercial paper which has, at the time of such
investment, a rating of at least P-1 from Standard & Poor's
and P-1 from Moody's and at least D-1 from Duff & Phelps, if
rated by Duff & Phelps;
(5) repurchase obligations with respect to any security described
in clauses (1), (2), (3) or (4) above, in each case entered
into with either (i) a commercial bank, a depository
institution or trust company (acting as principal) which, in
respect of its unsecured commercial paper or other short-term
unsecured debt, has credit ratings of at least A-1 from
Standard
5
<PAGE> 10
& Poor's and P-1 from Moody's and at least D-1 from Duff &
Phelps, if rated by Duff & Phelps; or (ii) a money market fund
maintained by a bank or a broker (which may be a money market
fund managed by Citibank, N.A. or any person who acts as a
successor Trustee) which, in respect of its unsecured
commercial paper or short-term unsecured debt, has a credit
rating of at least A-1 from Standard & Poor's and P-1 from
Moody's and at least D-1 from Duff & Phelps, if rated by Duff
& Phelps; and
(6) a money market fund maintained by a bank or broker (which may
be a money market fund managed by Citibank, N.A. or any person
who acts as a successor Trustee) which fund has a credit
rating of at least AAA-M from Standard & Poor's and Aaa from
Moody's and at least the equivalent rating from Duff & Phelps,
if rated by Duff & Phelps; provided that this category (6) of
investment shall have been accepted by each Rating Agency.
"Excess Percentage" means, at any time, 100% minus the sum of
(i) the SENS Total Collateral Percentage at such time and (ii) the
Credit Facility Total Collateral Percentage at such time and (iii) the
aggregate Designated Total Collateral Percentages for all Additional
Secured Obligations at such time.
"Excluded Export Contracts" means agreements relating to sales
of Copper (which is produced at any of the Principal Properties or the
SX/EW Facility from copper mined or leached at any of the Principal
Properties or from purchased copper) by the Issuer, SPCC or any direct
or indirect Subsidiary of either to customers located outside Peru
which are, from time to time, identified on a certificate of a
Responsible Officer, or in Exhibit 2.02, in each case in accordance
with, and subject to the limitations set forth in, Section 2.02 hereof.
"Excluded Export Receivables" means Receivables arising from
Excluded Export Contracts.
"Export Contract" means any agreement, other than Excluded
Export Contracts, relating to sales of Copper (which is produced at any
of the Principal Properties or the SX/EW Facility from copper mined or
leached at any of the Principal Properties or from purchased copper) by
the Issuer, SPCC or any direct or indirect Subsidiary of either to
customers located outside Peru.
"Export Receivables" means all Receivables, other than
Excluded Export Receivables, arising from (i) the sale of Copper (which
is produced at any of the Principal Properties or the SX/EW Facility
from copper mined or leached at any
6
<PAGE> 11
of the Principal Properties or from purchased copper) and sold by the
Issuer, SPCC or any direct or indirect Subsidiary of either to
customers located outside of Peru and (ii) the sale of Copper (which is
produced at any of the Principal Properties or the SX/EW Facility from
copper mined or leached at any of the Principal Properties or from
purchased copper) by the Issuer, SPCC or any direct or indirect
Subsidiary of either to customers located outside of Peru which are
effected through any Peruvian Governmental Authority, including without
limitation, in each case, all Receivables arising under Export
Contracts.
"Governmental Authority" means any nation or government, any
state, regional or other political subdivision thereof and any entity
exercising legislative, judicial, regulatory, or administrative
functions of or pertaining to government or any entity organized by any
of the foregoing.
"Hedge Agreements" means all swaps, caps, futures, options or
collar agreements or similar arrangements entered into by the Issuer
with any Credit Facility Lender or any Affiliate of any Credit Facility
Lender providing for protection against (a) fluctuations in interest
rates or currency exchange rates or the exchange of nominal interest
obligations or (b) fluctuations in the price of copper or other metals.
"Indenture" means the Original Indenture as supplemented by
each Supplemental Indenture, and as otherwise amended or supplemented
from time to time.
"Indenture Trustee" means the collective reference to all
trustees under the Indenture.
"Instruments" shall have the meaning set forth in Section
2.01(b) hereof.
"Moody's" means Moody's Investors Services, Inc.
"Noteholder" means any Person who is a holder of SENS issued
by the Issuer.
"Notice of Default" means a written notice delivered to the
Collateral Trustee by (i) the holders of 51% or more of the outstanding
(subject to any limitations on voting set forth in the Indenture with
respect to SENS owned by the Issuer, SPCC or any other obligor upon the
SENS or any Affiliate of the Issuer, SPCC or any other obligor upon the
SENS) principal amount of any Series of SENS (or the Indenture Trustee
on their behalf) or (ii) the Required Lenders under
7
<PAGE> 12
the Credit Facility Agreement (or the Administrative Agent on their
behalf) or (iii) the holders of the requisite percentage of any
Qualified Additional Secured Obligations for taking actions or giving
directions following events of default provided in the Senior Secured
Instruments relating thereto, in each case stating that an Event of
Default has occurred under the applicable Senior Secured Instrument,
and specifically identifying such notice as a "Notice of Default" under
Section 5.01 of this Agreement.
"Outstanding Principal Amount" means (a) on any date of
determination prior to the Commitment Termination Date, the sum of (x)
(i) the aggregate original principal amount of all SENS which have been
issued prior to such date (other than any Series, together with any
related Subordinated Secured Obligations, which have been paid in full
prior to such date of determination) minus (ii) the aggregate principal
amount of such SENS which have been permanently optionally redeemed as
of such date (such (i) minus (ii) hereinafter referred to as the "SENS
Amount") and (y) the aggregate principal amount of loans outstanding
under the Credit Facility Agreement, and (b) on any date of
determination thereafter, the sum of (x) the SENS Amount on such date
of determination and (y)(i) the aggregate principal amount of loans
outstanding under the Credit Facility Agreement on the Commitment
Termination Date minus (ii) the aggregate principal amount of such
loans permanently optionally prepaid or permanently mandatorily prepaid
as a result of the issuance of SENS or Additional Secured Obligations
subsequent to such date; provided that from and after the date that the
loans under the Credit Facility Agreement, together with all related
Subordinated Secured Obligations, have been repaid in full, the amount
under this clause (y) shall be equal to zero.
"Permitted Liens" means (a) liens created pursuant to this
Agreement, (b) liens for taxes, assessments, governmental charges,
other governmental obligations or levies or statutory liens, in each
case with respect to sums that are not yet due or are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of SPCC or
its subsidiaries, as the case may be, in conformity with GAAP, (c)
landlords', carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like liens arising in the ordinary course of
business and securing obligations that are not overdue by more than 30
days or are being contested in good faith by appropriate proceedings
and (d) liens incurred in the ordinary course of business in connection
with social security, workers' compensation, unemployment insurance and
similar types of laws or regulations.
8
<PAGE> 13
"Person" means an individual, partnership, corporation,
business trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture or Governmental Authority.
"Program Amount" means $750,000,000, as such amount may be
adjusted from time to time in accordance with Section 2.02(c), but in
no event shall the Program Amount exceed $750,000,000.
"Proceeds" shall have the meaning ascribed to such term under
the Uniform Commercial Code as in effect on the date hereof.
"Qualified Additional Secured Obligations" means any
Additional Secured Obligations which are not held by the Issuer or any
Affiliate of the Issuer.
"Rating Agency" means Standard & Poor's, Moody's or Duff &
Phelps.
"Realization Event" means a foreclosure upon all or any
portion of the Collateral or a sale or other disposition of all or any
portion of the Collateral pursuant to Section 5 hereof.
"Receivable" means the existing or future indebtedness and
payment obligations of a Person arising from the sale of Copper by the
Issuer and shall include the right to any payments of interest, taxes,
finance charges or late charges and other obligations of such Person
with respect thereto.
"Required Lenders" means the holders of the requisite
percentage of loans and/or commitments under the Credit Facility
Agreement required to so act in accordance with the terms of the Credit
Facility Agreement.
"Required Secured Parties" means (a) with respect to any
direction to the Collateral Trustee pursuant to Section 6.02 hereof
(other than in respect of a Realization Event with respect to the
Collateral or the direction of Collections to an account other than the
Collection Account), (i) the Required Lenders or the Administrative
Agent on their behalf or (ii) the holders of at least 51% of the
outstanding (subject to any limitations on voting set forth in the
Indenture with respect to SENS owned by the Issuer, SPCC or any
Affiliate of the Issuer, SPCC or any other obligor upon the SENS)
principal amount of all Series of SENS (or the Indenture Trustee on
their behalf) or (iii) the requisite percentages of holders of any
Qualified Additional Secured Obligations for taking actions or giving
directions following events of default provided in the Senior Secured
Instruments under which such Qualified Additional Secured Obligations
were issued (as set
9
<PAGE> 14
forth in the supplemental agreement delivered with respect to such
Additional Secured Obligations pursuant to Section 3.03 hereof), and
(b) with respect to any direction to the Collateral Trustee pursuant to
Section 6.02 hereof in respect of a Realization Event with respect to
the Collateral or the direction of Collections to an account other than
the Collection Account, the collective reference to (i) the Required
Lenders or the Administrative Agent on their behalf and (ii) the
holders of at least 51% of the outstanding (subject to any limitations
on voting set forth in the Indenture with respect to SENS owned by the
Issuer, SPCC or any Affiliate of the Issuer, SPCC or any other obligor
upon the SENS) principal amount of all Series of SENS (or the Indenture
Trustee on their behalf) and (iii) the requisite percentages of holders
of any Qualified Additional Secured Obligations for taking actions or
giving directions following events of default provided in the Senior
Secured Instruments under which such Qualified Additional Secured
Obligations were issued (as set forth in the supplemental agreement
delivered with respect to such Additional Secured Obligations pursuant
to Section 3.03 hereof), provided that, in the case of clause (b)
above, the term "Required Secured Parties" shall not include any class
of Secured Parties described in clauses (i), (ii) or (iii) above if the
aggregate outstanding principal amount of the Senior Secured
Obligations of such class of Secured Parties constitutes less than 10%
of the aggregate outstanding principal amount of all Senior Secured
Obligations of all such classes and, provided further that, following
the payment in full of all Senior Secured Obligations and the delivery
of all notices to the Collateral Trustee contemplated pursuant to
Section 3.05(b), "Required Secured Parties" shall mean the holders of
at least 51% of the aggregate outstanding principal and/or face amounts
of all Subordinated Secured Obligations then outstanding.
"Responsible Officer", when used with respect to the Issuer
means, unless the context otherwise requires, the president, chief
executive officer, chief financial officer, principal accounting
officer or treasurer of the Issuer or other executive officer of the
Issuer who in the normal performance of his or her operational duties
would have knowledge of the subject matter relating to any certificate,
report or notice to be delivered or given under this Agreement.
"Secured Hedge Agreement" shall mean at any time a Hedge
Agreement that has been designated as a "Secured Hedge Agreement"
pursuant to Section 3.05 hereof.
"Secured Instruments" means the collective reference to the
Senior Secured Instruments and the Subordinated Secured Instruments.
10
<PAGE> 15
"Secured Letter of Credit" shall mean at any time any letter
of credit that has been designated as a "Secured Series Reserve Letter
of Credit", "Secured Credit Facility Reserve Letter of Credit" or
"Secured Additional Secured Obligations Reserve Letter of Credit"
pursuant to Section 3.05 hereof.
"Secured Obligations" means the collective reference to the
Senior Secured Obligations and the Subordinated Secured Obligations.
"Secured Parties" means:
(i) so long as any Credit Facility Lender has any commitment
to make loans or other extensions of credit under the Credit Facility
Agreement or any amount is payable by the Issuer under the Credit
Facility Agreement, the Credit Facility Lenders and the Credit Facility
Agents under the Credit Facility Agreement;
(ii) so long as any amount is payable by the Issuer under the
Indenture or any series of SENS, the Noteholders and the Indenture
Trustee;
(iii) so long as any amount is payable by the Issuer under
this Agreement, the Collateral Trustee;
(iv) so long as any amount is payable by the Issuer in
respect of any Additional Secured Obligation, the holder or holders of
such Additional Secured Obligation; and
(v) so long as any amount is payable by the Issuer in
respect of any Subordinated Secured Obligation, the holder or holders
of such Subordinated Secured Obligation.
"Senior Creditor" means any holder of a Senior Secured
Obligation.
"Senior Secured Instruments" shall mean at any time any
agreements or instruments evidencing Senior Secured Obligations.
"Senior Secured Obligations" means the collective reference to
the Credit Facility Secured Obligations, the SENS Secured Obligations
and the Additional Secured Obligations.
"SENS Secured Obligations" means any and all of the debts,
obligations and liabilities of the Issuer to the Indenture Trustee and
the holders of SENS of
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any Series provided for or arising under the SENS or the Indenture,
whether now existing or hereafter arising, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether or not from time to time decreased or extinguished and
later increased, created or incurred (including without limitation
interest accruing at the then applicable rate provided in a
Supplemental Indenture for any Series of SENS and interest accruing at
the then applicable rate provided in such Supplemental Indenture after
the filing of any petition in bankruptcy, or the commencement of any
insolvency reorganization or like proceeding, relating to the Issuer,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) which may arise under, out of, or in
connection with the SENS, the Indenture or any other document made,
delivered or given in connection therewith, in each case whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel that are required to
be paid by the Issuer pursuant to the terms of any of the foregoing
agreements).
"SENS Total Collateral Percentage" means, at any time, the
percentage interest in the Collateral equal to the sum of all Series
Total Collateral Percentages for all outstanding series of SENS at such
time.
"Series" means any series of SENS issued pursuant to a
Supplemental Indenture.
"Series Basic Collateral Percentage" means, at any time with
respect to each Series of SENS, the percentage equivalent of a
fraction, the numerator of which shall be (a) the original principal
amount of SENS issued under such Series of SENS minus (b) the aggregate
principal amount of such SENS that have been permanently optionally
redeemed (to the extent that the sum of the aggregate principal amount
so redeemed plus the aggregate principal amount of all scheduled
principal payments (after giving effect to any reduction in such
scheduled payments as a result of such redemption) made prior to such
time exceeds the aggregate principal payments originally scheduled to
have been made by such time) as of such date and the denominator of
which shall be the Program Amount then in effect.
"Series Total Collateral Percentage" means, at any time with
respect to each Series of SENS, the percentage interest in the
Collateral of the Noteholders of such Series, which percentage shall be
equal to the Series Basic Collateral Percentage for such Series at such
time plus the Additional Percentage applicable to such Series, if any,
at such time.
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"Standard & Poor's" means Standard & Poor's Ratings Group.
"Subordinated Additional Secured Obligations" shall mean all
obligations of the Issuer to the Subordinated Creditors in respect of
Secured Additional Secured Obligations Reserve Letters of Credit (as
designated pursuant to Section 3.05 hereof).
"Subordinated Credit Facility Secured Obligations" shall mean
all obligations of the Issuer to the Subordinated Creditors in respect
of Secured Credit Facility Reserve Letters of Credit (as designated
pursuant to Section 3.05 hereof) or Secured Hedge Agreements, provided
that in no event shall the "Subordinated Credit Facility Secured
Obligations" in respect of all Secured Hedge Agreements exceed
$50,000,000 in the aggregate. For purposes of determining the amount of
obligations secured under any Hedge Agreement, such amount shall be the
maximum aggregate amount (giving effect to any netting agreements) that
the Issuer would be required to pay if such Hedge Agreement were
terminated at such time.
"Subordinated Creditors" shall mean at any time the holders of
the Subordinated Secured Obligations.
"Subordinated Secured Instruments" shall mean at any time any
agreements or instruments evidencing Subordinated Secured Obligations.
"Subordinated Secured Obligations" means the collective
reference to the Subordinated SENS Secured Obligations, the
Subordinated Credit Facility Secured Obligations and the Subordinated
Additional Secured Obligations.
"Subordinated SENS Secured Obligations" shall mean, with
respect to any Series of SENS, all obligations of the Issuer to the
Subordinated Creditors in respect of Secured Series Reserve Letters of
Credit (as designated pursuant to Section 3.05 hereof) issued with
respect to such Series.
"Subsidiary" means, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person.
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Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to Subsidiaries of SPCC.
"Supplemental Indenture" means any indenture supplemental to
the Original Indenture relating to a particular Series of SENS.
"SX/EW Facility" means the solvent extraction/electrowinning
copper plant located in Toquepala, Peru.
"Trust Indenture Act" means the Trust Indenture Act of 1939.
"Trustee" means Citibank, N.A. or any successor trustee of the
SENs or any Series thereof.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in the State of New York.
ARTICLE 2
SECURITY INTERESTS
SECTION 2.01. Grant of Security Interest. In order to secure the full
and punctual payment of the Secured Obligations and to secure the performance of
all of the obligations of the Issuer under this Agreement and the Secured
Instruments, the Issuer hereby pledges and grants a continuing, lien and
security interest to the Collateral Trustee (for the benefit of the Secured
Parties, as their interests appear herein) upon, in and to all of the rights,
revenues and properties of the Issuer listed in the following clauses (a)
through (c), inclusive, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all being collectively referred to as
the "Collateral"), and the Issuer collaterally assigns to the Collateral Trustee
(for the benefit of such Secured Parties, as their interests appear herein):
(a) the Export Contracts, the Export Receivables and all Proceeds
of the Export Contracts and the Export Receivables, including but
not limited to all moneys due or to become due under or in respect
of the Export Contracts and the Export Receivables and all
Collections, (b) all instruments, chattel paper or letters of
credit (each as defined in the Uniform Commercial Code)
(collectively, the "Instruments"), if any, and all general
intangibles (as defined in the Uniform Commercial Code) and other
contracts, if any, in each case evidencing, representing, arising
from, relating to, securing or otherwise supporting any obligation
to make
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payment under or in respect of the Export Contracts and the Export
Receivables, and (c) the Collection Account, all Eligible
Investments and all cash deposited therein from time to time.
SECTION 2.02. Excluded Export Receivables. (a) As of the date hereof,
the contracts identified on Exhibit 2.02 hereof shall constitute Excluded Export
Contracts and such contracts, and the Receivables arising thereunder, shall not
be subject to this Agreement in any manner.
(b) At any time and from time to time, a Responsible Officer of the
Issuer may, subject to the satisfaction of all applicable conditions, if any, in
any Senior Secured Instruments, deliver a certificate to the Collateral Trustee
for the purposes of identifying for any calendar year (1) contracts in
replacement of those identified on Exhibit 2.02, upon expiration or termination
of such contracts, or any amendments thereto (which replacement contracts or
amendments shall provide for sales of Copper in an aggregate annual amount
(expressed in short tons) equal to the aggregate annual amount covered by the
contracts identified in Exhibit 2.02, or, in the case of replacement contracts,
such higher amount as may be practically necessary, taking into account the
amount of Copper covered by contracts that may be available as replacement
contracts; provided that the aggregate annual amount of Copper covered by all
contracts described in Section 2.02(a) and 2.02(b)(1) shall not exceed 40,000
short tons), which replacement contracts or amended contracts shall constitute
Excluded Export Contracts and shall be reflected on an revised Exhibit 2.02
hereto to be provided by the Issuer to the Collateral Trustee and (2) additional
Excluded Export Contracts providing for sales of Copper up to an aggregate
annual amount (expressed in short tons) equal to the sum of (x) 10% of Net
Certified Export Sales (as defined below) and (y) the Excess Certified Export
Sales (as defined below), if any, in each case for such calendar year; provided
that the maximum amount of Copper to be sold under contracts which may be
excluded pursuant to this Section 2.02(b) with respect to any calendar year in
connection with any identification of Excluded Export Contracts after the
commencement of such calendar year shall be reduced by a fraction, the numerator
of which is the number of days elapsed since the commencement of such calendar
year and the denominator of which is 365; and provided further that the Issuer
shall not be permitted to exclude contracts pursuant to clause (x) above in an
amount that would cause the Program Amount to be reduced pursuant to Section
2.02(c) below an amount equal to the sum of (i) the Outstanding Principal Amount
at such time and (ii) the Attributable Principal Amount of Additional Secured
Obligations then outstanding. In connection with a designation of Excluded
Export Contracts pursuant to this Section 2.02(b), the Issuer shall provide the
Collateral Trustee with a certificate of a Responsible Officer certifying for
the applicable calendar year the budgeted level of sales of Copper (expressed in
short tons) by the Issuer to be sold to customers located outside Peru (the
"Certified Export Sales"). The "Net Certified Export Sales", for any calendar
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year, shall be equal to (A) the lesser of (i) 320,000 short tons and (ii) the
Certified Export Sales for such calendar year minus (B) the aggregate annual
amount of short tons of Copper to be sold under the Export Contracts identified
in Exhibit 2.02 hereof in such calendar year (or any contracts in replacement
therefor or any amendments thereto, as described in clause (1) of the first
sentence of this Section 2.02(b)). "Excess Certified Export Sales" shall mean
the excess, if any, of the Certified Export Sales for such calendar year over
the sum of (1) 320,000 short tons and (2) the annual amount of short tons of
Copper in respect of Excluded Export Contracts for such calendar year. The
Issuer shall use reasonable efforts, in connection with a designation of
Excluded Export Contracts pursuant to this Section 2.02(b), to make such
designation in a manner which would not cause the terms of the Excluded Export
Contracts and the Receivables arising thereunder (including as to sales price
and term and the timing of sales under such contracts) as a whole to be
materially better than the comparable terms of the contracts which are not
Excluded Export Contracts. Upon delivery by the Issuer of a certificate pursuant
to this subsection, the Collateral Trustee, as promptly as practicable
thereafter, shall take any and all actions and file any and all documents which
are reasonably necessary under the Uniform Commercial Code to evidence the
release of the security interest of the Secured Parties in any Excluded Export
Contracts identified in such certificate.
(c) If the Issuer elects to identify additional Excluded Export
Contracts pursuant to clause (x) of paragraph (b) of this Section 2.02, the
Program Amount shall be reduced, during the period in which such contracts are
so excluded, by an amount equal to the product of (x) the Program Amount prior
to such reduction and (y) a fraction, the numerator of which is equal to the
annual amount of Copper sales arising under such Excluded Export Contracts
(expressed in short tons) and the denominator of which is equal to the Net
Certified Export Sales.
(d) For purposes of calculating tonnages under this Agreement with
respect to copper concentrates, the amount of copper (expressed in short tons)
contained in copper concentrates shall be used.
SECTION 2.03. Preservation of Rights; Shared Security Interest. (a)
Notwithstanding the foregoing grant, transfer and collateral assignment, the
Issuer shall, subject to the terms and conditions hereof, exercise all rights
relating to the Export Contracts and the Export Receivables including, but not
limited to, amending the Export Contracts in respect of the Export Receivables,
making waivers and elections thereunder, and instituting and settling
proceedings to enforce its rights thereunder; provided that the Collateral
Trustee may direct or control the exercise of such rights in accordance with
Sections 5 and 6 hereof.
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(b) The individual Secured Parties will not have a separate security
interest in any specific Export Contract or Export Receivable but, through the
Collateral Trustee, will have a fractional undivided security interest in the
Collateral as a whole on the terms and conditions hereof, consisting of (i) in
the case of the holders of any Series of SENS, a percentage of the Collateral,
including the right to receive a percentage of all Collections, in each case
equal to the SENS Total Collateral Percentage for such Series, (ii) in the case
of the Credit Facility Lenders and the Credit Facility Agents, a percentage of
the Collateral, including the right to receive a percentage of the Collections,
in each case equal to the Credit Facility Total Collateral Percentage and (iii)
in the case of any Additional Secured Obligations, a percentage of the
Collateral, including the right to receive a percentage of the Collections, in
each case equal to the Designated Total Collateral Percentage for such
Additional Secured Obligations. The security interest is held in common for all
Secured Parties and the Collateral Trustee shall reject any Secured Party's
claim that its rights to the Collateral are superior to the rights of another
Secured Party by virtue of (i) having acquired those rights before, or after,
the other Secured Party or (ii) filing an earlier claim with respect to the
Collateral. At any time (including without limitation at any time following any
Realization Event) when the Excess Percentage is greater than zero, the Issuer
shall have the right to receive a percentage of all Collections equal to the
Excess Percentage.
SECTION 2.04. Additional Percentage Interest. (a) Initially, (i) the
holders of each Series of SENS and the Indenture Trustee shall have rights in
the Collateral equal to the SENS Basic Collateral Percentage for such Series,
(ii) the Credit Facility Lenders and the Credit Facility Agents shall have
rights in the Collateral equal to the Credit Facility Basic Collateral
Percentage, and (iii) the holders of any Additional Secured Obligations shall
have rights in the Collateral equal to the Designated Basic Collateral
Percentage for such Additional Secured Obligations. On any Business Day, the
Issuer may designate, by written notice from a Responsible Officer (which
designation shall be effective commencing on the next Business Day following
receipt of such written notice) to the Collateral Trustee, the Indenture
Trustee, and the Administrative Agent, that an additional percentage interest in
the Collateral (which shall thereafter be in addition to the relevant Series
Basic Collateral Percentage, the Credit Facility Basic Collateral Percentage or
the Designated Basic Collateral Percentage for the relevant Additional Secured
Obligations, as the case may be) for the benefit of the holders of any Series of
SENS, the Credit Facility Lenders or the holders of Additional Secured
Obligations, as the case may be; provided that after giving effect to such
designation, the sum of (A) the SENS Total Collateral Percentage, (B) the Credit
Facility Total Collateral Percentage and (C) the aggregate Designated Total
Collateral Percentages for all Additional Secured Obligations shall not exceed
100%.
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(b) On any Business Day, the Issuer may, by providing a certificate of
a Responsible Officer and subject to the satisfaction of all applicable
conditions, if any, in the Senior Secured Instruments, notify the Collateral
Trustee, the Indenture Trustee, and the Administrative Agent that any Additional
Percentage designated in accordance with paragraph (a) of this Section no longer
be so designated for the benefit of the holders of any Series of SENS, the
Credit Facility Lenders or the holders of Additional Secured Obligations, as the
case may be, which withdrawal of designation shall be effective commencing on
the fifth Business Day following receipt of such certificate.
ARTICLE 3
ACCOUNTS
SECTION 3.01. Proceeds of Export Receivables. The Issuer shall (i)
notify all Persons that are parties to, or otherwise obligated in respect of,
Export Contracts or parties that are otherwise obligated in respect of Export
Receivables that such Export Contracts, the Export Receivables arising
thereunder or such other Export Receivables have been pledged and assigned to
the Collateral Trustee for the benefit of the Secured Parties and (ii)
irrevocably instruct all such Persons to make all payments of all amounts owed
by it under or in respect of present or future sales of Copper (which is
produced at any of the Principal Properties or the SX/EW Facility from copper
mined or leached at any of the Principal Properties or from purchased copper)
directly into the Collection Account (referred to below) maintained by the
Collateral Trustee unless and until it has received written notice from the
Collateral Trustee that such payments are to be directed to another account or
are no longer required to be made. Along with such notice, which shall be
substantially in the form of Exhibit 3.01A hereto, the Issuer shall send to each
such Person a consent, acknowledgment and agreement, substantially in the form
of Exhibit 3.01B hereto, provided that any such consent, acknowledgment and
agreement sent after June 30, 1997 shall be substantially in the form of Exhibit
3.01C hereto, to pay in accordance with the notice (each, an "Acknowledgment")
and shall request such Person (other than customers in respect of Export
Receivables that are not parties to annual Export Contracts or Export Contracts
with a term greater than one year) to execute the Acknowledgment and return the
same to the Collateral Trustee. In the event that the Issuer determines that any
Purchaser has agreed pursuant to an Acknowledgment to make payments to the
Collection Account in respect of receivables or contracts that are not Export
Receivables or Export Contracts, the Collateral Trustee, upon written notice
from SP Limited, shall advise such Purchaser that amounts paid in respect of
such receivables or contracts shall not be paid to the Collection Account, but
instead shall be paid to such accounts and in such manner as SP Limited may from
time to time direct. All payments made to the Collateral Trustee as provided in
the preceding sentence shall be immediately
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deposited in the Collection Account. In addition to the foregoing, the Issuer
agrees that if the Proceeds of any Export Contracts or Export Receivables shall
be received by the Issuer (other than from distributions from (a) the Collection
Account in accordance with the provisions hereof and (b) any other Account in
accordance with the relevant Secured Instrument or security agreement related
thereto), the Issuer shall immediately notify the Collateral Trustee in writing
of such receipt and shall as promptly as possible deposit such proceeds into the
Collection Account. Until so deposited, all such proceeds shall be held in trust
by the Issuer for and as the property of the Collateral Trustee, for the benefit
of the Secured Parties (and, to the extent of the Excess Percentage, if any, for
the benefit of the Issuer), and shall not be commingled with any other funds or
property of the Issuer. Without limiting the obligation of the Issuer to pay the
Secured Obligations, amounts distributed to the Issuer or the Issuer's designee
in accordance with the provisions of this Agreement shall not be subject, under
any circumstances, to any rights of the Collateral Trustee, the Noteholders, the
Credit Facility Lenders or the holders of Additional Secured Obligations to
require the Issuer or the Issuer's designee to repay such amounts to the
Collateral Trustee, the Noteholders or the Credit Facility Lenders.
SECTION 3.02. Collection Account. (a) Concurrently with the execution
and delivery of this Agreement, the Collateral Trustee shall establish a
segregated trust account in New York designated the "Deutsche Bank/Southern Peru
Limited Collection Trust Account" (herein referred to as the "Collection
Account") into which there shall be deposited from time to time, Proceeds from
the Export Contracts and Export Receivables, including the Collections, required
to be delivered pursuant to Section 3.01. On every Business Day at 3:00 P.M.,
New York City time, the Collateral Trustee shall transfer the funds then on
deposit in the Collection Account, after deducting therefrom amounts sufficient
to pay the overdue fees and expenses of, and any other overdue amounts payable
to, the Collateral Trustee under this Agreement, in accordance with the
following percentages:
(i) a portion of the Collections equal to the Series Total Collateral
Percentage in effect on such Business Day for each Series of SENS shall be
transferred to the "Series Collateral Account" established for such Series as
designated in writing from time to time by the Indenture Trustee to the
Collateral Trustee, (ii) a portion of the Collections equal to the Credit
Facility Total Collateral Percentage in effect on such Business Day shall be
transferred to the "Credit Facility Collateral Account" as designated in writing
from time to time by the Collateral Agent to the Collateral Trustee, (iii) a
portion of the Collections equal to the Designated Total Collateral Percentage
for any Additional Secured Obligations in effect on such Business Day shall be
transferred to the relevant Account established in connection with such
Additional Secured Obligations or as the holders of such Additional Secured
Obligations may otherwise direct and (iv) a portion of the Collections equal to
the Excess Percentage in effect on such Business Day shall be
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transferred to such account as the Issuer may designate from time to time in
writing to the Collateral Trustee.
(b) The Collection Account shall be maintained in the name of the
Collateral Trustee, for the benefit of the Secured Parties, and shall at all
times be under the sole dominion and control of the Collateral Trustee in
accordance with the provisions hereof. Without prejudice to the rights of the
Issuer to receive a percentage of the Collections equal to the Excess Percentage
as provided herein, the Issuer shall have no rights of withdrawal from the
Collection Account.
(c) Any funds remaining overnight on deposit in the Collection Account
shall be invested by the Collateral Trustee, as specified in written investment
instructions given by a Responsible Officer of the Issuer or a Person specified
by such Responsible Officer, in Eligible Investments, but if no such investment
instructions are provided, the Collateral Trustee shall, pursuant to written
standing instructions from the Issuer, invest such funds overnight in Eligible
Investments until other instructions are received from the Issuer; provided that
after receipt by the Collateral Trustee of a Notice of Default, such funds shall
be invested by the Collateral Trustee in Eligible Investments selected by the
Collateral Trustee. All such Eligible Investments shall be maintained in the
name of the Collateral Trustee and pledged to the Collateral Trustee to be held
by it or on its behalf as part of the Collateral hereunder, and the Collateral
Trustee shall be authorized to endorse any of such Eligible Investments in a
manner satisfactory to it, on behalf of the Issuer. All earnings on Eligible
Investments shall be credited to the Collection Account upon receipt thereof by
the Collateral Trustee.
SECTION 3.03. Supplemental Agreements for Additional Secured
Obligations. Without the consent of the other Secured Parties, the Issuer and
the Collateral Trustee may enter into one or more agreements supplemental hereto
to provide for the designation of a percentage interest in the Collateral to
secure any Additional Secured Obligations, provided, however, that (a) the
holder of any such Additional Secured Obligations shall be required to consent
and agree to this Agreement and (b) after giving effect to such designation, the
sum of (i) the SENS Total Collateral Percentage, (ii) the Credit Facility Total
Collateral Percentage and (iii) the aggregate Designated Total Collateral
Percentages of all Additional Secured Obligations shall not exceed 100%.
SECTION 3.04. Determination of Series Total Collateral Percentage,
Credit Facility Total Collateral Percentage and Designated Total Collateral
Percentage. In determining the Series Total Collateral Percentage for each
Series of SENS, the Credit Facility Total Collateral Percentage and the
Designated Total Collateral Percentage at any time, the Collateral Trustee shall
conclusively rely upon information supplied by the Administrative Agent as to
the principal amount of Loans outstanding and, if applicable,
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prepaid under the Credit Facility Agreement, upon information supplied by the
Indenture Trustee as to the aggregate original principal amount issued and, if
applicable, optionally redeemed, under the relevant Series of SENS, and upon
information supplied by the holder of any Additional Secured Obligation as to
the principal amount outstanding and, if applicable, prepaid thereunder and upon
any notices delivered pursuant to Section 2.04 hereof, and the Collateral
Trustee shall have no liability to any of the Secured Parties for actions taken
in reliance on any such information. All determinations pursuant to this Section
shall be made based upon the most recent information provided to the Collateral
Trustee pursuant to the immediately preceding sentence.
SECTION 3.05. Designation of Secured Letters of Credit and Secured
Hedge Agreements; Supplemental Agreements for Subordinated Secured Obligations.
(a) The Issuer may, in accordance with the applicable Senior Secured
Instruments, from time to time designate certain letters of credit and Hedge
Agreements as "Secured Series Reserve Letters of Credit", "Secured Credit
Facility Reserve Letters of Credit", "Secured Additional Secured Obligations
Reserve Letters of Credit" or "Secured Hedge Agreements", respectively. From
time to time, the Issuer will give the Collateral Trustee written notice of such
designation and such letters of credit and/or Hedge Agreements shall thereafter
be deemed to be "Secured Series Reserve Letters of Credit", "Secured Credit
Facility Reserve Letters of Credit", "Secured Additional Secured Obligations
Reserve Letters of Credit" or "Secured Hedge Agreements", as the case may be,
for all purposes hereunder. The Issuer shall not create any Subordinated Secured
Obligations unless the holders thereof shall have agreed to be bound by the
provisions of this Agreement.
(b) After the SENS Secured Obligations in respect of a Series of SENS
shall have been paid in full and the Indenture Trustee shall have delivered a
written notice to such effect to the Collateral Trustee, the holders of
Subordinated Secured Obligations in respect of any Secured Series Reserve Letter
of Credit relating to such Series shall thereafter be entitled to the rights of
such Series in the Collateral under this Agreement, including the right to
receive a percentage of all Collections, in each case equal to the SENS Total
Collateral Percentage for such Series which shall, notwithstanding the payment
in full of such SENS Secured Obligations, remain in effect (equal to the
percentage in effect immediately prior to such payment in full of the principal
of such SENS Secured Obligations) until such Subordinated Secured Obligations
shall have been paid in full in accordance with the terms of the relevant
Subordinated Secured Instruments, and the Collateral Trustee shall thereafter
make all payments in respect of the SENS Total Collateral Percentage to such
account as shall be designated in writing by the holders of such Subordinated
Secured Obligations to the Collateral Trustee pursuant to such Subordinated
Secured Instruments. After the Credit Facility Secured Obligations shall have
paid in full and all commitments under the Credit Facility Agreement shall
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have terminated and the Administrative Agent shall have delivered a written
notice to such effect to the Collateral Trustee, the holders of Subordinated
Secured Obligations in respect of any Secured Credit Facility Reserve Letter of
Credit or Secured Hedge Agreement shall thereafter be entitled to the rights of
the Credit Facility Lenders and the Credit Facility Agents in the Collateral
under this Agreement, including the right to receive a percentage of all
Collections, in each case equal to the Credit Facility Total Collateral
Percentage which shall, notwithstanding the payment in full of the Credit
Facility Secured Obligations, remain in effect (equal to the percentage in
effect immediately prior to such payment in full of the principal of the loans
under the Credit Facility Agreement) until such Subordinated Secured Obligations
shall have been paid in full in accordance with the terms of the relevant
Subordinated Secured Instruments and the Collateral Trustee shall thereafter
make all payments in respect of the Credit Facility Total Collateral Percentage
to such account as shall be designated in writing by the holders of such
Subordinated Secured Obligations to the Collateral Trustee pursuant to such
Subordinated Secured Instruments. After any relevant Additional Secured
Obligations shall have paid in full and the holders of the Additional Secured
Obligations (or an authorized representative of such holders) shall have
delivered a written notice to such effect to the Collateral Trustee, the holders
of Subordinated Secured Obligations in respect of any Secured Additional Secured
Obligations Reserve Letter of Credit relating to such Additional Secured
Obligations shall thereafter be entitled to the rights of the holders of such
Additional Secured Obligations in the Collateral under this Agreement, including
the right to receive a percentage of all Collections, in each case equal to the
Designated Total Collateral Percentage for such Additional Secured Obligations
which shall, notwithstanding the payment in full of the Additional Secured
Obligations, remain in effect (equal to the percentage in effect immediately
prior to such payment in full of such Additional Secured Obligations) until such
Subordinated Secured Obligations shall have been paid in full in accordance with
the terms of the relevant Subordinated Secured Instruments and the Collateral
Trustee shall thereafter make all payments in respect of the Designated Total
Collateral Percentage to such account as shall be designated in writing by the
holders of such Subordinated Secured Obligations to the Collateral Trustee
pursuant to such Subordinated Secured Instruments. Notwithstanding anything to
the contrary contained in the Subordinated Secured Instruments or any other
document or agreement and irrespective of: (i) anything contained in any filing
or agreement to which the Noteholders, the Credit Facility Lenders, the holders
of any Additional Secured Obligations or any Subordinated Creditor now or
hereafter may be a party and (ii) the rules for determining priority under the
Uniform Commercial Code or any other law governing the relative priorities of
secured creditors, (A) no Subordinated Creditor shall be entitled to receive any
payment from the Collateral until the relevant Senior Secured Obligations shall
have been paid in full and the Collateral Trustee shall have received the
above-described written notice with respect thereto and (B) no Subordinated
Creditor shall exercise any rights or remedies in respect of the Collateral
until all the Senior
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Secured Obligations described in the first three sentences of this paragraph
shall have been indefeasibly paid in full and the Collateral Trustee shall have
received all of the written notices described in such sentences.
ARTICLE 4
PERFECTION
SECTION 4.01. Delivery and Other Perfection. The Issuer shall:
(a) deliver to the Collateral Trustee all Acknowledgments;
(b) deliver and pledge to the Collateral Trustee any and all
Instruments, endorsed and/or accompanied by such instruments of
assignment and transfer in such form and substance as the Collateral
Trustee may request;
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other paper that
may be necessary or desirable to create, preserve, perfect or validate
the security interest granted pursuant hereto or to enable the
Collateral Trustee to exercise and enforce its rights hereunder with
respect to such pledge and security interest; and
(d) prior to the occurrence of a trigger event, an accelerated
amortization event or an event of default under the Indenture or an
event of default under the Credit Facility Agreement, or an event of
default under the Secured Instrument relating to any Additional Secured
Obligation, permit the Collateral Trustee to discuss the affairs,
finances and accounts of the Issuer with, and to be advised as to the
same by, the Issuer's officers and employees upon reasonable notice, at
such reasonable times during regular business hours and intervals and
to such reasonable extent as the Collateral Trustee may desire.
Following the occurrence and during the continuance of a trigger event,
an accelerated amortization event or an event of default under the
Indenture or an event of default under the Credit Facility Agreement,
or an event of default under the Secured Instrument relating to any
Additional Secured Obligation, permit the Collateral Trustee to visit
and inspect any of the properties and the executive offices of the
Issuer, to examine the books of account and records of the Issuer, to
make or be provided with copies and extracts therefrom and, to discuss
the affairs, finances and accounts of the Issuer with, and to be
advised as to the same by, its officers, employees and independent
certified public accountants all at such reasonable times during
regular business hours and intervals and to such reasonable extent as
the
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Collateral Trustee may desire. If a trigger event, an accelerated
amortization event, or an event of default under the Indenture or an
event of default under the Credit Facility Agreement, or an event of
default under the Secured Instrument relating to any Additional Secured
Obligation, shall have occurred and be continuing, the Issuer agrees to
pay the fees and expenses of the Collateral Trustee in connection with
the exercise of rights by the Collateral Trustee pursuant to this
Section 4.01(d).
SECTION 4.02. Other Financing Statements and Liens. Except as otherwise
permitted under this Agreement, without the prior written consent of the
Collateral Trustee, the Issuer shall not file or suffer to be on file, or
authorize or permit to be filed or to be on file, in any jurisdiction any
financing statement or like instrument with respect to the Collateral in which
the Collateral Trustee is not named as the sole secured party.
SECTION 4.03. Representations and Warranties. The Issuer hereby
represents and warrants to the Collateral Trustee (for the benefit of the
Secured Parties) that: (a) Assuming compliance by the Collateral Trustee with
the terms hereof, this Agreement creates a valid and binding Lien in favor of
the Collateral Trustee in the Collection Account and all cash deposited therein
from time to time, enforceable in accordance with the terms hereof and prior to
all other Liens and rights of others, except for Permitted Liens.
(b) Upon the execution of UCC-1 financing statements and the proper
filing thereof in the locations indicated in Exhibit 4.03, this Agreement
creates a valid and binding lien and security interest in favor of the
Collateral Trustee in the Export Contracts, the Export Receivables and the
Proceeds of the Export Contracts and Export Receivables, enforceable in
accordance with the terms hereof, and prior to all other liens or other security
interests (as defined in the Uniform Commercial Code), except for Permitted
Liens.
(c) Each Export Contract is in full force and effect and constitutes a
valid and legally enforceable obligation of the Issuer, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. No amount payable to the
Issuer in excess of $100,000 under or in connection with any Export Contract is
evidenced by any Instrument which has not been delivered to the Collateral
Trustee. At the Collateral Trustee's request after receipt by the Collateral
Trustee of a Notice of Default, the Issuer shall deliver to the Collateral
Trustee all original Export Contracts and other documents evidencing, and
relating to, the Export
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Contracts which gave rise to the Export Receivables, including, without
limitation, all original orders, invoices and shipping receipts.
(d) Without prejudice to any other provision or agreement contained
herein, all obligations of the Issuer under this Agreement are (without any
further action by the Issuer or the Peruvian Branch) obligations of the Peruvian
Branch of the Issuer, and that such obligations, and the security interests
created under this Agreement, are enforceable against the Peruvian Branch of the
Issuer (and its assets), subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and covenant
of good faith and fair dealing.
SECTION 4.04. Issuer Remains Liable. Anything herein to the contrary
notwithstanding, the Issuer shall remain liable under each of the Export
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. Neither the Collateral Trustee nor any Secured
Creditor shall have any obligation or liability under any Export Contract by
reason of or arising out of this Agreement or the receipt by the Collateral
Trustee or any Secured Creditor of any payment relating thereto, nor shall the
Collateral Trustee or any Secured Creditor be obligated in any manner to perform
any of the obligations of the Issuer under or pursuant to any Export Contract,
to make any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance by any
party thereunder, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
ARTICLE 5
REMEDIES
SECTION 5.01. Notices of Default; Remedies Subject to Intercreditor
Arrangements and Issuer's Interest in the Collateral. Upon receipt of a Notice
of Default, the Collateral Trustee shall promptly notify the Issuer, the
Administrative Agent, the Indenture Trustee and the authorized representative of
the holders of any Additional Secured Obligations of its receipt thereof. Except
as expressly permitted hereunder, the Collateral Trustee is not empowered to
exercise any remedy under this Article 5 unless a Notice of Default has been
delivered. A Notice of Default shall become effective upon receipt thereof by
the Collateral Trustee. A Notice of Default, once effective, shall remain in
effect unless and until it is canceled as provided in the next succeeding
sentence. The Senior Creditors giving a Notice of Default shall be entitled to
cancel such
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Notice of Default by delivering a written notice of cancellation to the
Collateral Trustee at any time. The Collateral Trustee shall immediately notify
the Issuer, the Administrative Agent, the Indenture Trustee and the authorized
representative of the holders of any Additional Secured Obligations as to the
receipt and contents of any such notice of cancellation. Notwithstanding the
delivery of a Notice of Default, no Realization Event with respect to the
Collateral or the direction of Collections to any account other than the
Collection Account may be effected by the Collateral Trustee or by or on behalf
of any Secured Party except in accordance with the intercreditor arrangements
set forth in Article 6 hereof. Notwithstanding anything to the contrary herein
contained, nothing in this Article 5 shall modify, reduce, release or otherwise
affect the percentage interests in the Collections, as calculated in accordance
with the provisions hereof.
SECTION 5.02. General Authority of the Collateral Trustee over the
Collateral. The Issuer hereby irrevocably constitutes and appoints the
Collateral Trustee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of the Issuer or in its own name, from time to time in the
Collateral Trustee's discretion, so long as any Notice of Default is in effect,
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of this
Agreement and accomplish the purposes hereof and thereof and, without limiting
the generality of the foregoing, the Issuer hereby gives the Collateral Trustee
the power and right on behalf of the Issuer, without notice to or further assent
by the Issuer (and without any requirement to receive directions with respect
thereto pursuant to Section 6.02), so long as any Notice of Default is in
effect, to do the following:
(a) to ask for, demand, sue for, collect, receive and give acquittance
for any and all moneys due or to become due upon, or in connection with, the
Collateral;
(b) to receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and non-negotiable
instruments taken or received by the Collateral Trustee as, or in connection
with, the Collateral;
(c) to commence, prosecute, defend, settle, compromise or adjust any
claim, suit, action or proceeding with respect to, or in connection with, the
Collateral; and
(d) to do, at its option and at the expense and for the account of the
Issuer, at any time or from time to time, all acts and things which the
Collateral Trustee deems necessary to protect or preserve the Collateral.
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SECTION 5.03. Remedies Generally; Right to Initiate Judicial
Proceedings. (a) If a Notice of Default is in effect, then, subject to the
provisions of Article 6 hereof, the Collateral Trustee, on behalf of the Secured
Parties, may exercise, in addition to all other rights and remedies granted to
them in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the Uniform Commercial Code or any other applicable law.
Without limiting the generality of the foregoing, the Collateral Trustee,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Issuer or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived to the extent
permitted by applicable law), may in such circumstances, subject to the
provisions of Article 6 hereof, forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Collateral Trustee or any Secured
Party or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Collateral Trustee or any Secured
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Issuer, which right or equity is hereby waived and released.
The Collateral Trustee shall deposit the net proceeds of any action taken by it
pursuant to this Section, after deducting all reasonable costs and expenses of
every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Collateral Trustee hereunder, including, but not limited to,
reasonable attorneys' fees and disbursements, in the Collection Account for
distribution in accordance with Section 3.02. To the extent permitted by
applicable law, the Issuer waives all claims, damages and demands it may acquire
against the Collateral Trustee or any Secured Party arising out of the exercise
by them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 30 days before such sale or other
disposition.
(b) If a Notice of Default is in effect, then, subject to the
provisions of Article 6 hereof, the Collateral Trustee (i) shall have the right
and power to institute and maintain such suits and proceedings as it may deem
appropriate to protect and enforce the rights vested in it by this Agreement and
(ii) may proceed by suit or suits at law or in equity to enforce such rights and
to foreclose upon the Collateral and to sell all or, from time to
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time, any of the Collateral under the judgment or decree of a court of competent
jurisdiction.
SECTION 5.04. Right to Appoint a Receiver. If a Notice of Default is in
effect, then, subject to the provisions of Article 6 hereof, upon the filing of
a bill in equity or other commencement of judicial proceedings to enforce the
rights of the Collateral Trustee under this Agreement, the Collateral Trustee
shall, to the extent permitted by law, with notice to the Issuer but without
notice to any party claiming through the Issuer, without regard to the solvency
or insolvency at the time of any Person then liable for the payment of any of
the Secured Obligations, without regard to the then value of the Collateral, and
without requiring any bond from any complainant in such proceedings, be entitled
as a matter of right to the appointment of a receiver or receivers of the
Collateral, or any part thereof, and of the revenues and other income thereof,
pending such proceedings, with such powers as the court making such appointment
shall confer, and to the entry of an order directing that the rents, issues,
tolls, profits, royalties, revenues and other income of the property
constituting the whole or any part of the Collateral be segregated, sequestered
and impounded for the benefit of the Collateral Trustee and the Secured Parties,
and the Issuer irrevocably consents to the appointments of such receiver or
receivers and to the entry of such order.
SECTION 5.05. Waiver and Estoppel. (a) The Issuer agrees, to the extent
it may lawfully do so, that it will not at any time in any manner whatsoever
claim or take the benefit or advantage of any appraisal, valuation, stay of
execution, extension, moratorium, turnover or redemption law, or any law
permitting it to direct the order in which the Collateral shall be sold, now or
at any time hereafter in force, which may delay, prevent or otherwise affect the
performance or enforcement of this Agreement and hereby waives all benefit or
advantage of all such laws and covenants that it will not hinder, delay or
impede the execution of any power granted to the Collateral Trustee in this
Agreement but will suffer and permit the execution of every such power as though
no such law were in force.
(b) The Issuer, to the extent it may lawfully do so, on behalf of
itself and all who may claim through or under it, waives and releases all rights
to demand or to have any marshalling of the Collateral upon any sale, whether
made under any power of sale granted herein or pursuant to judicial proceedings
or upon any foreclosure or any enforcement of this Agreement and consents and
agrees that all the Collateral may at any such sale be offered and sold as an
entirety.
(c) The Issuer waives, to the extent permitted by applicable law,
presentment, demand, protest and any notice of any kind (except notices
explicitly required hereunder)
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in connection with this Agreement and any action taken by the Collateral Trustee
with respect to the Collateral.
SECTION 5.06. Limitation on Collateral Trustee's Duty in Respect of
Collateral. Beyond its duties as to the custody thereof expressly provided
herein and to account to the Secured Parties and the Issuer for moneys and other
property received by it hereunder and to make distributions in accordance with
the provisions hereof, the Collateral Trustee shall not have any duty to the
Issuer or to the Secured Parties as to any Collateral in its possession or
control or in the possession or control of any of its agents or nominees, or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto except to treat such Collateral in its
possession and control with the same degree of care as it accords its own
property.
SECTION 5.07. Payments. All payments received by the Collateral Trustee
in respect of the Collateral (including as a result of the exercise of remedies
hereunder) shall be deposited in the Collection Account for distribution in
accordance with Section 3.02.
SECTION 5.08. Stamp and Other Similar Taxes. The Issuer agrees to
indemnify and hold harmless the Collateral Trustee and each Secured Party from
any present or future claim for liability for any stamp or any other similar tax
and any penalties or interest with respect thereto, which may be assessed,
levied or collected by any jurisdiction in connection with this Agreement or any
Collateral. The obligations of the Issuer under this Section 5.08 shall survive
the termination of the other provisions of this Agreement.
SECTION 5.09. Filing Fees, Excise Taxes, Etc. The Issuer agrees to pay
or to reimburse the Collateral Trustee for any and all payments made by the
Collateral Trustee in respect of all filing, recording and registration fees,
excise taxes and other similar imposts which may be payable or determined to be
payable by the Collateral Trustee in respect of the execution and delivery of
this Agreement. The obligations of the Issuer under this Section 5.09 shall
survive the termination of the other provisions of this Agreement.
SECTION 5.10. Indemnification. The Issuer agrees to pay, indemnify, and
hold the Collateral Trustee harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and
reasonable out-of-pocket costs, expenses (including, without limitation, the
reasonable fees of counsel) or disbursements of any kind or nature whatsoever
with respect to the enforcement of this Agreement, unless arising from the gross
negligence or willful misconduct of the Collateral Trustee (including, without
limitation, indemnification of the Collateral Trustee for liabilities for the
net amount of taxes (after taking account of any deduction, credit or other tax
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reduction or benefit available by reason of the imposition of any such tax) in
any jurisdiction in which the Collateral Trustee would not otherwise be subject
to tax except by reason of its acting hereunder (directly or through agents,
separate trustees or co-trustees)). The agreements in this Section 5.10 shall
survive the termination of the other provisions of this Agreement.
SECTION 5.11. Deficiency. If the proceeds of the Collateral are
insufficient to cover the costs and expenses hereunder and the payment in full
of the Secured Obligations, the Issuer shall remain liable for any deficiency.
SECTION 5.12. Removals, Etc. Without at least 30 days prior written
notice to the Collateral Trustee and the taking of any such action as shall be
requested by the Collateral Trustee to maintain the perfection of the security
interests granted under this Agreement, the Issuer shall not (i) maintain its
chief executive office at any place other than at the following address: 180
Maiden Lane, New York, New York or (ii) change its name, or the name under which
it does business, from the name shown on the signature pages hereto.
SECTION 5.13. Termination. (a) When all SENS Secured Obligations shall
have been paid in full and the Indenture Trustee shall have delivered a written
notice to such effect to the Collateral Trustee, this Agreement shall terminate
as to the Indenture and, subject to Section 3.05(b), the Collateral Trustee
shall forthwith cease to hold the Collateral for the benefit of the Noteholders.
(b) When all Credit Facility Secured Obligations shall have been paid
in full, the commitments under the Credit Facility Agreement shall have been
terminated and the Administrative Agent shall have delivered a written notice to
such effect to the Collateral Trustee, this Agreement shall terminate as to the
Credit Facility Agreement and, subject to Section 3.05(b), the Collateral
Trustee shall forthwith cease to hold the Collateral for the benefit of the
Credit Facility Lenders and the Credit Facility Agents.
(c) When any Additional Secured Obligations shall have been paid in
full and the holders of such Additional Secured Obligations (or an authorized
representative of such holders) shall have delivered a written notice to such
affect to the Collateral Trustee, this Agreement shall terminate as to such
Additional Secured Obligations and, subject to Section 3.05(b), the Collateral
Trustee shall forthwith cease to hold the Collateral for the benefit of the
holders of such Additional Secured Obligations.
SECTION 5.14. Further Assurances. (a) The Issuer agrees that now or at
any time in the future, on being required to do so by the Collateral Trustee,
the Issuer will do or procure the doing of all such acts and/or execute and
deliver, or procure the execution and
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delivery of such further documents(including without limitation the filing of
Uniform Commercial Code continuation statements) in a form satisfactory to the
Collateral Trustee, and do such other acts and things as the Collateral Trustee
may reasonably request in order fully to effect the purposes of this Agreement
and secure to the Collateral Trustee the full benefit of the rights, powers and
remedies conferred upon the Collateral Trustee in this Agreement.
(b) Unless the Collateral Trustee shall have received a Notice of
Default, the Collateral Trustee, the Credit Facility Lenders, the Administrative
Agent, the Indenture Trustee and holders of any Additional Secured Obligations
shall execute such documents and take such action and do such things as may be
necessary or convenient to enable the Issuer, as grantor of the security
interest in the Export Contracts and the Export Receivables, to exercise the
rights retained by it in the Export Contracts and the Export Receivables, and no
Noteholder, Credit Facility Lender or holder of an Additional Secured
Obligations shall take any action that would unreasonably interfere with actions
in respect of the Export Contracts or the Export Receivables by the Issuer.
ARTICLE 6
INTERCREDITOR ARRANGEMENTS
SECTION 6.01. Limitations Concerning Collateral. Notwithstanding
anything to the contrary herein, the Required Secured Parties shall not(and
shall not direct the Collateral Trustee to) effect any Realization Event with
respect to the Collateral or direct the Collections to an account other than the
Collection Account unless (a) any Secured Obligations shall have been declared
due and payable prior to the stated maturity thereof in accordance with the
relevant Secured Instrument (an "Acceleration Event") or (b) there shall have
occurred and be continuing an event of default with respect to a Secured
Obligation resulting from (i) a failure to make a payment of principal or
interest and such event of default shall remain unremedied for a period of at
least 5 days (a "Payment Event of Default") or (ii) any event or proceeding of
the type described in Section 9(f) of the Credit Facility Agreement (a
"Bankruptcy Event of Default"). Following any Acceleration Event, Payment Event
of Default or Bankruptcy Event of Default, the Collateral Trustee shall effect
any Realization Event with respect to the Collateral or direct the Collections
to an account other than the Collection Account only upon the written
instructions of the Required Secured Parties.
SECTION 6.02. Exercise of Powers; Instructions of Required Secured
Parties. Subject to the provisions of Section 6.01 hereof, the Required Secured
Parties shall have the right, by one or more instruments in writing executed and
delivered to the Collateral
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Trustee, to direct the time, method and place of conducting any proceeding for
any right or remedy available to the Collateral Trustee, or of exercising any
trust or power conferred on the Collateral Trustee, or for the appointment of a
receiver, or to direct the taking or the refraining from taking of any action
authorized by this Agreement; provided that (i) such direction shall not
conflict with the provisions of law or of this Agreement and (ii) the Collateral
Trustee shall be adequately secured and indemnified as provided in Section 7
hereof. In the absence of such direction or indemnification, the Collateral
Trustee shall have no duty to take or refrain from taking any action unless
explicitly required herein. Nothing contained in this Agreement shall limit the
right of any Secured Party to require the Collateral Trustee to comply with the
terms of the Agreement.
SECTION 6.03. Subordination. (a) So long as any SENS Secured
Obligations, Credit Facility Secured Obligations or Additional Secured
Obligations have not been indefeasibly paid in full or any Senior Secured
Instrument remains in effect, whether or not any event or proceeding of the type
described in Section 9(f) of the Credit Facility Agreement shall have been
commenced by or against the Issuer, (i) no Subordinated Creditor will (A)
exercise or seek to exercise any rights or exercise any remedies with respect to
any Collateral or (B) institute any action or proceeding with respect to such
rights or remedies, including without limitation, any action of foreclosure or
(C) contest, protest or object to any foreclosure proceeding or action brought
by any Senior Creditor or the exercise of any rights and remedies under any
Senior Secured Instruments or (D) make any filing or take any other action to
perfect a security interest in any Collateral; and (ii) the Senior Creditors
shall have the exclusive right to enforce and to direct the enforcement of
rights and exercise remedies with respect to the Collateral in accordance with
this Agreement.
(b) In exercising rights and remedies with respect to the Collateral,
the Senior Creditors may enforce the provisions of this Agreement and exercise
remedies hereunder, all in such order and in such manner as they may determine
in the exercise of their sole business judgment. Such exercise and enforcement
shall include, without limitation, the rights to sell or otherwise dispose of
Collateral, to incur expenses in connection with such sale or disposition and to
exercise all the rights and remedies of a secured lender under the Uniform
Commercial Code of any applicable jurisdiction.
(c) The Senior Creditors' rights with respect to the Collateral
include the right to release any or all of the Collateral from the security
interest created pursuant to this Agreement, notwithstanding that the net
proceeds of any such sale may not be used to permanently prepay any Senior
Secured Obligations or Subordinated Secured Obligations. If the Senior Creditors
shall determine, in connection with any sale of Collateral, that the release of
the lien of any Subordinated Secured Instrument on such Collateral in connection
with such sale is necessary or advisable, the Subordinated
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Creditors shall execute such release documents and instruments and shall take
such further actions as the Collateral Trustee or the Senior Creditors shall
request. Each Subordinated Creditor hereby irrevocably constitutes and appoints
the Collateral Trustee and any officer or agent of the Collateral Trustee, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Subordinated
Creditor and in the name of such Subordinated Creditor or in the Collateral
Trustee's own name, from time to time in the Collateral Trustee's discretion,
for the purpose of carrying out the terms of this paragraph, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this paragraph,
including, without limitation, any financing statements, endorsements,
assignments or other instruments of transfer or release. Each Subordinated
Creditor hereby ratifies all that said attorneys shall lawfully do or cause to
be done pursuant to the power of attorney granted in this paragraph. Any release
(other than a release in connection with the payment in full of the Senior
Secured Obligations that is not made from the Proceeds of any Collateral) of
Collateral by the Senior Creditors shall be binding on the holders of
Subordinated Secured Obligations, and the holders of such obligations shall have
no rights with respect to any such released Collateral.
ARTICLE 7
THE COLLATERAL TRUSTEE
SECTION 7.01. Acceptance of Trust. The Collateral Trustee, for itself
and its successors, hereby accepts the trusts created by this Agreement upon the
terms and conditions hereof. The Collateral Trustee acknowledges that it shall
hold the Instruments and any other type of "possessory" Collateral for the
benefit of itself and for the benefit of the Secured Parties and the Issuer.
SECTION 7.02. Exculpatory Provisions. (a) The Collateral Trustee shall
not be responsible in any manner whatsoever for the correctness of any recitals,
statements, representations or warranties herein, all of which are made solely
by the Issuer. The Collateral Trustee makes no representations as to the value
or condition of the Collateral or any part thereof, or as to the title of the
Issuer thereto or as to the security or perfection afforded by this Agreement,
or as to the validity, execution (except its own execution), enforceability,
legality or sufficiency of this Agreement, or the Secured Obligations, and the
Collateral Trustee shall incur no liability or responsibility in respect of any
such matters. The Collateral Trustee shall not be responsible for insuring the
Collateral or for the payment of taxes, charges or assessments or discharging of
liens upon the Collateral or otherwise as to the maintenance of the Collateral,
except that if the Collateral Trustee takes possession of any Collateral, the
Collateral Trustee shall use the care accorded its own assets in the
preservation of the Collateral in its possession.
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(b) The Collateral Trustee shall not be required to ascertain or
inquire as to the performance by the Issuer of any of the covenants or
agreements contained herein or in any Secured Instrument.
(c) The Collateral Trustee shall be under no obligation or duty to
take any action under this Agreement if taking such action (i) would subject the
Collateral Trustee to a tax in any jurisdiction where it is not then subject to
a tax or (ii) would require the Collateral Trustee to qualify to do business in
any jurisdiction where it is not then so qualified, unless the Collateral
Trustee receives security or indemnity satisfactory to it against such tax (or
equivalent liability), or any liability resulting from such qualification or
failure to be so qualified, in each case as results solely from the taking of
such action under this Agreement.
(d) Notwithstanding any other provision of this Agreement (other than
those relating to the care of the Collateral in its possession), the Collateral
Trustee shall not be personally liable for any action taken or omitted to be
taken by it in accordance with this Agreement except for its own gross
negligence or willful misconduct.
(e) The Collateral Trustee shall have the same rights with respect to
any Secured Obligation held by it as any other Secured Party and may exercise
such rights as though it were not the Collateral Trustee hereunder, and may
accept deposits from, lend money to, and generally engage in any kind of banking
or trust business with, the Issuer as if it were not the Collateral Trustee.
SECTION 7.03. Delegation of Duties. The Collateral Trustee may execute
any of the trusts or powers hereof and perform any duty hereunder either
directly or by or through agents or attorneys-in-fact. The Collateral Trustee
shall be entitled to advice of counsel concerning all matters pertaining to such
trusts, powers and duties. The Collateral Trustee shall not be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care. The Collateral Trustee may enter into agreements with such
agents or attorneys-in-fact in such form as it may deem necessary or advisable,
and shall be entitled to amend, modify, or waive the provisions of such
agreements from time to time.
SECTION 7.04. Reliance by Collateral Trustee. (a) Whenever in the
administration of this Agreement, the Collateral Trustee shall deem it necessary
or desirable that a factual matter be proved or established in connection with
the Collateral Trustee taking, suffering or omitting any action hereunder or
thereunder, such matter (unless other evidence in respect thereof is herein
specifically prescribed) may be deemed to be conclusively proved or established
by a certificate of a Responsible Officer of the
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<PAGE> 39
Issuer delivered to the Collateral Trustee, and such certificate shall be full
warrant to the Collateral Trustee for any action taken, suffered or omitted in
reliance thereon.
(b) The Collateral Trustee may consult with counsel and any opinion of
such counsel shall be full and complete authorization and protection in respect
of any action taken or suffered by it hereunder in accordance therewith. The
Collateral Trustee shall have the right at any time to seek instructions
concerning the administration of this Agreement from any court of competent
jurisdiction.
(c) The Collateral Trustee may rely, and shall be fully protected in
acting, upon any resolution, statement, certificate, instrument, opinion,
report, notice, request, consent, order, bond or other paper or document which
it has no reason to believe to be other than genuine and to have been signed or
presented by the proper party or parties or, in the case of cables, facsimiles
and telexes, to have been sent by the proper party or parties. The Collateral
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Collateral Trustee and conforming to the requirements of this
Agreement.
(d) The Collateral Trustee shall not be under any obligation to
exercise any of the rights or powers vested in the Collateral Trustee by this
Agreement, at the request or direction of the Required Secured Parties pursuant
to this Agreement or otherwise, unless the Collateral Trustee shall have been
provided adequate security and indemnity against the costs, expenses and
liabilities which may be incurred by it in compliance with such request or
direction.
SECTION 7.05. Limitations on Duties of Collateral Trustee. (a) Unless a
Notice of Default is in effect, the Collateral Trustee shall be obligated to
perform such duties and only such duties as are specifically set forth in this
Agreement and no implied covenants or obligations shall be read into this
Agreement against the Collateral Trustee. If and so long as a Notice of Default
is in effect and subject to the provisions of Article 6 hereof, the Collateral
Trustee shall exercise the rights and powers vested in it by this Agreement, and
shall not be liable with respect to any action taken by it, or omitted to be
taken by it, in accordance with the direction of the Required Secured Parties
pursuant to Article 6 hereof.
(b) Except as herein otherwise expressly provided, the Collateral
Trustee shall not be under any obligation to take any action which is
discretionary with the Collateral Trustee under the provisions hereof except
upon the written request of the Required Secured Parties pursuant to Article 6
hereof.
(c) No provision of this Agreement shall be deemed to impose any duty
or obligation on the Collateral Trustee to perform any act or acts or exercise
any right,
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<PAGE> 40
power, duty or obligation conferred or imposed on it, in any jurisdiction in
which it shall be illegal, or in which the Collateral Trustee shall be
unqualified or incompetent, to perform any such act or acts or to exercise any
such right, power, duty or obligation or if such performance or exercise would
constitute doing business by the Collateral Trustee in such jurisdiction or
imposes a tax on the Collateral Trustee by reason thereof.
SECTION 7.06. Moneys to Be Held in Trust. All moneys received by the
Collateral Trustee under or pursuant to any provision of this Agreement (except
for its own fees) shall be held in trust for the purposes for which they were
paid or are held.
SECTION 7.07. Resignation and Removal of the Collateral Trustee. (a)
The Collateral Trustee may at any time, by giving written notice to the Issuer,
the Administrative Agent and the Indenture Trustee and the authorized
representative of the holders of Qualified Additional Secured Obligations,
resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor
Collateral Trustee, (ii) the acceptance of such appointment by such successor
Collateral Trustee, and (iii) the approval of such successor Collateral Trustee
evidenced by one or more instruments signed by the Issuer, the Administrative
Agent and the Indenture Trustee and the authorized representative of the holders
of Qualified Additional Secured Obligations (which approval shall not be
unreasonably withheld). If no successor Collateral Trustee shall be appointed
and shall have accepted such appointment within 90 days after the Collateral
Trustee gives the aforesaid notice of resignation, the Collateral Trustee, the
Issuer, the Indenture Trustee, the Administrative Agent, any authorized
representative of the holders of Qualified Additional Secured Obligation or any
Secured Party may apply to any court of competent jurisdiction to appoint a
successor Collateral Trustee, to act until such time, if any, as a successor
Collateral Trustee shall have been appointed as provided in this Section 7.07.
Any successor so appointed by such court shall immediately and without further
act be superseded by any successor Collateral Trustee. The Administrative Agent
and the Indenture Trustee may, at any time with the prior approval of the
Issuer, which approval shall not be unreasonably withheld, remove the Collateral
Trustee and appoint a successor Collateral Trustee, such removal to be effective
upon the acceptance of such appointment by the successor. The Issuer may, at any
time with the prior approval of (i) the Administrative Agent (if any Credit
Facility Secured Obligations remain outstanding), (ii) the Indenture Trustee (if
any SENS Secured Obligations are outstanding) and (iii) the agent or trustee, if
any, for the holders of any Additional Secured Obligations (if any Qualified
Additional Secured Obligations are outstanding), in each case such approval not
to be unreasonably withheld, remove the Collateral Trustee and appoint a
successor Collateral Trustee, such removal to be effective upon the acceptance
of such appointment by the successor. Any Collateral Trustee shall be entitled
to any rights of indemnification provided for herein to the extent incurred or
arising, or relating to events occurring,
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<PAGE> 41
before such resignation or removal becomes effective. Notwithstanding anything
to the contrary in this Section 7.07, the Administrative Agent, the Indenture
Trustee or the authorized representative of the holders of Qualified Additional
Secured Obligations shall not be entitled to any rights under this Section 7.07
if the aggregate outstanding principal amount of the Senior Secured Obligations
of the Secured Parties represented by such party constitutes less than 10% of
the aggregate principal outstanding amount of all Senior Secured Obligations.
(b) If at any time the Collateral Trustee shall be removed or
otherwise become incapable of acting, or if at any time a vacancy shall occur in
the office of the Collateral Trustee for any other cause, a successor Collateral
Trustee may be appointed by the Administrative Agent, the Indenture Trustee, the
authorized representative of the holders of Additional Secured Obligations or
the Issuer (in each case with the consent of the Administrative Agent, the
Indenture Trustee, such authorized representative and the Issuer, such consent
not to be unreasonably withheld). In either case, the powers, duties, authority
and title of the predecessor Collateral Trustee shall be terminated and canceled
without procuring the resignation of such predecessor and without any other
formality (except as may be required by applicable law) other than appointment
and designation of a successor in writing duly acknowledged and delivered to the
predecessor and the Issuer.
(c) Any such appointment and designation of a successor Collateral
Trustee shall be full evidence of the right and authority to make the same and
of all the facts therein recited, and this Agreement shall vest in such
successor, without any further act, deed or conveyance, all the estates,
properties, rights, powers, trusts, duties, authority and title of its
predecessor; but the predecessor Collateral Trustee shall, nevertheless, on the
written request of the Administrative Agent, the Indenture Trustee, the
authorized representative of the holders of Additional Secured Obligations, the
Issuer, or the successor, subject to the payment in full of all of the
predecessive Collateral Trustee's unpaid fees and expenses payable hereunder,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights, powers, trusts, duties, authority and title of such
predecessor hereunder and shall deliver all Collateral held or subsequently
received by it or its agents to such successor. Should any deed, conveyance or
other instrument in writing from the Issuer be required by any successor
Collateral Trustee solely for the purpose of more fully and certainly vesting in
such successor the estates, properties, rights, powers, trusts, duties,
authority and title vested or intended to be vested in the predecessor
Collateral Trustee, any and all such deeds, conveyances and other instruments in
writing shall, on request of such successor, be executed, acknowledged and
delivered by the Issuer. If the Issuer shall not have executed and delivered any
such deed, conveyance or other instrument within 10 Business Days after it
received a written request from the successor Collateral Trustee to do so, or if
a Notice of Default is in effect, the predecessor Collateral Trustee may execute
the same on behalf of
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<PAGE> 42
the Issuer. The Issuer hereby appoints any predecessor Collateral Trustee, as
its agent and attorney to act for it as provided in the next preceding sentence.
SECTION 7.08. Status of Successor Collateral Trustee. Every successor
Collateral Trustee appointed pursuant to Section 7.07 shall be a bank or trust
company in good standing and having power to act as Collateral Trustee
hereunder, incorporated under the laws of (or having a branch located within)
the United States of America or any State thereof or the District of Columbia
and having its principal corporate trust office within the 48 contiguous States
and shall also have capital, surplus and undivided profits of not less than
$500,000,000, if there be such an institution with such capital, surplus and
undivided profits willing, qualified and able to accept the trust hereunder upon
reasonable or customary terms.
SECTION 7.09. Merger of the Collateral Trustee. Any corporation into
which the Collateral Trustee may be merged, or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Collateral Trustee shall be a party, shall be Collateral Trustee under
this Agreement without the execution or filing of any paper or any further act
on the part of the parties hereto.
SECTION 7.10. Treatment of Payee or Indorsee by Collateral Trustee;
Representatives of Secured Parties. (a) The Collateral Trustee may treat the
registered holder or, if none, the payee or indorsee of any promissory note or
debenture evidencing a Secured Obligation as the absolute owner thereof for all
purposes and shall not be affected by any notice to the contrary, whether such
promissory note or debenture shall be past due or not.
(b) Any Person (other than the Administrative Agent or the Indenture
Trustee), which shall be designated as the duly authorized representative of one
or more Secured Parties to act as such in connection with any matters pertaining
to this Agreement or the Collateral shall present to the Collateral Trustee such
documents, including, without limitation, opinions of counsel, as the Collateral
Trustee may reasonably require, in order to demonstrate to the Collateral
Trustee the authority of such Person to act as the representative of such
Secured Parties. The authority of the Administrative Agent, the Collateral Agent
and the Indenture Trustee shall be demonstrated by the Credit Facility Agreement
and the Indenture.
SECTION 7.11. Reports by Collateral Trustee. (a) On or before the tenth
day of each calendar month immediately following any month in which the
Collateral Trustee receives Acknowledgments, the Collateral Trustee shall
provide each of the Issuer and the Trustee with a written statement listing the
Acknowledgments received by the Collateral Trustee during the immediately
preceding calendar month.
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<PAGE> 43
(b) The Collateral Trustee shall notify the Issuer and the Trustee
within five Business Days after the end of each calendar month of the aggregate
amount deposited in the Collection Account during such calendar month and of all
amounts distributed from the Collection Account during such calendar month.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. No Waiver. No failure on the part of the Collateral
Trustee to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall impair any right, remedy
or power or operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Trustee of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not exclusive
of any other remedies provided hereunder or under the Indenture or the Credit
Facility Agreement or any other Secured Instrument, or now or hereafter given by
statute, law, equity or otherwise. If the Collateral Trustee shall have
proceeded to enforce any right, remedy or power under this Agreement and the
proceeding for the enforcement thereof shall have been discontinued or abandoned
for any reason or shall have been determined adversely to the Collateral
Trustee, then the Issuer, the Collateral Trustee and the Secured Parties shall,
subject to any determination in such proceeding, severally and respectively be
restored to their former positions and rights hereunder or thereunder with
respect to the Collateral and in all other respects, and thereafter all rights,
remedies and powers of the Collateral Trustee shall continue as though no such
proceeding had been taken.
SECTION 8.02. Notices. All notices, requests, demands, directions or
other communications to or upon the respective parties hereto shall be in
writing and shall be given or made by telecopy, first-class mail or hand
delivery as follows:
If to the Issuer: Southern Peru Limited
180 Maiden Lane
New York, New York 10038
Telecopier No.: 212-510-1990
Attention: Treasurer
With copy to: E. Waide Warner, Jr., Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: 212-450-4800
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<PAGE> 44
If to the Collateral Trustee: Deutsche Bank AG,
New York Branch
31 West 52nd Street, 9th Floor
New York, New York 10019
Telecopier No.: 212-469-8979
Attention: Corporate Agency Services,
James R. Lewis
or at such other address or telecopier number as may be designated by either
party in a notice to the other party. All such notices or other communications
shall be deemed to have been duly given when transmitted by telex or telecopier,
personally delivered by hand or, in the case of a mailed notice, upon receipt
thereof, in each case given or addressed as aforesaid.
SECTION 8.03. Expenses. The Issuer covenants and agrees to pay or
reimburse the Collateral Trustee for all documented expenses, disbursements and
advances reasonably incurred or made by or on behalf of the Collateral Trustee
in accordance with any of the provisions of this Agreement (including, without
limitation, the fees, documented expenses and disbursements reasonably incurred
by its counsel) in connection with (i) any enforcement or collection proceeding
conducted in accordance with Article 6 hereof, including, without limitation,
all manner of participation in or other involvement with (w) performance by the
Collateral Trustee of any obligations of the Issuer in respect of the Collateral
that the Issuer has failed or refused to perform, (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Collateral
Trustee in respect thereof, by litigation or otherwise, (y) judicial or
regulatory proceedings and (z) workout, restructuring or other negotiations or
proceedings and (ii) the enforcement of this Section 8.03, and all such costs
and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant this Agreement. However, any such expense,
disbursement or advance arising from the Collateral Trustee's gross negligence
or wilful misconduct shall not be reimbursed. The provisions of this Section
8.03 shall survive the termination of this Agreement.
SECTION 8.04. Amendments, Etc. Except as provided under Section 3.03
with respect to supplemental agreements hereto, (a) the terms of this Agreement
may from time to time and at any time be altered or amended by an instrument in
writing duly executed by the Issuer and the Collateral Trustee, without the
consent of any other Secured Party other than the consent of the Collateral
Agent (such consent not to be unreasonably withheld) (1) in order to comply with
the requirements of (i) the Trust
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Indenture Act as then in effect or (ii) any Rating Agency that is rating the
first Series of SENS (prior to the issuance thereof) and (2) to cure any
ambiguity, to correct or supplement any provision herein which may be defective
or inconsistent with any other provision herein or to make any other provisions
with respect to matters or questions arising hereunder and (b) the terms of this
Agreement may from time to time and at any time, be waived, altered or amended
only by an instrument in writing duly executed by the Issuer, the Collateral
Trustee and the holders of at least 51% of the principal amount of the Senior
Secured Obligations then outstanding; provided in each case that no such waiver,
alteration or amendment shall adversely affect the rights or benefits afforded
by this Agreement (i) with respect to the holders of any Series of SENS without
the written consent of the requisite percentages of Noteholders as provided in
the Indenture, (ii) with respect to the Credit Facility Lenders, without the
written consent of the requisite percentages of Credit Facility Lenders as
provided in the Credit Facility Agreement or (iii) with respect to the holders
of Additional Secured Obligations, the requisite percentages of holders of any
Additional Secured Obligations as provided in the Senior Secured Instrument
under which such Additional Secured Obligations were issued. Any such amendment
or waiver shall be binding upon the Collateral Trustee, each Secured Party and
the Issuer.
SECTION 8.05. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Issuer, the Collateral Trustee and each holder of any of the Secured
Obligations; provided, however, that the Issuer shall not assign or transfer its
rights hereunder without the prior written consent of the Collateral Trustee,
the requisite percentages of Noteholders as provided in the Indenture, the
requisite percentages of Credit Facility Lenders as provided in the Credit
Facility Agreement and the requisite percentages of holders of any Additional
Secured Obligations as provided in the Senior Secured Instrument under which
such Additional Secured Obligations were issued.
SECTION 8.06. Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
SECTION 8.07. Counterparts. This Agreement may be executed in any
number of counterparts each of which shall be an original and such counterparts
taken together shall constitute one and the same instrument, and either of the
parties hereto may execute this Agreement by signing any such counterpart.
SECTION 8.08. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
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SECTION 8.09. Agents and Attorneys-in-Fact. The Collateral Trustee may
employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it pursuant to the exercise of reasonable care.
SECTION 8.10. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Collateral Trustee
in order to carry out the intentions of the parties hereto as nearly as may be
possible and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 8.11. Jurisdiction and Process. THE ISSUER AGREES THAT ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY LEGAL ACTION OR
PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT OBTAINED AGAINST THE
ISSUER, FOR BREACH HEREOF OR THEREOF, OR AGAINST ANY OF ITS PROPERTIES, MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BY OR ON BEHALF OF THE COLLATERAL
TRUSTEE AND THE ISSUER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL ACTION
OR PROCEEDING. IN ADDITION (A), THE ISSUER HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH
OR THEREWITH BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND (B) THE ISSUER AND THE COLLATERAL TRUSTEE HEREBY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.12. Secured Parties Bound. Each Secured Party or its
representative (which, in the case of any Series of SENS, shall be the Indenture
Trustee and, in the case
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<PAGE> 47
of the Credit Facility Lenders, shall be the Administrative Agent under the
Credit Facility Agreement) shall execute and deliver an acknowledgment
substantially in the form of Exhibit 8.12 hereto and, upon execution and
delivery of such acknowledgment to the Collateral Trustee, such Secured Party
shall be entitled to the benefits of this Agreement whether or not such
acknowledgment is acknowledged by the Collateral Trustee.
SECTION 8.13. Effectiveness. This Agreement shall become effective upon
(i) receipt by the Collateral Trustee of written consent to the provisions
hereof by the Required Lenders and (ii) (a) receipt by the Collateral Trustee of
written consent to the provisions hereof by 51% of the outstanding principal
amount of the first Series of SENS or (b) the consummation of the exchange of
notes of the first Series of SENS for new notes in accordance with the
provisions of the Registration Rights Agreement dated as of May 30, 1997 entered
into in connection with the offering of the first Series of SENS.
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<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
SOUTHERN PERU LIMITED
as Issuer
By: _____________________________________
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Collateral Trustee
By: _____________________________________
Title:
By: _____________________________________
Title:
44
<PAGE> 49
Exhibit 2.02
Excluded Export Receivables
(1) Contract No. SCR-SPC-014-94 dated as of January 1, 1994 between Mitsui
& Co. Ltd. and SP Limited, as modified for contract year 1997 by
Addendum No. 25, dated November 8, 1996, covering 6,000 metric tons
(6,614 short tons) of Ilo cathodes and as modified for contract year
1997 by Addendum No. 26, (Contract No. SCS-SPC-001-96) dated November
18, 1996, covering 18,000 metric tons (19,841 short tons) of SX/EW
cathodes.
(2) Contract No. SCR-SPC-002-97, dated December 9, 1996, between ASARCO
Incorporated and SP Limited covering 7,200 metric tons (7,937 short
tons) of Ilo cathodes.
<PAGE> 50
Exhibit 3.01A
[FORM OF NOTICE TO CUSTOMERS]
[Date]
[Name of Customer]
[Address]
Dear Sirs:
Reference is made to Contract No. _____, made as of ______________,
1997, between you and Southern Peru Limited (the "Initial Contract").
This is to notify you that, in connection with certain of its financing
arrangements, Southern Peru Limited has granted a security interest in all of
its rights, title and interest under the Initial Contract and any contracts
entered into in the future relating to the sale of copper by Southern Peru
Limited to you (such future contracts, together with the Initial Contract, the
"Contracts"), any receivables arising from the Contracts and all proceeds of the
Contracts and the receivables in favor of Deutsche Bank AG, New York Branch, as
Collateral Trustee (the "Collateral Trustee") for the several banks, other
financial institutions and certain other parties from time to time extending
credit to Southern Peru Limited.
In connection with the granting of the security interest, Southern Peru
has undertaken to instruct its customers to make payments to a bank account
maintained by the Collateral Trustee and acknowledge the security arrangements.
Accordingly, we hereby instruct you (i) to make payment of all sums payable by
you under the Contracts and the receivables directly to the Collateral Trustee
at [insert current payment instructions] and (ii) to execute and deliver to the
Collateral Trustee (with a copy to Southern Peru Limited) the attached Consent,
Acknowledgment and Agreement.
<PAGE> 51
Please do not hesitate to contact _____________ at _________ if you
have any questions concerning this request.
Very truly yours,
SOUTHERN PERU LIMITED
By: ___________________________
Name:
Title:
2
<PAGE> 52
[FORM OF NOTICE TO BE INCLUDED IN TEXT OF SPOT CONTRACTS]
__. NOTICE OF SECURITY INTEREST.
Southern Peru hereby notifies you that, in connection with certain of
its financing arrangements, Southern Peru has granted a security interest in all
of its rights, title and interest under this agreement and any receivables
arising from this agreement in favor of Deutsche Bank AG, New York Branch, as
Collateral Trustee (the "Collateral Trustee") for the several banks, financial
institutions and certain other parties from time to time extending credit to
Southern Peru. In connection with the granting of such security interest we
hereby instruct you to make all payments hereunder directly to the Collateral
Trustee at [insert current payment instructions].
3
<PAGE> 53
Exhibit 3.01B
Form of Consent, Acknowledgment and Agreement
To: Deutsche Bank AG, New York Branch
as Assignee, as referred to below
31 West 52nd Street
New York, New York 10019
The undersigned (the "Purchaser") hereby refers to Contract No.
_________ dated _________, between the Purchaser and Southern Peru Limited (the
"Assignor") (as it may thereafter be amended, supplemented and otherwise
modified from time to time and in effect, the "Initial Contract"; the Initial
Contract, together with any other contract entered into in the future relating
to the sale of copper by the Assignor, Southern Peru Copper Corporation or any
direct or indirect subsidiary of either (each, together with its successors and
assigns, an "Assignor Party") to the Purchaser, shall be referred to herein as
the "Contracts"). The Purchaser hereby agrees and undertakes as follows:
SECTION 1. Consent, Acknowledgment and Agreement. The Purchaser hereby
acknowledges and consents in all respects to the assignment by any Assignor
Party to Deutsche Bank AG, New York Branch (the "Assignee"), as collateral
trustee for the several banks, other financial institutions and certain other
parties from time to time extending credit to the Assignor (the "Lenders"), of
all the rights, title and interests of such Assignor Party under the Contracts,
any receivables arising from the Contracts and all proceeds of the Contracts and
the receivables, and agrees irrevocably for the benefit of the Lenders and the
Assignee to make payment of all sums payable by the Purchaser under the
Contracts and the receivables directly to account number 64 0000610 maintained
by the Assignee at its office at 31 West 52nd Street, New York, New York 10019
(ABA No. 026-003-780) unless and until it has received notice from the Assignee
that such payments are no longer required to be made to such account. The
Purchaser also confirms that it has not, pursuant to any other notice of sale or
assignment of the Contracts or receivables arising thereunder, agreed to make
payments to any third party with respect to such Contracts or the receivables
arising thereunder.
SECTION 2. Rights and Obligations of the Purchaser. Neither this
Consent, Acknowledgment and Agreement nor the exercise by the Assignee or the
Lenders of any rights it or they may have against any Assignor Party shall cause
the Purchaser to become subject to any obligations or liabilities of any
Assignor Party to the Assignee or the
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<PAGE> 54
Lenders. Except as otherwise set forth herein, this Consent, Acknowledgment and
Agreement shall not subject the Purchaser to any liability to which it would not
otherwise be subjected, nor shall this Consent, Acknowledgment and Agreement
modify in any respect the Purchaser's rights against any Assignor Party.
SECTION 3. Governing Law. THIS CONSENT, ACKNOWLEDGMENT AND AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned Purchaser has executed this
Consent, Acknowledgment and Agreement as of ______________.
[PURCHASER]
By____________________________
Title:
Address:______________________
______________________
______________________
Telephone:____________________
Facsimile:____________________
5
<PAGE> 55
Re: Southern Peru Limited Collection Account
Dear Sirs:
In connection with the recent Consent, Acknowledgment and Agreement
sent to you by Southern Peru Limited relating to the assignment of certain
contracts, receivables and proceeds by Southern Peru Limited to Deutsche Bank
AG, New York Branch, as Assignee, this letter advises you that, pursuant to the
enclosed notice from Deutsche Bank, the payment instructions in the Consent,
Acknowledgment and Agreement are incomplete. As indicated in the enclosed
notice, the complete information is:
Deutsche Bank NY
ABA #026 003 780
A/C #1004 2700 0003
Ref: Southern Peru Coll A/C
A/C #64 000061D
Attn: J. Lewis 469-8504
We would appreciate your noting this change, and executing and
returning this letter to the attention of ________________ by facsimile (fax
number: _____________) to indicate your receipt of this notice and agreement
with Deutsche Bank to this change.
Thank you for your assistance.
Sincerely yours,
SOUTHERN PERU LIMITED
By__________________________________
ACKNOWLEDGED AND AGREED
By_____________________________
Name:
Title:
6
<PAGE> 56
Exhibit 3.01C
Form of Consent, Acknowledgment and Agreement
To: Deutsche Bank AG, New York Branch
as Assignee, as referred to below
31 West 52nd Street
New York, New York 10019
The undersigned (the "Purchaser") hereby refers to Contract No.
_________ dated _________, between the Purchaser and Southern Peru Limited (the
"Assignor") (as it may thereafter be amended, supplemented and otherwise
modified from time to time and in effect, the "Initial Contract"; the Initial
Contract, together with any other contract entered into in the future (except as
the Purchaser may otherwise be directed in writing by the Collateral Trustee)
relating to the sale of copper by the Assignor, Southern Peru Copper
Corporation, or any direct or indirect subsidiary of either (each, together with
its successors and assigns, an "Assignor Party") to the Purchaser, shall be
referred to herein as the "Contracts"). The Purchaser hereby agrees and
undertakes as follows:
SECTION 1. Consent, Acknowledgment and Agreement. The Purchaser hereby
acknowledges and consents in all respects to the assignment by any Assignor
Party to Deutsche Bank AG, New York Branch (the "Assignee"), as collateral
trustee for the several banks, other financial institutions and certain other
parties from time to time extending credit to the Assignor (the "Lenders"), of
all the rights, title and interests of such Assignor Party under the Contracts,
any receivables arising from the Contracts and all proceeds of the Contracts and
the receivables, and agrees irrevocably for the benefit of the Lenders and the
Assignee to make payment of all sums payable by the Purchaser under the
Contracts and the receivables directly to Deutsche Bank NY, ABA # 026 003 780,
account number 1004 2700 0003, ref: Southern Peru Coll A/C, account number 64
0000610 unless and until it has received notice from the Assignee that such
payments are to be directed to another account or are no longer required to be
made. The Purchaser also confirms that it has not, pursuant to any other notice
of sale or assignment of the Contracts or receivables arising thereunder, agreed
to make payments to any third party with respect to such Contracts or the
receivables arising thereunder.
SECTION 2. Rights and Obligations of the Purchaser. Neither this
Consent, Acknowledgment and Agreement nor the exercise by the Assignee or the
Lenders of any
7
<PAGE> 57
rights it or they may have against any Assignor Party shall cause the Purchaser
to become subject to any obligations or liabilities of any Assignor Party to the
Assignee or the Lenders. Except as otherwise set forth herein, this Consent,
Acknowledgment and Agreement shall not subject the Purchaser to any liability to
which it would not otherwise be subjected, nor shall this Consent,
Acknowledgment and Agreement modify in any respect the Purchaser's rights
against the Assignor.
SECTION 3. Governing Law. THIS CONSENT, ACKNOWLEDGMENT AND AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned Purchaser has executed this
Consent, Acknowledgment and Agreement as of ______________.
[PURCHASER]
By____________________________
Title:
Address:______________________
______________________
______________________
Telephone:____________________
Facsimile:____________________
8
<PAGE> 58
EXHIBIT 4.03
FINANCING STATEMENTS
<TABLE>
<CAPTION>
Debtor Secured Party State Filing Office
------ ------------- ----- -------------
<S> <C> <C> <C>
Southern Peru Limited Deutsche Bank AG, New York Branch, as NY New York State
Collateral Agent
Southern Peru Limited Deutsche Bank AG, New York Branch, as NY New York County
Collateral Agent
Southern Peru Limited Deutsche Bank AG, New York Branch, as DL Delaware State
Collateral Agent
Southern Peru Limited Deutsche Bank AG, New York Branch, as NY New York State
Collateral Trustee
Southern Peru Limited Deutsche Bank AG, New York Branch, as NY New York County
Collateral Trustee
Southern Peru Limited Deutsche Bank AG, New York Branch, as DL Delaware State
Collateral Trustee
</TABLE>
<PAGE> 59
EXHIBIT 8.12
[FORM OF ACKNOWLEDGMENT]
[Date]
Deutsche Bank AG, New York Branch,
as Collateral Trustee
31 West 52nd Street
New York, New York 10019
Dear Sirs:
We hereby confirm that we have received a copy of the Amended and
Restated Collateral Trust and Security Agreement, dated as of May 30, 1997 (the
"Collateral Trust Agreement"), between Southern Peru Limited and Deutsche Bank
AG, New York Branch ("Deutsche"), as Collateral Trustee (in such capacity, the
"Collateral Trustee") [, as amended pursuant to [describe any amendments]]. We
hereby agree that Deutsche (or any successor Collateral Trustee pursuant to the
Collateral Trust Agreement) shall act as Collateral Trustee under the Collateral
Trust Agreement for the benefit of [describe applicable Secured Parties], among
others, and we hereby confirm our agreement to the terms and conditions of the
Collateral Trust Agreement.
This Acknowledgment shall be governed by, and construed in
accordance with, the laws of the State of New York.
[NAME OF APPLICABLE SECURED PARTY
OR DULY AUTHORIZED REPRESENTATIVE]
By:______________________________
Title:
ACKNOWLEDGED
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Collateral Trustee
By:______________________________
Title:
By:______________________________
Title:
<PAGE> 1
Exhibit 4.1(d)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF DTC AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF
<PAGE> 2
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 3.12 OF THE SUPPLEMENTAL
INDENTURE.
SOUTHERN PERU LIMITED
7.90% Series A
Secured Export Notes Due 2007
AGGREGATE AMOUNT OF THE ISSUE $150,000,000
Serial No. R-1 New York, New York
$150,000,000.00 , 1997
CUSIP #
SOUTHERN PERU LIMITED, a corporation organized under the laws of the state of
Delaware (the "Company" which term includes any successor corporation under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal amount of
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000.00) as provided below or on
such other date or dates as the relevant principal sum may become payable in
accordance with the provisions hereof and in the Indenture.
The principal on this Series A 7.90% Secured Export Note Due
2007 shall be payable on the 30th (or in the case of February, the 28th) of each
month, or if such day is not a Business Day (as defined in the Indenture (as
defined herein)), on the next Business Day (each such date, a "Payment Date"),
commencing June 30, 2000, in the amount equal to the Note's pro rata portion
(pro rata portion meaning the percentage of the principal amount of all
outstanding Series A SENs represented by the Note) of the amount (as adjusted as
provided below, a "Required Installment Payment") which is specified with
respect to such Payment Date on Schedule 3.4 to the Supplemental Indenture (as
defined herein); provided that in any event and in all circumstances the final
Required Installment Payment shall be in an amount sufficient to pay all unpaid
principal of this Note. In the event of any partial redemption of this Note as
provided in Section 3.5 of the Supplemental Indenture and Article 13 of the
Original Indenture (as defined herein), all remaining Required Installment
Payments hereon shall be reduced as provided in the Indenture. In the event that
following redemptions of this Note required as a result of the occurrence of an
Accelerated Amortization Event pursuant to Section 602 of the Original
Indenture, such Accelerated Amortization Event is cured as provided in Section
602 of the Original Indenture, each Required Installment Payment to be made
after the date of such cure shall be reduced as provided in the Indenture.
The Company promises to pay interest on the unpaid principal
amount hereof from , 1997 to the date on which this Note is repaid
in full at the rate of 7.90% per annum,
<PAGE> 3
payable monthly in arrears on each Payment Date, commencing June 30, 1997, to
the Holder hereof as of the Regular Record Date for such Payment Date as
provided in the Indenture. Accrued interest hereon shall be calculated on the
basis of a 360-day year of twelve 30-day months. The Company also promises to
pay the amount of additional interest, if any, on this Note pursuant to the
terms of the Registration Rights Agreement dated as of May 30, 1997 between the
Company and the initial purchasers named therein in the manner provided therein
and herein. In addition, if the Company shall fail to pay when due any principal
of or interest hereon or any other amount (whether of interest, fees or
otherwise) owing hereon when due, then the Company shall pay to the holder
hereof on demand interest on the amount in default from the date such payment
became due until payment in full at the rate of 8.90% per annum. All such
principal and interest shall be payable in lawful money of the United States of
America as provided in the Indenture.
The date and amount of each repayment and redemption of
principal hereof shall be endorsed by the holder hereof on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof, provided that the failure to make or any error in making any such
endorsement on such schedule shall not limit, extinguish or in any way modify
the obligation of the Company to repay this Note strictly in accordance with the
terms hereof and the Indenture.
The Company hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
Reference is hereby made to the further provisions of the Note
set forth on the reverse hereof, which further provisions will for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by
the Trustee or Authenticating Agent by the manual signature of one of its
authorized signatories, the Note will not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed.
Dated ________________, _______
SOUTHERN PERU LIMITED
By: ________________________
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the SENs of the Series designated herein and
referred to in the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By: ______________________________
Title: Authorized Signatory
<PAGE> 5
(Reverse of Note)
This Note is one of the Company's Secured Export Notes
designated as the "7.90% Series A Secured Export Notes due 2007" (together with
any of the Company's outstanding 7.90% Series A Secured Export Notes due 2007
the "Series A SENs"), originally issued in the aggregate principal amount of
$150,000,000 pursuant to the Indenture (the "Original Indenture"), dated as of
May 30, 1997, among the Company, Southern Peru Copper Corporation, as Guarantor,
and Citibank, N.A., as trustee thereunder (the "Trustee"), and the Supplemental
Indenture related thereto dated as of May 30, 1997 among the Company, the
Guarantor and the Trustee (the "Supplemental Indenture", and together with the
Original Indenture, the "Indenture"). The terms of the Series A SENs include
those stated in the Indenture. The Holder of this Note is entitled to the
benefits of, be bound by and be deemed to have notice of, all provisions of the
Indenture and, subject to the terms thereof, may enforce the agreements of the
Company and the Guarantor contained therein and exercise the remedies provided
for thereby or otherwise available in respect thereof. All terms used in this
Note that are defined in the Indenture will have the meanings assigned to them
in the Indenture.
The Series A SENs are secured pursuant to the terms of the Indenture and
the Amended and Restated Collateral Trust Agreement, dated as of July 15, 1997
(the "Collateral Trust Agreement") between the Company and Deutsche Bank AG, New
York Branch, as collateral trustee (the "Collateral Trustee"), and the Holder,
by its acceptance of this Note, consents to the Trustee and the Collateral
Trustee acting on its behalf under the Indenture and the Collateral Trust
Agreement, respectively.
Payments on the Series A SENs shall be made as provided in the
Indenture.
Each Series A SEN is registered and is transferable only upon
its surrender for registration or transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed by the holder hereof or his
attorney duly authorized in writing in all respects in accordance with the terms
and limitations of the Indenture. Except as provided in the Indenture or herein,
references in this Note to a "Holder" shall mean the person in whose name this
Note is at the time registered on the register kept by the Trustee as provided
in the Indenture and the Company and the Trustee may treat such person as the
owner of this Note for the purpose of receiving payment and for all other
purposes, and the Company and the Trustee shall not be affected by any notice to
the contrary.
The holders of the Series A SENs may be entitled to the
payment of Additional Amounts in respect of payments of principal, interest (and
premium, if any) on the Series A SENs as provided in, and subject to the terms
and limitations of, the Indenture. All references in this Note to principal,
premium or interest in respect of this Note shall be deemed to mean and
<PAGE> 6
include all Additional Amounts, if any, payable in respect of such principal,
premium or interest, unless the context otherwise requires, and express mention
of the payment of Additional Amounts in any provision hereof shall not be
construed as excluding reference to Additional Amounts in those provisions
hereof where such express mention is not made. References to the term holder in
this paragraph shall include the beneficial owner of this Note.
The Series A SENs shall be issued in amounts of US$250,000 and
integral multiples of US$1,000 in excess thereof.
The Series A SENs are subject to optional redemption, in whole
or in part, all as specified in the Indenture, and not otherwise.
In case an Accelerated Amortization Event shall occur and be
continuing, the Series A SENs are subject to redemption as provided in the
Indenture.
In case an Event of Default shall occur and be continuing, the
unpaid balance of the principal of the Series A SENs may become due and payable
in the manner and with the effect provided in the Indenture.
Subject to the terms of the Indenture, the Company and the
Guarantor at any time may terminate some or all of its obligations under the
Series A SENs and the Indenture by depositing with the Trustee cash or
Government Obligations, or a combination thereof, in the amount specified in the
Indenture.
Subject to certain exceptions set forth in the Indenture, the
Company, the Guarantor and the Trustee may enter into supplemental indentures to
the Original Indenture and the Supplemental Indenture as provided therein with
the consent of Holders of not less than 51% of the aggregate principal amount of
all Outstanding SENs of the Series A SENs. The Company, the Guarantor and the
Trustee may also enter into supplemental indentures to the Original Indenture
and the Supplemental Indenture in certain circumstances set forth therein
without the consent of any Holder.
This Note is made and delivered in New York, New York, and
shall be governed by, and construed in accordance with, the laws of the State of
New York.
<PAGE> 7
Guarantee
ENDORSED ON 7.90% SERIES A SECURED EXPORT NOTES DUE
2007 OF SOUTHERN PERU LIMITED
For value received, SOUTHERN PERU COPPER CORPORATION, a
company organized under the laws of Delaware, (the "Guarantor", which term
includes any successor corporation under the Indenture referred to in the Note
upon which this Guarantee is endorsed), hereby unconditionally guarantees to the
Holder of the Note upon which this Guarantee is endorsed, the due and punctual
payment of the principal of (and premium, if any) and interest, if any, on such
Note (including all Additional Amounts payable by the Company in respect thereof
pursuant to such Note), any other amount due and payable pursuant to the terms
of the Indenture when and as the same shall become due and payable, whether at
the Stated Maturity, by declaration of acceleration, call for redemption or
otherwise, according to the terms thereof and of the Indenture referred to
therein. In case of the failure of the Company punctually to make any such
payment, the Guarantor hereby agrees to cause such payment to be made punctually
when and as the same shall become due and payable, whether at the Stated
Maturity or by declaration of acceleration or otherwise, and as if such payment
were made by the Company, and to pay any and all Additional Amounts payable in
respect thereof pursuant to such Note and Section 1217 of such Indenture.
The Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of such Note or the Indenture, the absence of any action to
enforce the same, any waiver or consent by the Holder of such Note or the
Trustee or either of them with respect to any provisions thereof or of the
Indenture, the obtaining of any judgment against the Company or any action to
enforce the same or any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. The Guarantor hereby
waives the benefits of diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to such Note or the indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be discharged except by
payment in full of the principal of (and premium, if any) and interest on such
Note. The Guarantor hereby agrees that, in the event of a default in payment of
principal (or premium, if any) or interest on such Note, legal proceedings may
be instituted by the Trustee on behalf of, or by, the Holder of such Note, on
the terms and conditions set forth in the Indenture, directly against the
Guarantor to enforce this Guarantee without first proceeding against the
Company.
The Guarantor shall be subrogated to all rights of the Holder
of the Note upon which this Guarantee is endorsed against the Company in respect
of any amounts paid by the Guarantor on
<PAGE> 8
account of such Note pursuant to the provisions of this Guarantee or the
Indenture; provided, however, that the Guarantor shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation until the principal of (and premium, if any) and interest on such
Note and all other Series A SENs issued under the Indenture (including all
Additional Amounts payable in respect thereof) shall have been paid in full.
All terms used in this Guarantee which are defined in the
Indenture referred to in the Note upon which this Guarantee is endorsed shall
have the meanings assigned to them in such Indenture.
All references in this Guarantee to principal, premium or
interest in respect of any Note shall be deemed to mean and include all
Additional Amounts, if any, payable in respect of such principal, premium or
interest, unless the context otherwise requires, and express mention of the
payment of Additional Amounts in any provision hereof shall not be construed as
excluding reference to Additional Amounts in those provisions hereof where such
express mention is not made.
This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
No recourse for the payment of the principal of, premium, if
any, or interest under this Guarantee, or for any claim based hereon or
otherwise in respect hereof, and no recourse under or upon any obligation,
covenant or agreement of the Guarantor in the Indenture or in any supplemental
indenture, or in this Guarantee, or because of the creation of any indebtedness
represented hereby, shall be had against any incorporator or stockholder or any
officer or director, as such, past, present or future, of the Guarantor or of
any successor corporation thereof, either directly or through the Guarantor or
any successor of the Guarantor in the Indenture or in any supplemental
indenture, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of the Indenture and the
issue of the Note on which this Guarantee is endorsed.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is endorsed shall have been executed by the Trustee under the
Indenture by manual signature of one of its authorized officers.
<PAGE> 9
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed.
SOUTHERN PERU COPPER CORPORATION
By:_____________________________________
Attest:
_________________________________
Each Guarantee shall be dated the date of the Note upon which it is
endorsed. Reference is made to Article Sixteen for further provisions with
respect to the Guarantees.
<PAGE> 10
SCHEDULE 1
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Note is U.S.
$150,000,000. The following additions and reductions to, and payment of,
principal of this Note have been made in accordance with the Indenture.
<TABLE>
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Principal Remaining Notation
Amount Added Principal Made by
Date of Addition or Reduced on Amount or on
or Reduction to Transfer of Principal Outstanding behalf of
or Payment of Interest in or Amount Following such the
Principal to Note Paid Transactions Trustee
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<PAGE> 1
EXHIBIT 5
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, N.Y. 10017
212-450-4000
August 22, 1997
Southern Peru Limited
180 Maiden Lane
New York, NY 10038
Ladies and Gentlemen:
We have acted as special counsel to Southern Peru Limited (the
"Issuer") and Southern Peru Copper Corporation (the "Guarantor" and, together
with the Issuer, the "Company") in connection with the Issuer's offer (the
"Exchange Offer") to exchange its 7.90% Series A Secured Export Exchange Notes
due 2007 (the "New Notes"), for a like principal amount of any or all of its
outstanding 7.90% Series A Secured Export Notes due 2007 (the "Old Notes").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments as we have deemed necessary or advisable
for the purpose of rendering this opinion.
Upon the basis of the foregoing and assuming the due execution and
delivery of the New Notes, we are of the opinion that when the New Notes are
executed, authenticated and delivered in accordance with the Indenture and
Supplemental Indenture, each of which is dated May 30, 1997 among the Issuer,
the Guarantor and Citibank, N.A., and delivered in exchange for the Old Notes in
accordance with the Exchange Offer, the New Notes will be valid and binding
obligations of the Company enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws affecting creditors' rights generally and equitable
principles.
<PAGE> 2
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Exchange Offer. We also consent to the
reference to us under the caption "Legal Matters" in the Prospectus contained in
such Registration Statement.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
/s/ Davis Polk & Wardwell
2
<PAGE> 1
EXHIBIT 8.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, N.Y. 10017
212-450-4000
August 22, 1997
Southern Peru Limited
180 Maiden Lane
New York, NY 10038
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") contained in the
registration statement on Form S-4 dated August 22, 1997, being furnished by
Southern Peru Limited to the Securities and Exchange Commission in connection
with the Offer to Exchange 7.90% Series A Secured Export Exchange Notes due 2007
for all outstanding 7.90% Series A Secured Export Notes due 2007 of Southern
Peru Limited.
We are of the opinion that the summary contained in the Prospectus
under the caption "Taxation -- United States Taxation" accurately describes the
United States federal income and estate tax consequences referred to therein,
subject to the qualifications stated therein.
The discussion contained under the caption "Certain Tax Consequences of
the Exchange Offer -- United States" in the Prospectus constitutes the opinion
of Davis Polk & Wardwell, subject to the qualifications stated therein.
We hereby consent to the use of our name under the caption "Taxation --
United States Taxation " in the Prospectus. The issuance of such consent does
not concede that we are an "Expert" for the purposes of the Securities Act of
1933.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE> 1
Exhibit 8.2
[LETTERHEAD OF ESTUDIO
AURELIO GARCIA SAYAN
ABOGADOS]
CONSENT OF ESTUDIO AURELIO GARCIA SAYAN-ABOGADOS
We consent to the reference to the name of our law firm under the section
captioned "Peruvian Taxation" in the Prospectus which is part of the
Registration Statement filed by Southern Peru Limited, and in such Registration
Statement and any amendments to such Registration Statement and Prospectus. In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
/s/ Alfredo Gastaneta A.
---------------------------------
Alfredo Gastaneta A.
Dated: August 25, 1997
<PAGE> 1
Exhibit 10.9
CONFORMED COPY
================================================================================
SOUTHERN PERU LIMITED
as Borrower
SOUTHERN PERU COPPER CORPORATION
as Guarantor
--------------------------------------------------
$600,000,000
CREDIT AND GUARANTEE AGREEMENT
March 31, 1997
---------------------------------------------------
CHASE SECURITIES INC.
CITICORP SECURITIES, INC.
CREDIT SUISSE FIRST BOSTON
DEUTSCHE MORGAN GRENFELL INC.
GOLDMAN SACHS CREDIT PARTNERS L.P.
J.P. MORGAN SECURITIES INC.
as Arrangers
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Administrative Agent
THE CHASE MANHATTAN BANK
as Documentation Agent
CITICORP SECURITIES, INC.
as Syndication Agent
DEUTSCHE BANK AG, NEW YORK BRANCH
as Security and Collateral Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS......................................................................................... 1
1.1 Defined Terms..................................................................................... 1
1.2 Other Definitional Provisions..................................................................... 16
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS........................................................... 17
2.1 Term Loans........................................................................................ 17
2.2 Procedure for Term Loan Borrowing................................................................. 17
2.3 Commitment Fee.................................................................................... 18
2.4 Termination or Reduction of Term Loan Commitments................................................. 18
2.5 Repayment of Term Loans........................................................................... 18
2.6 Evidence of Term Loan Debt........................................................................ 18
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS................................................................................. 19
3.1 Revolving Credit Commitments...................................................................... 19
3.2 Procedure for Revolving Credit Borrowing.......................................................... 19
3.3 Commitment Fee.................................................................................... 20
3.4 Termination or Reduction of Commitments........................................................... 20
3.5 Repayment of Revolving Loans...................................................................... 20
3.6 Evidence of Debt.................................................................................. 21
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS.............................................................. 22
4.1 Optional and Mandatory Prepayments................................................................ 22
4.2 Continuations for Additional Interest Periods..................................................... 23
4.3 Minimum Amounts and Maximum Number of Tranches.................................................... 23
4.4 Interest Rates and Payment Dates.................................................................. 23
4.5 Computation of Interest and Fees.................................................................. 24
4.6 Inability to Determine Interest Rate.............................................................. 24
4.7 Pro Rata Treatment and Payments................................................................... 25
4.8 Illegality........................................................................................ 26
4.9 Requirements of Law............................................................................... 26
4.10 Taxes............................................................................................ 27
4.11 Indemnity........................................................................................ 29
4.12 Change of Lending Office......................................................................... 30
4.13 Replacement Lenders.............................................................................. 30
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 5. REPRESENTATIONS AND WARRANTIES...................................................................... 30
5.1 Corporate Organization and Existence.............................................................. 30
5.2 Corporate Power and Authorization................................................................. 31
5.3 No Consents or Approvals; Governmental Action..................................................... 31
5.4 Enforceable Obligations........................................................................... 31
5.5 No Material Litigation............................................................................ 31
5.6 Financial Condition............................................................................... 32
5.7 No Change; Default................................................................................ 32
5.8 Federal Regulations............................................................................... 32
5.9 Taxes............................................................................................. 32
5.10 Environmental Matters............................................................................ 32
5.11 Pari Passu Status................................................................................ 32
5.12 Purpose of Loans................................................................................. 33
5.13 Ownership and Leases of Principal Properties..................................................... 33
5.14 Investment Company Act; Other Regulations........................................................ 33
5.15 Information...................................................................................... 33
SECTION 6. CONDITIONS PRECEDENT................................................................................ 33
6.1 Conditions to Effectiveness....................................................................... 33
6.2 Conditions to Each Loan........................................................................... 36
SECTION 7. AFFIRMATIVE COVENANTS............................................................................... 37
7.1 Financial Statements.............................................................................. 37
7.2 Certificates; Other Information................................................................... 37
7.3 Conduct of Business and Maintenance of Existence.................................................. 38
7.4 Maintenance of Property; Insurance................................................................ 39
7.5 Inspection of Property; Books and Records; Discussions............................................ 39
7.6 Environmental Laws................................................................................ 39
7.7 Further Assurances................................................................................ 39
7.8 Appointment of Process Agent...................................................................... 39
7.9 Peruvian Public Deed.............................................................................. 39
SECTION 8. NEGATIVE COVENANTS.................................................................................. 40
8.1 Financial Condition Covenants..................................................................... 40
8.2 Limitation on Liens............................................................................... 40
8.3 Limitation on Fundamental Changes................................................................. 41
8.4 Limitation on Certain Sales of Assets............................................................. 41
8.5 Limitation on Dividends........................................................................... 41
8.6 Issuance, Prepayment and Amendment of Secured Export Notes and
Additional Secured Obligations................................................................ 42
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C>
8.7 Aggregate Program Outstandings and Additional Secured Obligations;
Total Collateral Percentages.................................................................. 42
8.8 Exclusion of Export Contracts..................................................................... 42
8.9 Designation and Termination of Designation of Additional Percentages
under the Collateral Trust Agreement.......................................................... 42
SECTION 9. EVENTS OF DEFAULT; BLOCKING EVENTS.................................................................. 43
SECTION 10. GUARANTEE.......................................................................................... 46
10.1 Guarantee........................................................................................ 46
10.2 No Subrogation, Contribution, Reimbursement or Indemnity......................................... 47
10.3 Amendments, etc. with respect to the Obligations; Waiver of Rights............................... 47
10.4 Guarantee Absolute and Unconditional............................................................. 48
10.5 Reinstatement.................................................................................... 49
10.6 Payments......................................................................................... 49
SECTION 11. THE AGENTS......................................................................................... 49
11.1 Appointment...................................................................................... 49
11.2 Delegation of Duties............................................................................. 50
11.3 Exculpatory Provisions........................................................................... 50
11.4 Reliance by Agents............................................................................... 50
11.5 Notice of Default................................................................................ 51
11.6 Non-Reliance on Agents and Other Lenders......................................................... 51
11.7 Indemnification.................................................................................. 51
11.8 Agents in Their Individual Capacities............................................................ 52
11.9 Successor Administrative and Collateral Agents................................................... 52
SECTION 12. MISCELLANEOUS...................................................................................... 52
12.1 Amendments and Waivers........................................................................... 52
12.2 Notices.......................................................................................... 53
12.3 No Waiver; Cumulative Remedies................................................................... 55
12.4 Survival of Representations and Warranties....................................................... 55
12.5 Payment of Expenses and Taxes.................................................................... 55
12.6 Successors and Assigns; Participations and Assignments........................................... 56
12.7 Adjustments; Set-off............................................................................. 59
12.8 Counterparts..................................................................................... 59
12.9 Severability..................................................................................... 60
12.10 Integration..................................................................................... 60
12.11 GOVERNING LAW................................................................................... 60
12.12 Submission To Jurisdiction; Waivers............................................................. 60
12.13 Waiver of Immunities............................................................................ 60
12.14 Judgment Currency............................................................................... 61
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
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<S> <C>
12.15 Acknowledgements................................................................................ 61
12.16 WAIVERS OF JURY TRIAL........................................................................... 62
12.17 Peruvian Branch................................................................................. 62
</TABLE>
- iv -
<PAGE> 6
SCHEDULES
Schedule 1.1(a) Commitments
Schedule 5.3 Consents etc.
Schedule 5.5 Litigations
EXHIBITS
Exhibit A Form of Collateral Account Agreement
Exhibit B Form of Collateral Trust Agreement
Exhibit C Form of Term Note
Exhibit D Form of Revolving Note
Exhibit E Form of Closing Certificate
Exhibit F-1 Form of Opinion of Davis Polk & Wardwell
Exhibit F-2 Form of Opinion of Augustus B. Kinsolving, Esq.
Exhibit F-3 Form of Opinion of Simpson Thacher & Bartlett
Exhibit F-4 Form of Opinion of Rodrigo, Elias & Medrano, Abogados
Exhibit G Form of Assignment and Acceptance
- v -
<PAGE> 7
CREDIT AND GUARANTEE AGREEMENT, dated as of March 31, 1997,
among SOUTHERN PERU COPPER CORPORATION, a Delaware corporation (the "Parent"),
SOUTHERN PERU LIMITED, a Delaware corporation (the "Borrower"), the several
banks and other financial institutions from time to time parties to this
Agreement (collectively, the "Lenders"; individually, a "Lender"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent for the Lenders (in
such capacity and together with any successor Administrative Agent appointed
pursuant to subsection 11.9, the "Administrative Agent"), THE CHASE MANHATTAN
BANK, as Documentation Agent for the Lenders (in such capacity, the
"Documentation Agent"), CITICORP SECURITIES, INC., as Syndication Agent (in such
capacity, the "Syndication Agent"), and DEUTSCHE BANK AG, NEW YORK BRANCH, as
Security and Collateral Agent for the Lenders (in such capacity and together
with any successor Collateral Agent appointed pursuant to subsection 11.9, the
"Collateral Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Administrative Agent": as defined in the Preamble to this
Agreement.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.
"Agents": collectively, the Administrative Agent, the
Collateral Agent, the Documentation Agent and the Syndication Agent.
"Aggregate Program Outstandings": at any time, an amount equal
to the sum of (a) the aggregate principal amount of Loans then
outstanding and (b) the aggregate principal amount of Secured Export
Notes then outstanding.
"Agreement": this Credit and Guarantee Agreement, as amended,
supplemented or otherwise modified from time to time.
"Agreement Currency": as defined in subsection 12.14(b).
"Applicable Rate": for any day, with respect to any Term Loan
or Revolving Loan which is a Eurodollar Loan or with respect to any
commitment fees payable hereunder, the applicable rate per annum set
forth below under the caption "Eurodollar Spread for Term Loans",
"Eurodollar Spread for Revolving Loans" or "Commitment Fee Rate", as
the case may be, based upon the ratings by the Rating Agencies
applicable on such date to the Index Debt:
<PAGE> 8
2
<TABLE>
<CAPTION>
========================================================================================================================
Eurodollar Spread Eurodollar Spread Commitment
Index Debt Ratings: for Term Loans for Revolving Loans Fee Rate
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Category 1 1.75% 2.00% 0.50%
----------
- ------------------------------------------------------------------------------------------------------------------------
Category 2 2.00% 2.25% 0.625%
----------
- ------------------------------------------------------------------------------------------------------------------------
Category 3 2.125% 2.375% 0.625%
----------
- ------------------------------------------------------------------------------------------------------------------------
Category 4 2.50% 2.75% 0.625%
----------
- ------------------------------------------------------------------------------------------------------------------------
Each of the percentages set forth in the table above under the captions "Eurodollar Spread for Term Loans" and
"Eurodollar Spread for Revolving Loans" shall increase on the third anniversary of the Closing Date by 0.25% and shall
be further increased on the fifth anniversary of the Closing Date by 0.25%.
========================================================================================================================
</TABLE>
For purposes of the foregoing, (a) if no Rating Agency shall have in effect a
rating for the Index Debt, then the Rating Agencies shall be deemed to have
established a rating in Category 2 for purposes of calculating the "Eurodollar
Spreads" and Category 1 (or, after the initial Loans are made hereunder,
Category 2) for purposes of calculating the "Commitment Fee Rate"; (b) if the
ratings established by the Rating Agencies for the Index Debt shall fall within
different Categories, the Applicable Rate shall be based on the highest of the
ratings; (c) if the ratings established by any Rating Agency for the Index Debt
shall be changed, such change shall be effective as of the date on which it is
first announced by such Rating Agency; and (d) if a Rating Agency shall have in
effect a rating for the Index Debt, the Categories shall be as follows: (i)
Category 1 shall be in effect if the Index Debt is rated BBB- or higher by Duff
& Phelps, BBB-or higher by Fitch, Baa3 or higher by Moody's or BBB- or higher by
S&P; (ii) Category 2 shall be in effect if the Index Debt is rated BB+ by Duff &
Phelps, BB+ by Fitch, Ba1 by Moody's or BB+ by S&P and Category 1 is not in
effect; (iii) Category 3 shall be in effect if the Index Debt is rated BB by
Duff & Phelps, BB by Fitch, Ba2 by Moody's or BB by S&P and neither Category 1
nor Category 2 is in effect; and (iv) Category 4 shall be in effect if the Index
Debt is rated BB- or lower by Duff & Phelps, BB- or lower by Fitch, Ba3 or lower
by Moody's or BB- or lower by S&P and none of Category 1, Category 2 and
Category 3 is in effect. Each change in the Applicable Rate shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change.
"Assignee": as defined in subsection 12.6(c).
<PAGE> 9
3
"Available Revolving Credit Commitment": as to any Revolving
Lender at any time, an amount equal to the excess, if any, of (a) the
amount of such Revolving Lender's Revolving Credit Commitment over (b)
the aggregate principal amount of all Revolving Loans made by such
Revolving Lender then outstanding; collectively, as to all the
Revolving Lenders, the "Available Revolving Credit Commitments".
"Available Term Loan Commitment": as to any Term Lender at any
time, an amount equal to the excess, if any, of (a) the amount of such
Term Lender's Term Loan Commitment over (b) the aggregate initial
principal amount of all Term Loans made by such Term Lender;
collectively, as to all the Term Lenders, the "Available Term Loan
Commitments".
"Base Rate": a fluctuating rate of interest equal on any day
to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate most recently determined by the
Administrative Agent plus 0.50% per annum, in each case plus (i) the
Applicable Rate then in effect for Term Loans or Revolving Loans, as
applicable, which are Eurodollar Loans minus (ii) 1%. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the
effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.
"Blocked Collections": at any time, (a) if the Outstanding
Principal Amount is less than $300,000,000 at such time, 100% of the
Collections transferred to the Credit Facility Collateral Account
pursuant to the Collateral Trust Agreement, (b) if the Outstanding
Principal Amount is less than $500,000,000 but greater than or equal to
$300,000,000 at such time, 75% of the Collections transferred to the
Credit Facility Collateral Account pursuant to the Collateral Trust
Agreement and (c) if the Outstanding Principal Amount is greater than
or equal to $500,000,000 at such time, 50% of the Collections
transferred to the Credit Facility Collateral Account pursuant to the
Collateral Trust Agreement. Such percentages shall be calculated
following funding of the Credit Facility Reserve Account to the extent
necessary to cause the amount on deposit in the Credit Facility Reserve
Account to be equal to the Required Balance at such time.
"Blocking Event": any event which results in the retention of
Collections in any SENS Collateral Account, provided no event which
constitutes a Default or an Event of Default hereunder shall constitute
a "Blocking Event".
"Board of Governors": the Board of Governors of the Federal
Reserve System and any Governmental Authority which succeeds to the
powers and functions thereof.
"Borrower": as defined in the Preamble to this Agreement.
<PAGE> 10
4
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2 or 3.2 as a date on which the Borrower
requests the Lenders to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close, provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in deposits in Dollars in the
London interbank market.
"Capitalization Ratio": at any date of determination, the
ratio of (a) Consolidated Net Debt at such date of determination to (b)
the sum of (a) Consolidated Net Debt at such date of determination plus
(b) Consolidated Net Worth at such date of determination plus (c)
Minority Interests at such date of determination.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
other than a corporation and any and all warrants or options to
purchase any of the foregoing.
"Closing Date": the date on which the conditions precedent set
forth in subsection 6.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all assets of the Borrower or the Parent, now
owned or hereafter acquired, upon which a Lien is purported to be
created by any Security Document.
"Collateral Account Agreement": the Collateral Account and
Security Agreement to be executed and delivered by each of the Persons
party thereto, substantially in the form of Exhibit A, as the same may
be amended, supplemented or otherwise modified from time to time.
"Collateral Agent": as defined in the Preamble to this
Agreement.
"Collateral Trust Agreement": the Collateral Trust and
Security Agreement to be executed and delivered by each of the Persons
party thereto, substantially in the form of Exhibit B, as the same may
be amended, supplemented or otherwise modified from time to time.
"Commitment": with respect to any Lender, such Lender's Term
Loan Commitment and/or Revolving Credit Commitment, as the case may be;
collectively, as to all the Lenders, the "Commitments".
<PAGE> 11
5
"Commitment Period": the period from and including the Closing
Date to but not including the Commitment Termination Date.
"Commitment Termination Date": the Scheduled Commitment
Termination Date or such earlier date on which the Commitments shall
terminate as provided herein.
"Consolidated EBITDA": for any period, Consolidated Net Income
for such period, plus, to the extent deducted in determining such
Consolidated Net Income, (a) Consolidated Interest Expense, (b)
depreciation and depletion expenses, (c) amortization expenses, (d) all
Federal, state, local and foreign income taxes, (e) the minority
interest of Labor Shares in the income of the Peruvian Branch and (f)
any non-cash charges or write-offs not included in clauses (a) through
(e) above.
"Consolidated Interest Expense": for any period, the amount of
interest expense, both expensed and capitalized, of the Parent and its
Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Debt": at any date of determination, (a) all
Indebtedness of the Parent and its Subsidiaries at such date of
determination minus (b) the aggregate amount of cash on deposit in
funded collateral accounts at such date of determination in which a
Lien has been granted to secure the repayment of any such Indebtedness.
"Consolidated Net Income": for any period, the net income of
the Parent and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth": at any date of determination, all
items which would, in accordance with GAAP, be included under
shareholders' equity on the consolidated balance sheet of the Parent at
such date of determination, adjusted to exclude the effects of (i) any
non-cash non-recurring charges, (ii) any non-cash extraordinary charges
and (iii) any other non-cash charges required as a result of a change
in accounting principles or the application thereof under GAAP in the
year of such charges or in the year of adoption of any such change and
without giving effect to the future effects of any such charge or
change. In the case of clauses (i) and (ii), "non-cash" refers to the
portion of the charge which, at the time of the charge, will not be
required to be paid prior to the Final Maturity Date.
"Consolidated Tangible Net Worth": at any date of
determination, Consolidated Net Worth at such date of determination
after deducting therefrom the sum of deferred charges, goodwill,
trademarks, and other intangibles of the Parent and its Subsidiaries
reflected on the consolidated balance sheet of the Parent at such date
of determination.
<PAGE> 12
6
"Consolidated Total Assets": at any date of determination, the
total assets of the Parent and its Subsidiaries at such date of
determination as determined on a consolidated basis in accordance with
GAAP.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Credit Facility Collateral Account": as defined in the
Collateral Account Agreement.
"Credit Facility Reserve Account": as defined in the
Collateral Account Agreement.
"Cuajone Mine": the copper mine, concentrator and mill
(including, without limitation, the mining and other concessions
relating thereto) located in Cuajone, Peru.
"Default": any of the events specified in subsection 9.1,
whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Documentation Agent": as defined in the Preamble to this
Agreement.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Duff & Phelps": Duff & Phelps Credit Rating Co.
"Environmental Laws": (a) the PAMA (or any successor thereto)
so long as it is in effect or, (b) if the PAMA (or any such successor
thereto) is not in effect, any and all Peruvian central, regional or
municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other
Requirements of Law regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the
environment, as now or at any time hereafter in effect.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors
or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of the Board of Governors) maintained by a member bank of
the Federal Reserve System.
<PAGE> 13
7
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate appearing on
Page 3750 of the Telerate Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to Dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the
rate for Dollar deposits with a maturity comparable to such Interest
Period. In the event that such rate is not available at such time for
any reason, then the "Eurodollar Base Rate" with respect to such
Eurodollar Loan for such Interest Period shall be the rate at which
Dollar deposits in an amount equal to the amount of the borrowing of
which such Eurodollar Loan constitutes a part and for a maturity
comparable to such Interest Period are offered to the principal London
office of the Administrative Agent in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in subsection
9.1, provided that any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"Federal Funds Effective Rate": for any day, a rate of
interest for such day equal to (a) the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the most recent
Business Day) by the Federal Reserve Bank of New York or (b) if such
rate is not so published for any day, the average of the quotations for
such day (or, if such day is not a Business Day, for the most recent
Business Day) on such transactions received by the Administrative Agent
from three Federal Funds brokers of recognized standing selected by it.
"Final Maturity Date": March 31, 2004.
<PAGE> 14
8
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"Fitch": Fitch Investors Service, L.P.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state,
regional or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hedge Agreements": as to any Person, all swaps, futures,
options, caps or collar agreements or similar arrangements entered into
by such Person with any Lender or any Affiliate of any Lender providing
for protection against (a) fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations or (b)
fluctuations in the price of copper or other metals.
"Ilo Refinery": the refinery located in Ilo, Peru.
"Ilo Smelter": the copper smelter located in Ilo, Peru.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices), (b) all
obligations of such Person under Financing Leases, and (c) guarantees
or endorsements (other than endorsements for collection or deposit in
the ordinary course of business) of obligations of any other Person of
the types described in this definition. For purposes of determining the
Indebtedness of any Person, guarantees of Indebtedness otherwise
included in determining the Indebtedness of such Person shall not also
be included in such determination.
"Index Debt": any series of Secured Export Notes.
"Interest Coverage Ratio": for any period, the ratio of (a)
Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
"Interest Payment Date": (a) as to Base Rate Loans, the last
day of each March, June, September and December, and (b) as to any
Eurodollar Loan, the last day of each Interest Period with respect to
such Eurodollar Loan.
"Interest Period": with respect to any Eurodollar Loan:
<PAGE> 15
9
(i) initially, the period commencing on the
Borrowing Date with respect to such Eurodollar Loan and ending
one, two or three months thereafter, as selected by the
Borrower in its notice of borrowing given with respect
thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two or three months
thereafter, as selected by the Borrower by irrevocable notice
to the Administrative Agent not less than three Business Days
prior to the last day of the then current Interest Period with
respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar
Loan would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Business Day;
(2) no Interest Period that would otherwise extend
beyond the Final Maturity Date shall be selected by the
Borrower; and
(3) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"Judgment Currency": as defined in subsection 12.14(b).
"Labor Shares": any and all shares reflecting the interests of
holders of labor shares in the equity of the Peruvian Branch.
"Lender" or "Lenders": as defined in the Preamble to this
Agreement.
"Lien": any mortgage, pledge, hypothecation, assignment, lien
(statutory or other), charge or other security interest of any kind.
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, any Notes and the Security
Documents.
"Loan Parties": the Parent and the Borrower.
<PAGE> 16
10
"Mandatory Prepayment Event": any event (other than an event
of default or similar event) which requires the Borrower to make any
mandatory prepayment (including, without limitation, as a result of an
accelerated amortization event) in respect of the principal of any
Secured Export Notes or Additional Secured Obligations (other than
regularly scheduled payments of principal) or to make any mandatory
redemption, defeasance or purchase of any Secured Export Notes or
Additional Secured Obligations. For the avoidance of doubt, the term
"defeasance" shall not include the retention of Collections in a SENS
Collateral Account as a result of a Blocking Event.
"Material Adverse Effect": a material adverse effect on (a)
the ability of the Borrower or the Parent to satisfy its payment
obligations under this Agreement or any of the other Loan Documents or
(b) the validity or enforceability of this Agreement or any of the
other Loan Documents.
"Material Portion of the Collateral": at any time, at least
20% of the Export Receivables (measured on a contracted annual tonnage
basis) subject to the Liens created under the Security Documents at
such time.
"Material Subsidiary": any Subsidiary with respect to which
the occurrence of any of the events described in subsection 9.1(f)
would result in a Material Adverse Effect.
"Minority Interests": at any date of determination, all
amounts reflected in respect of minority interests, in accordance with
GAAP, on a consolidated balance sheet of the Parent and its
Subsidiaries at such date of determination.
"Moody's": Moody's Investors Service, Inc.
"Non-Excluded Taxes": as defined in subsection 4.10.
"Notes": the collective reference to the Revolving Notes and
the Term Notes.
"Obligations": the collective reference to the unpaid
principal of and interest on the Loans and all other obligations and
liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in this Agreement after
the maturity of the Loans and interest accruing at the then applicable
rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) to
the Administrative Agent, the Collateral Agent, any other Agent or any
Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement, the other Loan
Documents or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
<PAGE> 17
11
otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent, the Collateral Agent or any other
Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
"Outstanding Program Percentage": at any time, the percentage
which (a) the aggregate principal amount of Loans then outstanding then
constitutes of (b) the sum of (i) the Aggregate Program Outstandings at
such time and (ii) the Attributable Principal Amount of Additional
Secured Obligations then outstanding.
"PAMA": The Programa de Adecuacion y Manejo Ambiental
(Environmental Adequacy and Management Program), as defined in Supreme
Decree No. 016-93-EM, as amended from time to time.
"Parent": as defined in the Preamble to this Agreement.
"Participant": as defined in subsection 12.6(b).
"Permitted Copper Inventory Liens": (a) Liens to secure
Indebtedness of the Borrower incurred to finance the working capital
requirements of the Borrower in an aggregate amount not exceeding
$100,000,000 at any time outstanding; (b) Liens for taxes, assessments,
governmental charges, other governmental obligations (other than
Indebtedness) or levies and statutory Liens, in each case with respect
to sums that are not yet due or are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Parent or its Subsidiaries,
as the case may be, in conformity with GAAP; (c) landlords', carriers',
warehousemen's, mechanics', materialmen's, repairmen's and other like
Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are
being contested in good faith by appropriate proceedings; and (d) any
Lien incurred in the ordinary course of business in connection with
social security, workers' compensation, unemployment insurance and
similar types of laws or regulations.
"Permitted Export Receivable Liens": (a) Liens created
pursuant to the Security Documents; (b) Liens for taxes, assessments,
governmental charges, other governmental obligations (other than
Indebtedness) or levies and statutory Liens, in each case with respect
to sums that are not yet due or are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Parent or its Subsidiaries,
as the case may be, in conformity with GAAP; (c) Liens to secure the
Borrower's obligations in respect of (i) Qualified Letters of Credit
and/or (ii) Hedge Agreements, provided that (x) the maximum amount of
obligations secured pursuant to clause (ii) shall not exceed
$50,000,000 and (y) such Liens are subordinated on the terms and
conditions set forth in the Collateral Trust Agreement to the Liens on
the Export Receivables granted in favor of the Collateral Trustee
pursuant to the Collateral Trust Agreement; and (d) any Lien incurred
in the ordinary course of business in connection with social
<PAGE> 18
12
security, workers' compensation, unemployment insurance and similar
types of laws or regulations. For purposes of determining the amount of
obligations secured by any Hedging Agreement, such amount shall be the
maximum aggregate amount (giving effect to any netting agreements) that
the Borrower would be required to pay if such Hedging Agreement were
terminated at such time.
"Permitted Principal Property Liens": (a) Liens existing on
the Closing Date; (b) Liens for taxes, assessments, governmental
charges, other governmental obligations (other than Indebtedness) or
levies and statutory Liens, in each case with respect to sums that are
not yet due or are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Parent or its Subsidiaries, as the case
may be, in conformity with GAAP; (c) landlords', carriers',
warehousemen's, mechanics', materialmen's, repairmen's and other like
Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are
being contested in good faith by appropriate proceedings; (d) any Lien
incurred in the ordinary course of business in connection with social
security, workers' compensation, unemployment insurance and similar
types of laws or regulations; (e) Liens to secure the performance of
bids, trade contracts, leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a similar nature
incurred in the ordinary course of business; (f) Liens securing loans
from or guaranteed or insured by export credit, governmental, bilateral
or multilateral agencies; (g) Liens to secure the purchase price of any
property or assets acquired by the Parent or any of its Subsidiaries
(including, without limitation, the Borrower) after the date hereof or
to secure Indebtedness of the Parent or any of its Subsidiaries
(including, without limitation, the Borrower) incurred to finance the
acquisition of any property or assets by the Parent or any of its
Subsidiaries after the date hereof, provided that (i) such Liens are
created within 180 days after the acquisition of such property or
assets, (ii) such Liens do not at any time encumber any property or
assets other than the property or assets financed by such Indebtedness
and (iii) the principal amount of Indebtedness secured by any such Lien
shall at no time exceed 100% of the original purchase price of such
property or assets; (h) any Lien on any property or assets of any
Person that becomes a Subsidiary of the Parent (including, without
limitation, the Borrower) after the date hereof or on any property or
assets acquired by the Parent or any of its Subsidiaries (including,
without limitation, the Borrower) after the date hereof, provided that
such Liens existed at the time such Person became a Subsidiary or such
property or assets were acquired, as the case may be, and were not
created in anticipation thereof; (i) any Lien created to secure
Indebtedness incurred to finance the cost (including capitalized
interest) of construction, acquisition, improvement or development of
specific property or assets, provided that such Lien (i) does not at
any time encumber any property or assets other than the property or
assets constructed or acquired or the specific improvement or
development and (ii) secures Indebtedness in an amount not in excess of
the financed cost of such construction or acquisition or the specific
improvement or development; (j) replacements, renewals or extensions of
the Liens permitted under clauses (a), (b), (f), (g), (h), and (i)
above, so long as (i) the principal amount is not increased over
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13
the original principal amount and (ii) such liens do not extend to any
additional property or assets; (k) Liens securing Indebtedness that in
the aggregate at any time does not exceed an amount equal to 10% of (i)
Consolidated Total Assets at the end of the most recent fiscal quarter
minus (ii) the aggregate amount of Indebtedness then secured by Liens
permitted under clauses (f) and (i) above; and (l) any judgment lien,
unless (i) the judgment it secures shall not have been discharged
within 60 days after the entry thereof, or (ii) execution of the
judgment it secures shall not have been discharged within 60 days after
the expiration of any stay thereof pending appeal.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Peruvian Branch": the Peruvian Branch of the Borrower.
"Prime Rate": the rate of interest publicly announced in New
York from time to time by Morgan Guaranty Trust Company of New York as
its prime rate.
"Principal Properties": the collective reference to the
Toquepala Mine, the Cuajone Mine, the Ilo Refinery and the Ilo Smelter.
"Qualified Letter of Credit": any letter of credit designated
as a "Secured Letter of Credit" pursuant to Section 3.05 of the
Collateral Trust Agreement, provided that only letters of credit issued
in accordance with Section 9(b) of the Collateral Account Agreement may
be designated as "Secured Credit Facility Reserve Letters of Credit"
pursuant to such Section.
"Rating Agency": Duff & Phelps, Fitch, Moody's or S&P.
"Register": as defined in subsection 12.6(d).
"Required Balance": at any time on any day, an amount equal to
the sum of (a) the interest payable on the Loans during the calendar
quarter in which such day occurs and (b) the aggregate amount of
principal payable in respect of the Loans during such calendar quarter.
For purposes of calculating the "Required Balance" at any time during
any calendar quarter, (i) an amount equal to 8.33% of the aggregate
principal amount of the Loans outstanding at such time shall be deemed
to be payable during such calendar quarter and (ii) all Loans shall be
deemed to bear interest at the rate which would be applicable to
Eurodollar Loans with an Interest Period commencing on the first date
of such calendar quarter and ending on the last day of such calendar
quarter (and for purposes of calculating interest, all Loans shall be
deemed to have been outstanding at the beginning of such calendar
quarter).
"Required Lenders": at any time, Lenders the Voting
Percentages of which then aggregate at least 66-2/3%.
<PAGE> 20
14
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": with respect to any Person, the
president, chief executive officer, chief financial officer, principal
accounting officer or treasurer of such Person or other executive
officer of such Person who in the normal performance of his or her
operational duties would have knowledge of any particular event or the
subject matter relating to any certificate, report or notice to be
delivered or given under this Agreement.
"Revolving Commitment Percentage": as to any Revolving Lender
(a) at any time prior to the termination of the Revolving Credit
Commitments, the percentage which (i) such Revolving Lender's Revolving
Credit Commitment then constitutes of (ii) the Revolving Credit
Commitments of all the Revolving Lenders and (b) at any time after the
termination of the Revolving Credit Commitments, the percentage which
(i) the aggregate principal amount of such Revolving Lender's Revolving
Loans then outstanding then constitutes of (ii) the aggregate principal
amount of Revolving Loans of all the Revolving Lenders then
outstanding.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Revolving Loans to the Borrower
hereunder in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender's name on
Schedule 1.1(a) under the heading "Revolving Credit Commitment", as
such amount may be reduced from time to time pursuant to this Agreement
or as such amount may be adjusted from time to time pursuant to
subsection 12.6; collectively, as to all such Lenders, the "Revolving
Credit Commitments".
"Revolving Lender": any Lender with a Revolving Credit
Commitment hereunder and/or any Revolving Loans outstanding hereunder;
collectively, the "Revolving Lenders".
"Revolving Loans": as defined in subsection 3.1.
"Revolving Note": as defined in subsection 3.6(d).
"Scheduled Commitment Termination Date": March 31, 2001.
"Scheduled Facility Debt Service": with respect to any period,
an amount equal to the sum of (a) the interest payable on the Loans
during such period and (b) the aggregate amount of principal payable in
respect of the Loans during such period. For purposes of clause (b) of
the immediately preceeding sentence with respect to any period prior to
the Commitment Termination Date, an amount equal to 8.33% of the
<PAGE> 21
15
aggregate principal amount of the Loans outstanding at the beginning of
such period shall be deemed to be payable during such period.
"Secured Export Notes": the Secured Export Notes issued by the
Borrower pursuant to its Secured Export Note Program.
"Security Documents": collectively, the Collateral Trust
Agreement, the Collateral Account Agreement and any other document or
agreement pursuant to which a Lien is granted on any Collateral in
connection with this Agreement.
"Series A Secured Export Notes": the initial Series of Secured
Export Notes issued by the Borrower pursuant to its Secured Export Note
Program.
"S&P": Standard & Poor's Ratings Services.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Parent.
"Syndication Agent": as defined in the Preamble to this
Agreement.
"Term Commitment Percentage": as to any Term Lender at any
time, (a) the percentage which (a) the sum of (i) such Term Lender's
Available Term Loan Commitment plus (ii) the aggregate principal amount
of such Term Lender's then outstanding Term Loans then constitutes of
(b) the sum of (i) the aggregate Available Term Loan Commitments of all
the Term Lenders and (ii) the aggregate outstanding principal amount of
the Term Loans of all the Term Lenders then outstanding.
"Term Lender": any Lender with an unused Term Loan Commitment
hereunder and/or any Term Loan outstanding hereunder; collectively, the
"Term Loan Lenders".
"Term Loan Commitment": as to any Lender, its obligation to
make Term Loans to the Borrower in an aggregate principal amount not to
exceed the amount set forth opposite such Lender's name in Schedule
1.1(a) under the heading "Term Loan Commitment", as such amount may be
reduced from time to time pursuant to this Agreement or as such amount
may be adjusted from time to time pursuant to subsection 12.6;
collectively, as to all such Lenders, the "Term Loan Commitments".
"Term Loans": as defined in subsection 2.1.
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"Term Note": as defined in subsection 2.6(d).
"Toquepala Mine": the copper mine, concentrator and mill
(including, without limitation, the mining and other concessions
relating thereto) located in Toquepala, Peru.
"Tranche": collectively, Eurodollar Loans the then current
Interest Periods with respect to all of which begin on the same date
and end on the same later date (whether or not such Eurodollar Loans
shall originally have been made on the same day).
"Transferee": as defined in subsection 12.6(f).
"Voting Percentage": as to any Lender, (a) at any time prior
to the termination in whole of the Commitments, the percentage which
(i) the sum of (x) such Lender's Revolving Credit Commitment plus (y)
such Lender's Available Term Loan Commitment plus (z) the aggregate
principal amount of such Lender's Term Loans then outstanding then
constitutes of (ii) the sum of (x) the Revolving Credit Commitments of
all the Lenders plus (y) the Available Term Loan Commitments of all the
Lenders plus (z) the aggregate principal amount of Term Loans of all
the Lenders then outstanding, and (b) at any time after the termination
in whole of the Commitments, the percentage which (i) the aggregate
principal amount of such Lender's Loans then outstanding then
constitutes of (ii) the aggregate principal amount of Loans of all the
Lenders then outstanding.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Parent and its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not defined, shall have
the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) As used in this Agreement, the following terms which are
defined in the Collateral Trust Agreement shall have the meanings given such
terms in the Collateral Trust Agreement: Acknowledgment, Additional Percentage,
Additional Secured Obligations,
<PAGE> 23
17
Attributable Principal Amount, Basic Collateral Percentage, Collateral Trustee,
Collection Account, Collections, Credit Facility Collateral Account, Credit
Facility Basic Collateral Percentage, Credit Facility Total Collateral
Percentage, Designated Total Collateral Percentage, Excluded Export Receivables,
Export Receivables, Notice of Default, Outstanding Principal Amount, Proceeds,
Program Amount, SENS Collateral Account, SENS Reserve Account and SENS Total
Collateral Percentage.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loans. Subject to the terms and conditions hereof,
each Term Lender severally agrees to make term loans ("Term Loans") to the
Borrower from time to time during the Commitment Period in an aggregate
principal amount not to exceed the amount of such Term Lender's Term Loan
Commitment, provided that the Borrower may not borrow Term Loans if, after
giving effect to the borrowing of such Term Loans and the use of proceeds
thereof, the amount on deposit in the Credit Facility Reserve Account (after
giving effect to any transfers of Collections to the Credit Facility Reserve
Account pursuant to the Collateral Account Agreement) would be less than the
Required Balance at such time. Except as otherwise provided in subsection 4.6 or
4.8, all Term Loans shall be Eurodollar Loans.
2.2 Procedure for Term Loan Borrowing. The Borrower may borrow
under the Term Loan Commitments during the Commitment Period on any Business
Day, provided that the Borrower shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to 11:00
a.m., New York City time, three Business Days prior to the requested Borrowing
Date), specifying (i) the amount to be borrowed, (ii) the requested Borrowing
Date and (iii) the length of the initial Interest Period with respect thereto.
Each borrowing under the Term Loan Commitments shall be in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
Available Term Loan Commitments of all the Term Lenders are less than
$5,000,000, such lesser amount). Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Term Lender
thereof. Each Term Lender will make the amount of its pro rata share of each
borrowing available to the Administrative Agent for the account of the Borrower
at the office of the Administrative Agent specified in or pursuant to subsection
12.2 prior to 11:00 a.m., New York City time, on the Borrowing Date requested by
the Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent crediting the account of the Borrower on the books of such office prior to
1:00 P.M., New York City time, on such Borrowing Date with the aggregate of the
amounts made available to the Administrative Agent by the Term Lenders and in
like funds as received by the Administrative Agent, provided that the
Administrative Agent is hereby authorized and instructed to deliver to the
Collateral Agent for deposit in the Credit Facility Reserve Account pursuant to
the Collateral Account Agreement such portion of such borrowing, if any, as
shall be required (after giving effect to any transfers of Collections to the
Credit Facility Reserve Account pursuant to the Collateral Account Agreement) to
cause the amount
<PAGE> 24
18
on deposit in the Credit Facility Reserve Account at such time to be equal to
the Required Balance at such time.
2.3 Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Term Lender a commitment fee for
the period from and including the first day of the Commitment Period to the
Commitment Termination Date, computed at a rate per annum on the average daily
amount of the Available Term Loan Commitment of such Term Lender during the
period for which payment is made equal to the Applicable Rate, payable quarterly
in arrears on the last day of each March, June, September and December,
commencing June 30, 1997, and on the Commitment Termination Date.
2.4 Termination or Reduction of Term Loan Commitments. The
Borrower shall have the right, upon not less than three Business Days' prior
written notice to the Administrative Agent, to terminate the Available Term Loan
Commitments or, from time to time during the Commitment Period, to reduce the
amount of the Available Term Loan Commitments. Any such reduction shall be in an
amount equal to $10,000,000 or a whole multiple of $5,000,000 in excess thereof
(or, if the then Available Term Loan Commitments of all the Term Lenders are
less than $10,000,000, such lesser amount) and shall reduce permanently the Term
Loan Commitments then in effect.
2.5 Repayment of Term Loans. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the Term Lenders the principal amount of the Term Loans of all the Term Lenders
outstanding on March 31, 2001 in twelve consecutive equal quarterly
installments, payable on the last day of March, June, September and December of
each year (or such earlier date on which the Term Loans become due and payable
pursuant to subsection 4.1(b), 4.1(c) or 9.1), commencing June 30, 2001, with
each such installment being equal to 8.33% of the aggregate principal amount of
Term Loans of the Term Lenders outstanding on March 31, 2001 (as such
installments may be reduced pursuant to subsection 4.1), provided that,
notwithstanding the foregoing, the final installment shall equal the then
aggregate unpaid principal amount of the Term Loans of all the Term Lenders.
Amounts paid in respect of the principal of the Term Loans may not be
reborrowed. The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Term Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 4.4.
2.6 Evidence of Term Loan Debt. (a) Each Term Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Term Lender resulting from the Term Loans
of such Term Lender, including the amounts of principal and interest payable and
paid to such Term Lender from time to time under this Agreement.
(b) The Administrative Agent shall record in the Register,
with separate subaccounts therein for each Term Lender, (i) the amount and
Borrowing Date of each Term Loan outstanding hereunder and each Interest Period
applicable thereto (if any), (ii) the amount of any principal or interest due
and payable or to become due and payable from the Borrower to each Term Lender
hereunder and (iii) both the amount of any sum received by
<PAGE> 25
19
the Administrative Agent hereunder from the Borrower and each Term Lender's
share thereof, if any.
(c) The entries made in the Register and the accounts of each
Term Lender maintained pursuant to subsections 2.6(a) and 2.6(b) shall, to the
extent permitted by applicable law, be conclusive and binding on the Borrower in
the absence of manifest error; provided, however, that the failure of any Term
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Term Loans of such Term Lender
in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request of any Term
Lender, the Borrower will execute and deliver to such Term Lender a promissory
note of the Borrower dated the Closing Date evidencing the Term Loans of such
Term Lender, substantially in the form of Exhibit C (a "Term Note") and payable
to the order of such Term Lender. Each Term Lender is hereby authorized to
record the date and amount of each Term Loan of such Term Lender, the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, and the length of each Interest Period and Eurodollar Rate with respect
thereto, on the schedule (or any continuation of the schedule) annexed to and
constituting a part of its Term Note and any such recordation shall, to the
extent permitted by applicable law, be conclusive and binding on the Borrower in
the absence of manifest error, provided that the failure to make any such
recordation (or any error therein) shall not affect the obligation of the
Borrower to repay (with applicable interest) the Term Loans of such Term Lender
in accordance with the terms of this Agreement.
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 Revolving Credit Commitments. Subject to the terms and
conditions hereof, each Revolving Lender severally agrees to make revolving
credit loans ("Revolving Loans") to the Borrower from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed the amount of such Revolving Lender's Revolving Credit Commitment,
provided that the Borrower may not borrow Revolving Loans if, after giving
effect to the borrowing of such Revolving Loans and the use of proceeds thereof,
the amount on deposit in the Credit Facility Reserve Account (after giving
effect to any transfers of Collections to the Credit Facility Reserve Account
pursuant to the Collateral Account Agreement) would be less than the Required
Balance at such time. During the Commitment Period, the Borrower may use the
Revolving Credit Commitments by borrowing, prepaying and reborrowing the
Revolving Loans in whole or in part, all in accordance with the terms and
conditions hereof. Except as otherwise provided in subsection 4.6 or 4.8, all
Revolving Loans shall be Eurodollar Loans.
3.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Commitment Period on
any Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 11:00 a.m., New York
<PAGE> 26
20
City time, three Business Days prior to the requested Borrowing Date),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date and
(iii) the length of the initial Interest Period with respect thereto. Each
borrowing under the Revolving Credit Commitments shall be in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
Available Revolving Credit Commitments of all the Revolving Lenders are less
than $5,000,000, such lesser amount). Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Revolving Lender
thereof. Each Revolving Lender will make the amount of its pro rata share of
each borrowing available to the Administrative Agent for the account of the
Borrower at the office of the Administrative Agent specified in or pursuant to
subsection 12.2 prior to 11:00 a.m., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office prior to 1:00 P.M., New York City time, on such Borrowing Date with the
aggregate of the amounts made available to the Administrative Agent by the
Revolving Lenders and in like funds as received by the Administrative Agent,
provided that the Administrative Agent is hereby authorized and instructed to
deliver to the Collateral Agent for deposit in the Credit Facility Reserve
Account pursuant to the Collateral Account Agreement such portion of such
borrowing, if any, as shall be required (after giving effect to any transfers of
Collections to the Credit Facility Reserve Account pursuant to the Collateral
Account Agreement) to cause the amount on deposit in the Credit Facility Reserve
Account at such time to be equal to the Required Balance at such time.
3.3 Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the first day of the Commitment Period to the
Commitment Termination Date, computed at a rate per annum on the average daily
amount of the Available Revolving Credit Commitment of such Revolving Lender
during the period for which payment is made equal to the Applicable Rate,
payable quarterly in arrears on the last day of each March, June, September and
December, commencing June 30, 1997, and on the Commitment Termination Date.
3.4 Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than three Business Days' prior written
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time during the Commitment Period, to reduce the
amount of the Revolving Credit Commitments, provided that any such termination
or reduction shall be accompanied by prepayments of the Revolving Loans in
excess of the Revolving Credit Commitments as terminated or reduced. Any such
reduction shall be in an amount equal to $10,000,000 or a whole multiple of
$5,000,000 in excess thereof (or, if the then Available Revolving Credit
Commitments of all the Revolving Lenders are less than $10,000,000, such lesser
amount) and shall reduce permanently the Revolving Credit Commitments then in
effect.
3.5 Repayment of Revolving Loans. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the Revolving Lenders the unpaid principal amount of the Revolving Loans of the
Revolving Lenders outstanding on
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21
March 31, 2001 in twelve consecutive equal quarterly installments, payable on
the last day of March, June, September and December of each year (or such
earlier date on which the Revolving Loans become due and payable pursuant to
subsection 4.1(b), 4.1(c) or 9.1), commencing June 30, 2001, with each such
installment being equal to 8.33% of the aggregate principal amount of the
Revolving Loans of all the Revolving Lenders outstanding on March 31, 2001 (as
such installments may be reduced pursuant to subsection 4.1), provided that,
notwithstanding the foregoing, the final installment shall equal the then
aggregate unpaid principal amount of the Revolving Loans of all the Revolving
Lenders. Amounts paid in respect of the principal of the Revolving Loans
pursuant to this subsection may not be reborrowed. The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Revolving Loans
from time to time outstanding from the date hereof until payment in full thereof
at the rates per annum, and on the dates, set forth in subsection 4.4.
3.6 Evidence of Debt. (a) Each Revolving Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Revolving Lender resulting from each
Revolving Loan of such Revolving Lender, including the amounts of principal and
interest payable and paid to such Revolving Lender from time to time under this
Agreement.
(b) The Administrative Agent shall record in the Register,
with separate subaccounts for each Revolving Lender, (i) the amount and
Borrowing Date of each Revolving Loan outstanding hereunder and each Interest
Period applicable thereto (if any), (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Revolving
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Revolving Lender's
share thereof, if any.
(c) The entries made in the Register and the accounts of each
Revolving Lender maintained pursuant to subsections 3.6(a) and 3.6(b) shall, to
the extent permitted by applicable law, be conclusive and binding on the
Borrower in the absence of manifest error; provided, however, that the failure
of any Revolving Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Loans of such Revolving Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request of any
Revolving Lender, the Borrower will execute and deliver to such Revolving Lender
a promissory note of the Borrower dated the Closing Date evidencing the
Revolving Loans of such Revolving Lender, substantially in the form of Exhibit D
(a "Revolving Note") and payable to the order of such Revolving Lender. Each
Revolving Lender is hereby authorized to record the date and amount of each
Revolving Loan of such Revolving Lender, the date and amount of each payment or
prepayment of principal thereof, each continuation thereof, and the length of
each Interest Period and Eurodollar Rate with respect thereto, on the schedule
(or any continuation of the schedule) annexed to and constituting a part of its
Revolving Note, and any such recordation shall, to the extent permitted by
applicable law, be conclusive and binding on the
<PAGE> 28
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Borrower in the absence of manifest error, provided that the failure to make any
such recordation (or any error therein) shall not affect the obligation of the
Borrower to repay (with applicable interest) the Revolving Loans of such
Revolving Lender in accordance with the terms of this Agreement.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS
4.1 Optional and Mandatory Prepayments. (a) The Borrower may
at any time and from time to time prepay the Loans, in whole or in part, without
premium or penalty, upon irrevocable notice to the Administrative Agent prior to
11:00 a.m., New York City time, three Business Days prior to such prepayment,
specifying the date and amount of prepayment and whether the prepayment is of
Term Loans, Revolving Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with any amounts payable pursuant to
subsection 4.11 and accrued interest to such date on the amount prepaid. Amounts
prepaid on account of the Term Loans (or Revolving Loans, after the Scheduled
Commitment Termination Date) may not be reborrowed. Partial prepayments shall be
in an aggregate principal amount of $10,000,000 or a whole multiple of
$5,000,000 in excess thereof, provided that partial prepayments of Term Loans
(and, after the Scheduled Commitment Termination Date, Revolving Loans) shall be
applied to the remaining principal installments of the Term Loans or Revolving
Loans, as the case may be, on a pro rata basis.
(b) The Available Term Loan Commitments shall be reduced
and/or the Loans shall be prepaid by an aggregate amount equal to the amount by
which the sum of (i) the aggregate principal amount of Secured Export Notes
issued by the Borrower and (ii) the Attributed Principal Amount of Additional
Secured Obligations issued or incurred by the Borrower exceeds $150,000,000. Any
reduction of the Available Term Loan Commitments and/or prepayment of Loans
required pursuant to this paragraph shall become effective or be made, as the
case may be, on the Business Day on which the relevant Secured Export Notes are
issued or the Additional Secured Obligations are issued or incurred (or, in the
case of an increase in the Attributable Principal Amount of any Additional
Secured Obligations resulting from any designation of an additional percentage
interest for the benefit of any holders of Additional Secured Obligations
pursuant to the Collateral Trust Agreement, on the date of each such
designation) and shall be made in the following order: (i) if such reduction or
prepayment occurs prior to the Scheduled Commitment Termination Date, first, the
Available Term Loan Commitments shall be permanently reduced, and second, the
Term Loans shall be prepaid and (ii) if such prepayment occurs on or after the
Scheduled Commitment Termination Date, the Term Loans and/or the Revolving Loans
shall be prepaid as the Borrower may elect.
(c) If the Borrower makes any payment in respect of any
Mandatory Prepayment Event, the Borrower shall prepay the Loans in an amount
sufficient to cause the Outstanding Program Percentage after giving effect to
any payment in respect of any such
<PAGE> 29
23
Mandatory Prepayment Event to be not greater than the Outstanding Program
Percentage prior to giving effect to such payment. Any prepayment of Loans
required pursuant to this paragraph shall be made concurrently with the relevant
payment or prepayment of or redemption, defeasance or purchase of Secured Export
Notes or Additional Secured Obligations and shall be made in the following
order: (i) if such prepayment occurs prior to the Scheduled Commitment
Termination Date, first, the Term Loans shall be prepaid, and second, if no Term
Loans are outstanding after giving effect to such prepayment, the Revolving
Loans shall be prepaid and (ii) if such prepayment occurs on or after the
Scheduled Commitment Termination Date, the Term Loans and/or Revolving Loans
shall be prepaid as the Borrower may elect.
(d) Each prepayment of Loans pursuant to this subsection shall
be accompanied by payment in full of all accrued fees and interest thereon to
and including the date of such prepayment, together with any additional amounts
owing pursuant to subsection 4.11. Each prepayment of the Term Loans or, after
the Scheduled Commitment Termination Date, Revolving Loans required pursuant to
this subsection 4.1 may not be reborrowed. Any prepayment of Term Loans or,
after the Scheduled Commitment Termination Date, Revolving Loans pursuant to
paragraphs (b) and (c) of this subsection shall be applied to the remaining
principal installments thereof on a pro rata basis.
4.2 Continuations for Additional Interest Periods. Any Loan
may be continued for an additional Interest Period upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Administrative Agent, in accordance with the applicable provisions of the
term "Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loan, provided that, if the Borrower
shall fail to give any such notice with respect to any Loan, such Loan shall be
automatically continued for an additional Interest Period of one month.
4.3 Minimum Amounts and Maximum Number of Tranches. All
borrowings and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections such that, after giving effect thereto, there shall be no more than
twenty Tranches outstanding at any time.
4.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Rate.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate.
(c) If all or a portion of (i) the principal amount of any
Loan, (ii) any interest payable thereon or (iii) any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), the principal of the Loans and any such
overdue interest, commitment fee or other amount shall bear interest at a rate
per annum which is (x) in the case of principal, the rate that would otherwise
be applicable thereto pursuant to the foregoing provisions of this subsection
plus 2% or (y) in
<PAGE> 30
24
the case of any such overdue interest, commitment fee or other amount, the rate
then applicable to Revolving Loans plus 2%, in each case from the date of such
non-payment until such overdue principal, interest, commitment fee or other
amount is paid in full (as well after as before judgment), provided that
Interest Periods for overdue amounts shall be for such periods as shall be
determined by the Administrative Agent.
(d) Interest shall be payable in arrears on each Interest
Payment Date and on the Final Maturity Date or such earlier date on which the
Loans shall become due and payable pursuant to subsection 4.1(b), 4.1(c) or 9.1,
provided that interest accruing pursuant to subsection 4.4(c) shall be payable
from time to time on demand.
4.5 Computation of Interest and Fees. (a) Commitment fees and
interest shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable, notify the
Borrower and the Lenders of each determination of a Eurodollar Rate. Any change
in the interest rate on a Loan resulting from a change in the Eurocurrency
Reserve Requirement shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall, as
soon as practicable, notify the Borrower and the Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower
or any Lender, deliver to the Borrower or such Lender a statement showing the
quotations used by the Administrative Agent in determining any interest rate
pursuant to subsection 4.4(a).
4.6 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. Upon receipt of any
such notice, (x) any affected Eurodollar Loans requested to be made on the first
day of such Interest Period shall be made as Base Rate Loans and (y) any
outstanding affected Eurodollar Loans shall be converted, on the last day of the
Interest Period applicable thereto, to Base Rate Loans.
<PAGE> 31
25
Until such notice has been withdrawn by the Administrative Agent, (i) no further
Eurodollar Loans shall be made or continued as such by the relevant Lenders and
(ii) all Loans shall be made as Base Rate Loans. During the period of sixty days
following receipt of such notice, the Borrower and the Administrative Agent
shall negotiate (in consultation with the Lenders) to determine a mutually
satisfactory interest rate to be substituted for the Eurodollar Rate and to
agree upon any amendments required to this Agreement in connection therewith. If
a substituted interest rate is agreed upon, it shall become effective as soon as
practicable (but in no event later than five Business Days) following such
determination. If a determination is made by the Administrative Agent that such
circumstances no longer exist and/or any such notice from the Required Lenders
is withdrawn by the Required Lenders, the Administrative Agent will, as soon as
practicable, withdraw the notice referred to in the first sentence of this
subsection.
4.7 Pro Rata Treatment and Payments. (a) All payments
(including prepayments) to be made by the Borrower hereunder, whether on account
of principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:30 P.M., New York City time, on the
due date therefor to the Administrative Agent, for the account of the Revolving
Lenders or the Term Lenders, as the case may be, at the Administrative Agent's
office specified in or pursuant to subsection 12.2, in Dollars and in
immediately available funds. Payments received by the Administrative Agent after
such time shall be deemed to have been received on the next Business Day. The
Administrative Agent shall distribute such payments to the Lenders entitled to
receive the same promptly upon receipt in like funds as received. If any payment
hereunder (other than any payment in respect of Eurodollar Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (and, with respect to payments of principal, interest
shall be payable thereon at the then applicable rate during such extension)
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its portion of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this subsection shall be conclusive in the
absence of demonstrable error. If such Lender's portion of such borrowing is not
made available to the Administrative Agent by such Lender
<PAGE> 32
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within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to such Loans hereunder, on demand, from the Borrower.
(c) Each borrowing by the Borrower of Term Loans or Revolving
Loans shall be made ratably from the Term Lenders or Revolving Lenders,
respectively, in accordance with their respective Term Commitment Percentages
and Revolving Commitment Percentages. Any reduction of the Term Loan Commitments
or the Revolving Credit Commitments shall be made ratably among the Term Lenders
or the Revolving Lenders, as the case may be, in accordance with their
respective Term Commitment Percentages and Revolving Commitment Percentages.
4.8 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans and to continue Eurodollar Loans for
additional Interest Periods shall forthwith be suspended until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar Loans
as contemplated by this Agreement and all Loans made by such Lender during the
period of such suspension shall be made as Base Rate Loans and (b) such Lender's
Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required in connection therewith pursuant to subsection 4.11.
4.9 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, in each
case made subsequent to the date hereof:
(i) shall subject any Lender to any tax on or
calculated by reference to the amount of Eurodollar Loans made or to be
made by it hereunder and/or by reference to any sum received or
receivable by it hereunder (except for Non-Excluded Taxes covered by
subsection 4.10 and changes in the rate of tax or the basis on which
tax is imposed on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
<PAGE> 33
27
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, continuing or
maintaining Eurodollar Loans or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the Borrower agrees to pay promptly to
such Lender such additional amount or amounts as will compensate such Lender for
such increased cost or reduced amount receivable, provided that no Lender shall
be entitled to receive any payment under this paragraph in respect of any cost
resulting from events of the type described in clauses (i), (ii) and (iii) above
which apply to borrowers, or loans made to borrowers, on the basis of the
country in which such borrowers are organized or operating.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Borrower agrees to pay promptly to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction, provided that no Lender shall be entitled to receive any payment
under this paragraph in respect of any cost resulting from events of the type
described in this paragraph (b) which apply to borrowers, or loans made to
borrowers, on the basis of the country in which such borrowers are organized or
operating.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower (with
a copy to the Administrative Agent) of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable pursuant
to this subsection submitted by such Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
4.10 Taxes. (a) All payments made by or on behalf of the
Borrower under this Agreement and any Notes shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by the United States or Peru or any political subdivision or taxing
authority thereof or therein, excluding income taxes, franchise taxes and other
similar taxes imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender, as the case may be, and the
United States or Peru or any political subdivision or taxing authority thereof
or therein (other than any such connection arising solely from such Agent or
such Lender, as the case may be, having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
Note). If any such non-excluded taxes, levies, imposts, duties,
<PAGE> 34
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charges, fees deductions or withholdings ("Non-Excluded Taxes") are required to
be withheld from any amounts payable to any Agent or any Lender hereunder or
under any Note, the amounts so payable to such Agent or such Lender, as the case
may be, shall be increased to the extent necessary to yield to such Agent or
such Lender (after payment of all Non-Excluded Taxes), as the case may be,
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrower shall
not be required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender or Agent fails to comply with the requirements of paragraph (b) of
this subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower, to the extent legally available,
shall send to the Administrative Agent for the account of such Agent or such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower agrees to indemnify the Agents and the
Lenders for any incremental taxes, interest or penalties that may become payable
by any Agent or any Lender as a result of any such failure. The agreements in
this subsection shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
(b) Each Lender and Agent that is not incorporated under the
laws of the United States of America or a state thereof shall:
(i) immediately after it becomes a party to this
Agreement deliver to the Borrower and the Administrative Agent (A) two
duly completed copies of United States Internal Revenue Service Form
1001 or 4224, or successor applicable form, as the case may be, and (B)
an Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be;
(ii) deliver to the Borrower and the Administrative
Agent two further copies of any such form or certification on or before
the date that any such form or certification expires or becomes
obsolete and after the occurrence of any event requiring a change in
the most recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested by
the Borrower or the Administrative Agent;
unless, in the case of (ii) and (iii), any change in treaty, law or regulation
has occurred after the date such Lender or Agent becomes a party to this
Agreement prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender or Agent from duly completing and delivering any such form with respect
to it and such Lender or Agent so advises the Borrower and the Administrative
Agent. Such Lender or Agent shall certify (i) in the case of a Form 1001 or
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4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
Participant pursuant to subsection 12.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms and statements
required pursuant to this subsection, provided that in the case of a Participant
such Participant shall furnish all such required forms and statements to the
Lender from which the related participation shall have been purchased.
(c) Upon the request of the Borrower, and at the Borrower's
expense, each Lender or Agent (as the case may be) shall use reasonable efforts
to cooperate with the Borrower to obtain a refund of any taxes which were not
correctly or legally imposed and with respect to which the Borrower has paid
additional amounts to such Lender or Agent (as the case may be) under this
subsection 4.10. If a Lender or Agent shall receive a refund (including any
offset or credit) from a taxing authority (as a result of any error in the
imposition of taxes by such taxing authority) of any taxes paid by the Borrower
pursuant to this subsection 4.10, such Lender or Agent (as the case may be)
shall promptly pay to the Borrower the amount so received.
(d) Each Lender and Agent agrees that it will (i) take all
reasonable actions reasonably requested by the Borrower that are without
material risk or material cost to such Lender or Agent (as the case may be) to
maintain all exemptions, if any, available to it from withholding taxes (whether
available by treaty or existing administrative waiver), and (ii) to the extent
reasonable and without material cost to it, otherwise cooperate with the
Borrower to minimize any amounts payable by the Borrower under this subsection
4.10. Each Lender and Agent shall, at the request of the Borrower, use
reasonable efforts (consistent with applicable legal and regulatory
restrictions) to file any document requested by the Borrower if the making of
such a filing would avoid the need for or reduce the amount of any such
additional amounts payable to or for the account of such Lender or Agent (as the
case may be) pursuant to this subsection 4.10 which may thereafter accrue and
would not, in the judgment of such Lender or Agent, require such Lender or Agent
to disclose any confidential or proprietary information or be otherwise
materially disadvantageous to such Lender or Agent.
4.11 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification shall include an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or
<PAGE> 36
30
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Rate included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
4.12 Change of Lending Office. Each Lender agrees that if it
makes any demand for payment under subsection 4.9 or 4.10(a), or if any adoption
or change of the type described in subsection 4.8 shall occur with respect to
it, it will use reasonable efforts to designate a different lending office if
the making of such a designation would reduce or obviate the need for the
Borrower to make payments under subsection 4.9 or 4.10(a), or would eliminate or
reduce the effect of any adoption or change described in subsection 4.8,
provided, however, that no Lender shall be obligated to designate a different
lending office if such Lender determines that (a) as a result of such
designation, such Lender would be in violation of any applicable law,
regulation, directive or guideline or would incur additional costs or expenses
(unless the Borrower agrees to pay such costs and expenses) or (b) such
designation would be inadvisable for regulatory reasons.
4.13 Replacement Lenders. In the event that the Borrower
becomes obligated to pay additional amounts or increased amounts to, or receives
notice from, any Lender pursuant to subsection 4.8, 4.9 or 4.10 then, unless
such Lender has theretofore removed or cured the conditions which result in the
obligation to pay such additional amounts or increased amounts, the Borrower
may, on ten Business Days' prior written notice to the Administrative Agent and
such Lender, cause such Lender to (and such Lender shall) assign pursuant to
subsection 12.6(c) (but without any obligation on the part of such Lender to pay
the registration and processing fee under subsection 12.6(e)) all of its rights
and obligations under this Agreement to another bank or financial institution
which is willing to become a Lender and is acceptable (which acceptance shall
not be unreasonably withheld) to the Administrative Agent, for a purchase price
equal to the outstanding principal amount of the Loans payable to such Lender
plus any accrued but unpaid interest on such Loans and any accrued but unpaid
commitment fees in respect of such Lender's Commitments, provided that the
Borrower shall concurrently pay any other amounts due and payable to such Lender
under this Agreement (including, without limitation, amounts payable under
subsection 4.11).
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to induce the Lenders to make the Loans hereunder, each Loan Party
hereby represents and warrants to the Administrative Agent, the Collateral Agent
and each Lender that:
5.1 Corporate Organization and Existence. Such Loan Party (a)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and authority, and
the legal right, to own and
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31
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified and/or in good standing could not, in the aggregate, reasonably be
expected to result in a Material Adverse Effect, and (d) is in compliance with
all Requirements of Law (other than Environmental Laws) except to the extent
that the failure to comply therewith would not, in the aggregate, result in a
Material Adverse Effect.
5.2 Corporate Power and Authorization. Such Loan Party has the
corporate power and authority to make, deliver and perform the Loan Documents to
which it is a party and (in the case of the Borrower) to borrow hereunder and
has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and any Notes and to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party. This Agreement has been, and each other Loan Document to which it is a
party will be, duly executed and delivered on behalf of such Loan Party. The
execution, delivery and performance of the Loan Documents, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or material Contractual Obligation of such Loan Party and will not result
in, or require, the creation or imposition of any Lien prohibited hereunder on
any of its respective properties or revenues pursuant to any Requirement of Law
or material Contractual Obligation of such Loan Party. Such Loan Party is not in
default under or with respect to any of its Contractual Obligations in any
respect which would result in a Material Adverse Effect.
5.3 No Consents or Approvals; Governmental Action. Except for
such consents, approvals, authorizations, filings and notices as have been
obtained or made as set forth on Schedule 5.3 and are in full force and effect,
no consent, approval (including exchange approvals required to make payments
hereunder) or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which such Loan
Party is a party, except to the extent that the failure to obtain any such
consent or authorization or to make any such filing, give any such notice or
take any such action would not, individually or in the aggregate, result in a
Material Adverse Effect.
5.4 Enforceable Obligations. This Agreement constitutes, and
each other Loan Document to which it is a party when executed and delivered will
constitute, a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
5.5 No Material Litigation. Except as set forth on Schedule
5.5, no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of such Loan Party,
threatened by or against such Loan
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32
Party which, if adversely determined, would have a material adverse effect on
the financial condition or results of operations of the Parent, the Borrower and
their respective Subsidiaries, taken as a whole, or on the validity or
enforceability of this Agreement or any of the other Loan Documents or would
enjoin or prevent any of the transactions contemplated hereby.
5.6 Financial Condition. The consolidated balance sheet of the
Parent and its Subsidiaries as at December 31, 1996 and the related consolidated
statements of earnings, cash flows and changes in common stockholders' equity
for the fiscal year ended on such date, reported on by Coopers & Lybrand L.L.P.,
copies of which have heretofore been furnished to each Lender, are complete and
correct and present fairly in all material respects the consolidated financial
condition of the Parent and its Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as disclosed therein).
5.7 No Change; Default. Since December 31, 1996, there has
been no material adverse change in the financial condition or results of
operations of the Parent and its Subsidiaries, taken as a whole (it being agreed
that a decline in metals prices, in and of itself, shall not constitute a
material adverse change).
5.8 Federal Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or Regulation
U of the Board of Governors as now and from time to time hereafter in effect. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of FR Form G-1 or FR Form U-1 referred to in
said Regulation G or Regulation U, as the case may be.
5.9 Taxes. Such Loan Party has filed or caused to be filed all
tax returns which, to the knowledge of such Loan Party, are required to be filed
and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of such Loan Party and
except to the extent any such failure would not, individually or in the
aggregate, result in a Material Adverse Effect).
5.10 Environmental Matters. Such Loan Party is in compliance
with the terms of the PAMA to the extent applicable to it, except to the extent
that any failure to so comply would not result in a Material Adverse Effect or
such compliance is being contested in good faith by appropriate proceedings.
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33
5.11 Pari Passu Status. (a) The obligations of the Borrower
hereunder and under the Notes constitute direct senior obligations of the
Borrower and rank at least pari passu (in priority of payment, security and
otherwise) with all other unsubordinated payment obligations of the Borrower
with respect to Indebtedness for borrowed money.
(b) The obligations of the Parent hereunder constitute direct
senior obligations of the Parent and rank at least pari passu (in priority of
payment, security and otherwise) with all other unsubordinated payment
obligations of the Parent with respect to Indebtedness for borrowed money.
5.12 Purpose of Loans. The proceeds of the Loans shall be used
by the Borrower to finance the expansion and modernization of operations at its
Cuajone Mine and Ilo Smelter and for general corporate purposes and to make
deposits in the Credit Facility Reserve Account to the extent required to cause
the amount on deposit in the Credit Facility Reserve Account (after giving
effect to any transfers of Collections to the Credit Facility Reserve Account
pursuant to the Collateral Account Agreement) to be equal to the Required
Balance at such time.
5.13 Ownership and Leases of Principal Properties. The
Borrower owns, or has valid and enforceable rights to use or operate, each of
the Principal Properties.
5.14 Investment Company Act; Other Regulations. Such Loan
Party is not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. Such Loan Party is not subject to regulation under any Federal or
State statute or regulation (other than Regulation X of the Board of Governors)
which limits its ability to incur Indebtedness.
5.15 Information. The Confidential Information Memorandum
dated February 1997 prepared in connection with the transactions contemplated
hereby (excluding financial projections) does not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances
under which such statements were made and as of their respective dates, and all
financial projections included in such Confidential Information Memorandum were
prepared in good faith based upon reasonable assumptions (it being recognized by
the Agents and the Lenders that such projections are subject to significant
uncertainties and contingencies, many of which are beyond such Loan Party's
control, and that no assurance can be given that the projections will be
realized).
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Effectiveness. This Agreement shall become
effective upon satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Parent and the
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34
Borrower, with a counterpart for each Lender, (ii) the Collateral Trust
Agreement, executed and delivered by a duly authorized officer of each
Person party thereto, with a counterpart for the Administrative Agent
and the Collateral Agent and a counterpart or a conformed copy for each
Lender, (iii) the Collateral Account Agreement, executed and delivered
by a duly authorized officer of each Person party thereto, with a
counterpart for the Administrative Agent and the Collateral Agent and a
counterpart or a conformed copy for each Lender, (iv) a Term Note for
each Term Lender which requests a Term Note on or prior to the Closing
Date, executed and delivered by a duly authorized officer of the
Borrower and conforming to the requirements hereof, and (v) a Revolving
Note for each Revolving Lender which requests a Revolving Note on or
prior to the Closing Date, executed and delivered by a duly authorized
officer of the Borrower and conforming to the requirements hereof.
(b) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, dated the Closing Date, substantially in the form of Exhibit
E, with appropriate insertions and attachments, satisfactory in form
and substance to the Administrative Agent and the Documentation Agent,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of the Borrower.
(c) Corporate Proceedings of the Borrower. The Administrative
Agent shall have received, with a counterpart for each Lender, a copy
of the resolutions, in form and substance satisfactory to the
Administrative Agent and the Documentation Agent, of the Board of
Directors of the Borrower authorizing (i) the execution, delivery and
performance of this Agreement and the other Loan Documents to which it
is a party, (ii) the borrowings contemplated hereunder and (iii) the
granting by it of the Liens created pursuant to the Security Documents,
certified by the Secretary or an Assistant Secretary of the Borrower as
of the Closing Date, which certificate shall be in form and substance
satisfactory to the Administrative Agent and the Documentation Agent
and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(d) Borrower Incumbency Certificate. The Administrative Agent
shall have received, with a counterpart for each Lender, a certificate
of the Borrower, dated the Closing Date, as to the incumbency and
signature of the officers of the Borrower executing any Loan Document,
satisfactory in form and substance to the Administrative Agent and the
Documentation Agent, executed by the President or any Vice President
and the Secretary or any Assistant Secretary of the Borrower.
(e) Corporate Proceedings of the Parent. The Administrative
Agent shall have received, with a counterpart for each Lender, a copy
of the resolutions, in form and substance satisfactory to the
Administrative Agent and the Documentation Agent, of the Board of
Directors of the Parent authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, certified by
the Secretary or an Assistant Secretary of the Parent as of the Closing
Date, which certificate shall be in form and substance satisfactory to
the Administrative Agent and the
<PAGE> 41
35
Documentation Agent and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(f) Parent Incumbency Certificate. The Administrative Agent
shall have received, with a counterpart for each Lender, a certificate
of the Parent, dated the Closing Date, as to the incumbency and
signature of the officers of the Parent executing any Loan Document,
satisfactory in form and substance to the Administrative Agent and the
Documentation Agent, executed by the President or any Vice President
and the Secretary or any Assistant Secretary of the Parent.
(g) Corporate Documents. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies
of the certificate of incorporation and by-laws of each Loan Party,
certified as of the Closing Date as complete and correct copies thereof
by the Secretary or an Assistant Secretary of such Loan Party.
(h) Consents, Licenses and Approvals. The Administrative Agent
shall have received, with a counterpart for each Lender, a certificate
of a Responsible Officer of each of the Parent and the Borrower (i)
attaching copies of all consents, authorizations and filings described
in Schedule 5.3, each of which shall be in form and substance
satisfactory to the Administrative Agent and the Documentation Agent,
and (ii) stating that such consents, authorizations and filings are in
full force and effect.
(i) Fees. The Agents and the Lenders shall have received the
fees to be received by them on the Closing Date pursuant to the
Commitment Letter, dated January 9, 1997, among the Parent, the Agents,
Chase Securities Inc., Citicorp Securities Inc., Credit Suisse First
Boston, Deutsche Morgan Grenfell Inc., Goldman Sachs Credit Partners
L.P. and J.P. Morgan Securities Inc.
(j) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Lender, the following executed
legal opinions:
(i) the executed legal opinion of Davis Polk &
Wardwell, counsel to the Parent and the Borrower,
substantially in the form of Exhibit F-1;
(ii) the executed legal opinion of Augustus B.
Kinsolving, Esq., general counsel of the Parent and the
Borrower, substantially in the form of Exhibit F-2;
(iii) the executed legal opinion of Simpson Thacher &
Bartlett, special counsel to the Agents, substantially in the
form of Exhibit F-3; and
(iv) the executed legal opinion of Rodrigo, Elias &
Medrano, Abogados, special Peruvian counsel to the Parent and
the Borrower, substantially in the form of Exhibit F-4.
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36
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
and the Documentation Agent may reasonably require.
(k) Actions to Perfect Liens. The Administrative Agent shall
have received evidence in form and substance satisfactory to it that
all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on
form UCC-1, necessary or, in the opinion of the Administrative Agent,
the Collateral Agent and the Documentation Agent, desirable to perfect
the Liens created by the Security Documents shall have been completed.
(l) Lien Searches. The Administrative Agent shall have
received the results of a recent search by a Person satisfactory to the
Administrative Agent, the Collateral Agent and the Documentation Agent,
of the Uniform Commercial Code, judgment and tax lien filings which may
have been filed with respect to personal property of the relevant Loan
Parties, and the results of such search shall be satisfactory to the
Administrative Agent, the Collateral Agent and the Documentation Agent.
(m) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received
such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
6.2 Conditions to Each Loan. The agreement of each Lender to
make any Loan requested to be made by it on any date (including, without
limitation, the initial Loans) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Loan Parties in or pursuant
to the Loan Documents (other than the representations and warranties
contained in subsections 5.5, 5.7, 5.13 and 5.15) shall be true and
correct in all material respects on and as of such date as if made on
and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans requested to be made on such date.
(c) No Blocking Event or Mandatory Prepayment Event. No
Blocking Event or Mandatory Prepayment Event shall have occurred and be
continuing.
(d) No Limitation on Exports. No action by the Republic of
Peru shall have occurred and be continuing that would limit the export
of copper products by the
<PAGE> 43
37
Parent or the Borrower (including the Peruvian Branch) for a period
exceeding 90 consecutive days and which would result in a Material
Adverse Effect.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
this subsection have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
So long as the Commitments remain in effect or any amount is
owing to any Lender or Agent hereunder or under any other Loan Document:
7.1 Financial Statements. The Parent shall furnish to each
Lender:
(a) as soon as available, but in any event within 120 days
after the end of each fiscal year of the Parent, a copy of the
consolidated balance sheet of the Parent and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of earnings, cash flows and changes in common stockholders'
equity for such year, setting forth in each case in comparative form
the figures for the previous year, reported on by Coopers & Lybrand
L.L.P. or other independent certified public accountants of nationally
recognized standing; and
(b) as soon as available, but in any event not later than 60
days after the end of each of the first three quarterly periods of each
fiscal year of the Parent, the unaudited consolidated balance sheet of
the Parent and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of earnings,
cash flows and changes in common stockholders' equity of the Parent and
its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each case
in comparative form the figures for the previous year, certified by a
Responsible Officer of the Parent as being fairly stated in all
material respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as disclosed therein).
7.2 Certificates; Other Information. The Parent shall furnish
to each Lender (or, in the case of paragraph (d) or (e), the Borrower shall
furnish to the Administrative Agent):
(a) concurrently with any delivery of financial statements
under subsection 7.1(a) above, a certificate of the accounting firm
that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such
financial statements of any Default (which certificate may be limited
to the extent required by accounting rules or guidelines);
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38
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a
Responsible Officer of the Parent (i) stating that, to the best of such
Responsible Officers' knowledge, during such period no Event of Default
has occurred which is then continuing except as specified in such
certificate and (ii) setting forth in reasonable detail the
calculations required to determine compliance with subsection 8.1;
(c) promptly after the same become publicly available, copies
of the final prospectus contained in each registration statement (other
than registration statements relating to employee benefit plans), and
supplements thereto and all proxy statements and regular periodic
reports, if any, filed by the Parent with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, as the case may be;
(d) (i) concurrently with the issuance of any Series A Secured
Export Notes, a certificate of a Responsible Officer of the Borrower
setting forth or attaching a summary of the representations and
warranties, covenants and events of default to be applicable to such
Secured Export Notes, together with certified copies of the offering
documents and material agreements and indentures relating to such
Secured Export Notes, (ii) at least four Business Days prior to the
issuance of any Secured Export Notes, a certificate of a Responsible
Officer of the Borrower setting forth the principal amount of Secured
Export Notes to be issued and any reduction of Term Loan Commitments
and/or prepayments of Loans required in connection therewith pursuant
to subsection 4.1(b) and (iii) at least four Business Days prior to the
issuance or incurrence of any Additional Secured Obligations, a
certificate of a Responsible Officer setting forth the percentage
interest in the Export Receivables and the Collections to be designated
for the benefit of the holders of such Additional Secured Obligations,
the Attributable Principal Amount thereof and any reduction of
Commitments and/or prepayments of Loans required in connection
therewith pursuant to subsection 4.1(b);
(e) following knowledge of any Responsible Officer of the
Borrower or the Parent thereof, prompt notice of the occurrence of any
Default, Event of Default, Blocking Event or Mandatory Prepayment
Event; and
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Parent or the Borrower, or compliance with the terms
of this Agreement, as the Administrative Agent may reasonably request.
7.3 Conduct of Business and Maintenance of Existence. Each
Loan Party shall (a) continue to engage in business of the same general type as
now conducted by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
concessions, privileges and franchises necessary or desirable in the normal
conduct of its business except as otherwise permitted pursuant to
<PAGE> 45
39
subsection 8.3 and except to the extent that the failure to maintain any such
rights, concessions, privileges and franchises would not, individually or in the
aggregate, result in a Material Adverse Effect or is being contested in good
faith by appropriate proceedings, (b) continue to sell or otherwise dispose of
copper inventory in a manner consistent with past practice (without limiting
such Loan Party's rights to create Permitted Copper Inventory Liens) and (c)
comply with all Requirements of Law (other than Environmental Laws) except to
the extent that failure to comply therewith would not, individually or in the
aggregate, result in a Material Adverse Effect or is being contested in good
faith by appropriate proceedings.
7.4 Maintenance of Property; Insurance. Each Loan Party shall
(a) keep all material property necessary for the conduct of its business in good
working order and condition (ordinary wear and tear excepted), (b) maintain such
insurance with financially sound and reputable insurance companies (including
captive or affiliated insurance companies) or, to the extent consistent with
prudent business practice, through programs of self insurance, as such Loan
Party shall determine to be adequate on all its property (taking into account
both the commercial availability and cost of such insurance) and (c) and furnish
to each Lender, upon written request, full information as to the insurance
carried.
7.5 Inspection of Property; Books and Records; Discussions.
Each Loan Party shall, upon reasonable advance notice, permit representatives of
the Administrative Agent and, after the occurrence and during the continuation
of any Event of Default, any Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of such Loan
Party with officers and employees of such Loan Party and with its independent
certified public accountants.
7.6 Environmental Laws. Each Loan Party shall comply with all
applicable Environmental Laws and obtain and comply with and maintain any and
all licenses, authorizations, approvals, notifications, registrations or permits
required by applicable Environmental Laws, except where (a) the failure to do so
would not result in a Material Adverse Effect or (b) the need to comply
therewith is being contested in good faith by appropriate proceedings.
7.7 Further Assurances. Upon the request of the Administrative
Agent, each Loan Party shall promptly perform or cause to be performed any and
all acts and execute or cause to be executed any and all documents (including,
without limitation, financing statements and continuation statements) for filing
under the provisions of the Uniform Commercial Code or any other Requirement of
Law which are necessary or advisable to maintain in favor of the Collateral
Agent, for the benefit of the Lenders, Liens on the Collateral that are duly
perfected in accordance with all applicable Requirements of Law.
7.8 Appointment of Process Agent. Each Loan Party shall
appoint an agent in New York City for service of process if the Borrower shall
cease to or shall not have a place of business in New York City and promptly
deliver to the Administrative Agent letters
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40
from such process agent acknowledging its appointment as agent for such purpose
in form and substance reasonably satisfactory to the Administrative Agent.
7.9 Peruvian Public Deed. Upon delivery by the Administrative
Agent to the Borrower of all required powers of attorney and all other ancillary
documents required to satisfy all Requirements of Law in Peru in connection with
the execution of a public deed with respect to this Agreement in Peru, the
Borrower shall, as promptly as practicable after receipt of all such documents,
but in any event within 180 days thereafter, execute a public deed in the
Republic of Peru with respect to this Agreement, provided however, that such 180
days for the execution of the public deed shall be tolled for any period during
which the attorney-in-fact for any Secured Party fails to appear personally in
Lima, Peru, to execute such public deed. Notwithstanding any other provision in
this Agreement to the contrary, it is understood by the parties hereto that the
Borrower shall have no further obligations in respect of this covenant after the
execution of the aforementioned public deed.
SECTION 8. NEGATIVE COVENANTS
So long as the Commitments remain in effect or any amount is
owing to any Lender or Agent hereunder or under any other Loan Document:
8.1 Financial Condition Covenants.
(a) Maintenance of Tangible Net Worth. The Parent shall not
permit Consolidated Tangible Net Worth at any time to be less than
$750,000,000.
(b) Maintenance of Capitalization Ratio. The Parent shall not
permit the Capitalization Ratio at any time to be greater than 0.50 to
1.00.
(c) Maintenance of Interest Coverage Ratio. The Parent shall
not permit the Interest Coverage Ratio for the period of four
consecutive fiscal quarters ending at the end of any fiscal quarter to
be less than 1.50 to 1.00 if at the end of the immediately preceding
fiscal quarter the Interest Coverage Ratio for the period of four
consecutive fiscal quarters ending at the end of such immediately
preceding fiscal quarter was less than 1.50 to 1.00.
(d) Maintenance of Collections. Neither the Parent nor the
Borrower shall permit, as of the last day of any fiscal quarter, the
aggregate Collections transferred to the Credit Facility Collateral
Account pursuant to the Collateral Trust Agreement during such fiscal
quarter to be less than the product of (i) 1.5 and (ii) the Scheduled
Facility Debt Service for such fiscal quarter, provided that if, within
five Business Days after the Collateral Agent shall have notified the
Borrower of the aggregate amount of Collections transferred to the
Credit Facility Collateral Account pursuant to the Collateral Trust
Agreement during such fiscal quarter, (x) the Borrower designates an
Additional Percentage interest in the Export Receivables (thereby
increasing the Credit Facility Total Collateral Percentage) in
accordance with Section 2.04 of the
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41
Collateral Trust Agreement, then Collections in respect of such
Additional Percentage during such fiscal quarter shall, following the
effectiveness of such designation, be included for purposes of
determining compliance with this paragraph for such fiscal quarter as
if such Collections had been transferred to the Credit Facility
Collateral Account pursuant to the Collateral Trust Agreement during
such fiscal quarter or (y) the Borrower prepays Loans pursuant to
subsection 4.1(a), then the principal of and interest on such Loans
shall, following such prepayment, not be included for purposes of
determining compliance with this paragraph for such fiscal quarter as
if such Loans had been prepaid prior to the first day of such fiscal
quarter, provided, further that, in connection with any designation or
prepayment pursuant to clause (x) or (y) of the immediately preceding
proviso, the Borrower shall deliver a certificate of a Responsible
Officer setting forth the calculations required to determine compliance
with this paragraph for the relevant fiscal quarter after giving effect
to such designation or prepayment.
8.2 Limitation on Liens. Neither the Parent nor the Borrower
shall create, incur, assume or suffer to exist any Lien upon (a) any Principal
Property, except for Permitted Principal Property Liens, (b) any Export
Receivable, except for Permitted Export Receivable Liens, or (c) any of its
copper inventory, except for Permitted Copper Inventory Liens.
8.3 Limitation on Fundamental Changes. Neither the Parent nor
the Borrower shall enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets (including, in the
case of the Parent, the Capital Stock of the Borrower), except that (a) so long
as no Default or Event of Default shall have then occurred and be continuing or
would result therefrom, the Parent and the Borrower may merge with each other,
provided that, if the Parent is the surviving entity in such merger, the Parent
shall have complied with the applicable requirements of clause (b)(ii) below,
and (b) the Parent or the Borrower may merge, consolidate or amalgamate with
another Person if (i) no Default or Event of Default shall have then occurred
and be continuing or would result therefrom, (ii) the Parent or the Borrower, as
the case may be, is the surviving entity in such consolidation or merger or, if
such other Person is the surviving entity in such consolidation or merger, such
other Person shall (A) be organized under the laws of the United States of
America or any State thereof and (B) have assumed all of the obligations of the
Parent or the Borrower, as the case may be, under this Agreement and the other
Loan Documents pursuant to agreements in form and substance satisfactory to the
Required Lenders and (iii) the Administrative Agent shall have received a
certificate of a Responsible Officer of the Parent or the Borrower, as the case
may be, to the effect that each of the conditions set forth in clauses (i) and
(ii) above have been satisfied.
8.4 Limitation on Certain Sales of Assets. Neither the Parent
nor the Borrower shall convey, sell, lease, assign, transfer or otherwise
dispose of (a) all or substantially all of the assets constituting any Principal
Property to any Person (other than to each other or as permitted under
subsection 8.3) in any single transaction or series of related
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42
transactions, provided that no Principal Property may be conveyed, sold,
assigned, transferred or otherwise disposed of to the Parent, unless the Parent
shall have executed and delivered such amendments and supplements to the Loan
Documents and such other agreements and documents as the Administrative Agent
may reasonably require in connection with the assumption by the Parent of all or
a portion of the obligations of the Borrower (including in respect of Liens on
any Export Receivables generated by the operation of such Principal Property)
under this Agreement and the other Loan Documents with respect to such Principal
Property (all such amendments, supplements and other agreements and documents to
be in form and substance satisfactory to the Administrative Agent) or (b) except
as provided in the Collateral Trust Agreement, any Export Receivables.
8.5 Limitation on Dividends. The Parent shall not declare or
pay any dividend (other than dividends payable solely in common stock of the
Parent) on, or make any payment on account of, or set apart assets for a sinking
or other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of Capital Stock of the Parent or
any warrants or options to purchase any such Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Parent or
any Subsidiary, provided that, so long as no Event of Default shall have then
occurred and be continuing or would result therefrom, the Parent may pay
dividends in respect of its common stock in an amount equal to 50% of
Consolidated Net Income for any fiscal quarter so long as such dividends are
paid on or before June 30 of the fiscal year next succeeding the fiscal year in
which such Consolidated Net Income was earned.
8.6 Issuance, Prepayment and Amendment of Secured Export Notes
and Additional Secured Obligations. The Borrower shall not (a) fail to comply
with the requirements of subsection 4.1, or (b) issue any Series A Secured
Export Notes the terms of which, or amend the terms of any outstanding Series A
Secured Export Notes to, include representations and warranties, covenants or
events of defaults which are more favorable to the holders of such Secured
Export Notes than those continued in this Agreement unless the Parent and the
Borrower shall amend this Agreement to include such representations and
warranties, covenants or events of default in this Agreement or, if applicable,
to amend the representations and warranties, covenants or events of default
contained in this Agreement to conform to such more favorable representations
and warranties, covenants or events of default, as the case may be.
8.7 Aggregate Program Outstandings and Additional Secured
Obligations; Total Collateral Percentages. Neither the Parent nor the Borrower
shall permit, at any time, (a) the sum of (i) the Outstanding Principal Amount
at such time and (ii) the Attributable Principal Amount of Additional Secured
Obligations then outstanding to exceed the Program Amount then in effect or (b)
the sum of (i) the SENS Total Collateral Percentage, (ii) the Credit Facility
Total Collateral Percentage and (iii) the aggregate Designated Total Collateral
Percentages for all Additional Secured Obligations to exceed 100% at any time.
8.8 Exclusion of Export Contracts. The Borrower shall not
exclude any Export Contracts pursuant to Section 2.02(b) of the Collateral Trust
Agreement (a) unless, at
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43
least five Business Days prior to the effectiveness of such exclusion, the
Borrower shall have delivered a certificate of a Responsible Officer of the
Borrower to the Administrative Agent demonstrating that the Borrower would have
been in compliance with subsection 8.1(d) for the most recent fiscal quarter if
Collections in respect of such Export Contracts had not been included for
purposes of determining compliance with such subsection for such fiscal quarter
or (b) at any time following the occurrence and during the continuation of an
Event of Default.
8.9 Designation and Termination of Designation of Additional
Percentages under the Collateral Trust Agreement. (a) At any time after the
occurrence and during the continuation of a Default or Event of Default, the
Borrower shall not designate any Additional Percentage for the benefit of any
Secured Parties (other than the Lenders and the Agents) pursuant to Section
2.04(a) of the Collateral Trust Agreement unless the Borrower shall designate a
ratable (calculated on the basis of the Basic Collateral Percentages of the
Secured Parties) Additional Percentage for the benefit of the Lenders and the
Agents pursuant to such Section.
(b) If the Borrower shall designate any Additional Percentage
for the benefit of the Lenders and the Agents pursuant to Section 2.04(a) of the
Collateral Trust Agreement, the Borrower shall not notify the Collateral Trustee
pursuant to Section 2.04(b) that such Additional Percentage shall no longer be
designated for the benefit of the Lenders and the Agents unless (a) at least
five Business Days prior to the delivery of such notice, the Borrower shall have
delivered the certificate required pursuant to subsection 7.2(b) demonstrating
that the Borrower would have been in compliance with subsection 8.1(d) for the
fiscal quarter relating to such certificate if Collections in respect of such
Additional Percentage during such fiscal quarter had not been included for
purposes of determining compliance with such subsection and (b) no Event of
Default shall have then occurred and be continuing.
SECTION 9. EVENTS OF DEFAULT; BLOCKING EVENTS
9.1 Events of Default. If any of the following events shall
occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
when due in accordance with the terms hereof; or the Borrower shall
fail to pay any interest on any Loan, or any other amount payable
hereunder, within five Business Days after any such interest or other
amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Parent or the Borrower herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement
or any such other Loan Document shall prove to
<PAGE> 50
44
have been incorrect in any material respect on or as of the date made
or deemed made; or
(c) Any Loan Party shall default in the observance or
performance of (i) any agreement contained in Section 8 (other than
subsection 8.2 (a) or 8.2(c)) or (ii) subsection 8.2(a) or 8.2(c) and
such default under subsection 8.2(a) or 8.2(c) shall continue
unremedied (x) in the case of a voluntary default, for 10 days after
the earlier of the day on which the Borrower or the Parent receives
written notice thereof or the day on which a Responsible Officer of the
Borrower or the Parent first obtains knowledge thereof and (y) in the
case of an involuntary default, for 45 days after the earlier of the
day on which a Responsible Officer of the Borrower or the Parent
receives written notice thereof or the day on which the Borrower or the
Parent first obtains knowledge thereof; or
(d) Any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any
other Loan Document (other than as provided in paragraphs (a) through
(c) of this Section), and such default shall continue unremedied for a
period of 30 days after the earlier of the day on which the Borrower or
the Parent receives written notice thereof or the day on which a
Responsible Officer the Borrower or the Parent first obtains knowledge
thereof; or
(e) One or more final, non-appealable judgments shall be
entered against the Parent, the Borrower and their respective
Subsidiaries involving in the aggregate a liability (to the extent not
paid or covered by insurance) in excess of $50,000,000, and such
judgments shall not have been vacated, discharged, stayed or bonded
within 60 days from the entry thereof; or
(f) (i) The Parent, the Borrower or any of their respective
Material Subsidiaries, or the Peruvian Branch, shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or the Parent, the
Borrower or any of their respective Material Subsidiaries, or the
Peruvian Branch, shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Parent, the
Borrower or any of their respective Material Subsidiaries, or the
Peruvian Branch, any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Parent, the Borrower or any of
their Material Subsidiaries, or the Peruvian Branch, any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets
<PAGE> 51
45
which results in the entry of an order for any such relief which shall
not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Parent, the Borrower
or any of their respective Material Subsidiaries, or the Peruvian
Branch, shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) the Parent, the Borrower or
any of their respective Material Subsidiaries, or the Peruvian Branch,
shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(g) Any Governmental Authority of the Republic of Peru shall
seize, nationalize, expropriate or otherwise compulsorily acquire all
or substantially all of the assets (including the concessions) of the
Parent or the Borrower without payment of adequate compensation; or
(h) (i) Any payment default shall occur with respect to any
Indebtedness of the Parent, the Borrower or any of their respective
Subsidiaries (including as a result of a Mandatory Prepayment Event) or
(ii) any event or condition occurs (other than a Mandatory Prepayment
Event) that results in any such Indebtedness becoming due prior to its
scheduled maturity; provided, however, that no Default or Event of
Default shall exist under this paragraph unless the aggregate amount of
Indebtedness outstanding in respect of which any default or other event
or condition referred to in this paragraph shall have occurred shall be
in excess of $30,000,000; or
(i) (x) The guarantee in Section 10 shall cease, for any
reason, to be in full force and effect or the Parent shall so assert,
(y) any Lien purported to be created by any Security Document shall
cease to be perfected or in full force and effect with respect to, or
shall not have the priority intended thereby with respect to, a
Material Portion of the Collateral; or (z) any Lien purported to be
created by any Security Document shall cease to be perfected or in full
force and effect with respect to, or shall not have the priority
intended thereby with respect to, a portion of the Collateral which
does not constitute a Material Portion of the Collateral and such
cessation is not cured, or Adequate Substitute Collateral is not
provided, within 30 days after the earlier of the day on which a
Responsible Officer of the Borrower or the Parent receives written
notice thereof or the day on which the Borrower or the Parent first
obtains knowledge thereof; the requirement to provide "Adequate
Substitute Collateral" shall be deemed satisfied if (i) the Borrower
designates, in accordance with Section 2.04 of the Collateral Trust
Agreement, an Additional Percentage interest in the Export Receivables
for the benefit of the Lenders (thereby increasing the Credit Facility
Total Collateral Percentage) equal to such percentage as may be
necessary to ensure that the Lenders will maintain the same interest
(on a contracted tonnage basis) in the Export Receivables (calculated
without including the Export Receivables as to which priority or
perfection has ceased) as such Lenders would have had but for the
cessation of perfection or priority or (ii) the Borrower shall provide
such other additional collateral to the Lenders as may be in an amount
and form satisfactory to the Administrative Agent; or
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46
(j) ASARCO Incorporated shall cease to own, directly or
indirectly (on a fully diluted basis), more than 50% of the outstanding
voting interests of the Parent or the Borrower; or
<PAGE> 53
47
(k) the Parent or the Borrower shall fail to deliver a notice
and Acknowledgment to any obligor on an Export Receivable if such
failure is attributable to an intention by the Parent or the Borrower
to avoid the security arrangement contemplated by the Collateral Trust
Agreement and such failure shall continue unremedied for a period of 10
days after the Parent or the Borrower receives written notice thereof
or a Responsible Officer of the Parent or the Borrower first obtains
knowledge thereof;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, any or all of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement to be due and payable forthwith,
whereupon the same shall immediately become due and payable, and (iii) with the
consent of the Required Lenders, the Administrative Agent and/or the Collateral
Agent may, or upon the request of the Required Lenders, the Administrative Agent
and/or the Collateral Agent shall, exercise all rights and remedies available to
it under the Security Documents (including, without limitation, the right of the
Collateral Agent to retain all or a portion of the Collections in the Credit
Facility Collateral Account and the right to deliver a Notice of Default under
Section 5.01 of the Collateral Trust Agreement), provided that, upon the
occurrence and during the continuation of an Event of Default, the Collateral
Agent shall retain the Blocked Collections in the Credit Facility Collateral
Account for a period not exceeding 30 days at the end of which the Collateral
Agent shall cease to retain the Blocked Collections and shall release any
Blocked Collections so retained unless otherwise instructed by the Required
Lenders, after making any deposit in the Credit Facility Reserve Account
necessary to maintain the Required Balance therein at such time. Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
9.2 Blocking Events. If any Blocking Event shall occur then,
and in any such event, the Collateral Agent shall retain the Blocked Collections
in the Credit Facility Collateral Account as additional collateral for the
Obligations pursuant to the Collateral Account Agreement until such Blocking
Event is cured. Following the cure of any such Blocking Event, there will no
further blocking of Collections in the Credit Facility Collateral Account as a
result of such Blocking Event and all Blocked Collections shall be released to
the Borrower, after making any deposit in the Credit Facility Reserve Account
necessary to maintain the Required Balance therein at such time.
<PAGE> 54
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SECTION 10. GUARANTEE
10.1 Guarantee. (a) To induce the Agents and the Lenders to
execute and deliver this Agreement and to induce the Lenders to make Loans to
the Borrower under this Agreement, the Parent hereby unconditionally and
irrevocably guarantees to the Agents and the Lenders and their respective
successors, permitted transferees and permitted assigns, the prompt and complete
payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations. The Parent further
agrees to pay any and all reasonable expenses (including, without limitation,
all reasonable fees and disbursements of counsel) which may be paid or incurred
by the Administrative Agent, the Collateral Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Parent under this Section 10. The
guarantee in this Section 10 shall remain in full force and effect until the
Obligations are paid in full and the Commitments are terminated, notwithstanding
that from time to time prior thereto the Borrower may be free from any
Obligations.
(b) No payment or payments made by the Borrower or any other
Person or received or collected by the Administrative Agent, the Collateral
Agent or any Lender from the Borrower or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application, at any time
or from time to time, in reduction of or in payment of the Obligations shall be
deemed to modify, release or otherwise affect the liability of the Parent under
this Section 10 which shall, notwithstanding any such payment or payments,
remain in full force and effect until the Obligations are paid in full and the
Commitments are terminated. The Parent agrees that whenever, at any time or from
time to time, it shall make any payment to the Administrative Agent, the
Collateral Agent or any Lender on account of its liability under this Section
10, it will notify the Administrative Agent, the Collateral Agent and such
Lender in writing that such payment is made under this Section 10 for such
purpose.
10.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Upon making any payment under this Section 10, the Parent shall be subrogated to
the rights of the payee against the Borrower with respect to such payment;
provided that the Parent shall not enforce such rights of subrogation until all
amounts owing to the Administrative Agent, the Collateral Agent and the Lenders
by the Borrower on account of the Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to the Parent on account
of such subrogation rights at any time when all of the Obligations shall not
have been paid in full or the Commitments shall not have been terminated, such
amount shall be held by the Parent in trust for the Administrative Agent, the
Collateral Agent and the Lenders, segregated from other funds of the Parent, and
shall, forthwith upon receipt by the Parent, be turned over to the
Administrative Agent in the exact form received by the Parent (duly indorsed by
the Parent to the Administrative Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine. The provisions of this paragraph shall survive the
termination of the guarantee contained in this Section 10, the payment in full
of the Obligations and the termination of the Commitments.
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10.3 Amendments, etc. with respect to the Obligations; Waiver
of Rights. The Parent shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Parent, and without notice to or
further assent by the Parent, any demand for payment of any of the Obligations
made by the Administrative Agent, the Collateral Agent or any Lender may be
rescinded by the Administrative Agent, the Collateral Agent or such Lender, and
any of the Obligations continued, and the Obligations, or the liability of any
other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent, the
Collateral Agent or any Lender, and this Agreement, the other Loan Documents,
and any other documents executed and delivered in connection herewith or
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Administrative Agent (or the Collateral Agent or the relevant
Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent, the Collateral Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released; provided,
however, that nothing shall increase the aggregate principal amount of the Loans
to an amount in excess of $600,000,000 without the written consent of the
Parent. Neither the Administrative Agent, the Collateral Agent nor any Lender or
its Affiliates shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Obligations or for the
guarantee contained in this Section 10 or any property subject thereto. When
making any demand hereunder against the Parent, the Administrative Agent, the
Collateral Agent or any Lender may, but shall be under no obligation to, make a
similar demand on the Borrower or any other guarantor, and any failure by the
Administrative Agent, the Collateral Agent or any Lender to make any such demand
or to collect any payments from the Borrower or any such other guarantor or any
release of the Borrower or such other guarantor shall not relieve the Parent of
its obligations or liabilities under this Section 10 and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of
the Administrative Agent, the Collateral Agent or any Lender against the Parent.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
10.4 Guarantee Absolute and Unconditional. The Parent waives,
to the fullest extent permitted by applicable law, any and all notice of the
creation, renewal, extension or accrual of any of the Obligations (other than
any increase in the aggregate principal amount of the Loans to an amount in
excess of $600,000,000) and notice of or proof of reliance by the Administrative
Agent, the Collateral Agent or any Lender upon the guarantee contained in this
Section 10 or acceptance of the guarantee contained in this Section 10; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon the guarantee contained in this Section 10 (other than any increase in the
aggregate principal amount of the Loans to an amount in excess of $600,000,000);
and all dealings between the Borrower or the Parent, on the one hand, and the
Administrative Agent, the Collateral Agent and the Lenders, on the other hand,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon the guarantee contained in this Section 10. The Parent waives, to
the fullest extent permitted by applicable law, diligence, presentment, protest,
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demand for payment and notice of default or nonpayment to or upon the Borrower
with respect to the Obligations. This Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of this Agreement, any Note or
any other Loan Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent, the Collateral Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower against the Administrative Agent, the Collateral Agent or any
Lender or (c) any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or the Parent) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Obligations, in bankruptcy or in any other instance. When pursuing its rights
and remedies hereunder against the Parent, the Administrative Agent, the
Collateral Agent and any Lender may, but shall be under no obligation to, pursue
such rights and remedies as it may have against the Borrower or any other Person
or against any collateral security or guarantee for the Obligations or any right
of offset with respect thereto, and any failure by the Administrative Agent, the
Collateral Agent or any Lender to pursue such other rights or remedies or to
collect any payments from the Borrower or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of the Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve the Parent
of any liability hereunder and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent, the Collateral Agent or any Lender against the Parent. The
guarantee contained in this Section 10 shall remain in full force and effect and
be binding in accordance with and to the extent of its terms upon the Parent and
its successors and shall inure to the benefit of the Administrative Agent, the
Collateral Agent and the Lenders, and their respective successors, permitted
transferees and permitted assigns, until all the Obligations and the obligations
of the Parent under this Section 10 shall have been satisfied by payment in full
and the Commitments shall be terminated, notwithstanding that from time to time
during the term of this Agreement the Borrower may be free from any Obligations.
10.5 Reinstatement. The guarantee contained in this Section 10
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent, the
Collateral Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any substantial part of its property, or otherwise,
all as though such payment had not been made.
10.6 Payments. The Parent hereby agrees that the Obligations
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the office of the Administrative Agent specified in or pursuant to
subsection 12.2.
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SECTION 11. THE AGENTS
11.1 Appointment. (a) Each Lender hereby irrevocably
designates and appoints Morgan Guaranty Trust Company of New York as the
Administrative Agent of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes Morgan Guaranty Trust
Company of New York, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Each Lender hereby irrevocably appoints Deutsche Bank AG, New York Branch as the
Collateral Agent of such Lender under this Agreement and the other Loan
Documents and each such Lender hereby authorizes Deutsche Bank AG, New York
Branch, in such capacity, to take such actions on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Collateral
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Each Lender acknowledges
and agrees that The Chase Manhattan Bank shall be the Documentation Agent with
respect to this Agreement and the other Loan Documents and that Citicorp
Securities, Inc. shall be the Syndication Agent with respect to this Agreement.
The Documentation Agent and the Syndication Agent shall not have any duties or
obligations following the Closing Date.
(b) Notwithstanding any provision to the contrary elsewhere in
this Agreement, no Agent shall have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any Agent.
11.2 Delegation of Duties. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
11.3 Exculpatory Provisions. No Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Parent, the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by any Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower or any other Loan Party to perform its
obligations hereunder or thereunder. No Agent shall be under any obligation to
any
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Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, except, in the Administrative Agent's case, for verification of
delivery to it of the items required to be delivered pursuant to subsection 6.1,
or to inspect the properties, books or records of the Borrower or any other Loan
Party.
11.4 Reliance by Agents. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by such Agent. Each Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. Each Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Lenders entitled to so
act, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders and all future holders of the Loans.
11.5 Notice of Default. Except with respect to payments of
principal and interest on the Loans and commitment fees hereunder to be made to
the Administrative Agent for the account of the Lenders, no Agent shall be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless such Agent has received notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders and the Collateral Agent. The Administrative
Agent and the Collateral Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Lenders
entitled to so act; provided that unless and until the Administrative Agent or
the Collateral Agent, as the case may be, shall have received such directions,
the Administrative Agent or the Collateral Agent, as the case may be, may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
11.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that no Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by any Agent hereafter taken, including any
review of the affairs of the Borrower or any other Loan Party, shall be deemed
to constitute any representation or warranty by any Agent to any Lender. Each
Lender represents to the Agents that it has, independently and without
<PAGE> 59
53
reliance upon any Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties and
risks relating to the Republic of Peru and made its own decision to make its
Loans hereunder and enter into this Agreement. Each Lender also represents that
it will, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower or the other Loan
Parties which may come into the possession of such Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
11.7 Indemnification. The Lenders agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Voting Percentages in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Agent in any way relating to
or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by such Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from such Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the payment
of the Loans and all other amounts payable hereunder.
11.8 Agents in Their Individual Capacities. Each Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though such Agent were not an Agent
hereunder or under the other Loan Documents. With respect to the Loans made by
it, each Agent shall have the same rights and powers under this Agreement and
the other Loan Documents as any Lender and may exercise the same as though it
were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent
in its individual capacity.
11.9 Successor Administrative and Collateral Agents. The
Administrative Agent and the Collateral Agent may resign as Administrative Agent
or Collateral Agent, as the case may be, upon 30 days' notice to the Lenders. If
the Administrative Agent or the Collateral Agent shall resign as Administrative
Agent or Collateral Agent, as the case may
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54
be, under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Administrative Agent or
Collateral Agent, as the case may be, hereunder. Effective upon such appointment
and approval, the term "Administrative Agent" or "Collateral Agent", as the case
may be, shall mean such successor agent, and the former Administrative Agent's
or Collateral Agent's, as the case may be, rights, powers and duties as
Administrative Agent or Collateral Agent, as the case may be, shall be
terminated, without any other or further act or deed on the part of such former
Administrative Agent or Collateral Agent, as the case may be, or any of the
parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's or Collateral Agent's, as the case may be, resignation as
Administrative Agent or Collateral Agent, as the case may be, the provisions of
this Section 11 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent or Collateral Agent, as the
case may be, under this Agreement and the other Loan Documents.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof, may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent or the Collateral Agent, as the case
may be, shall, from time to time, (x) enter into with the relevant Loan Parties
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (y) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default or Blocking Event
and its consequences; provided, however, that (a) no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or extend the
scheduled date of maturity of any Loan or of any installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the expiration date
of any Lender's Commitment, in each case without the consent of each Lender, or
(ii) amend, modify or waive any provision of this subsection or reduce the
percentage specified in the definition of Required Lenders, or consent to the
assignment or transfer by the Parent or the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, or, except as
otherwise provided herein, release the Parent from its obligations under Section
10 or all or substantially all of the Collateral (including by lowering the
basis on which the Credit Facility Basic Collection Percentage is calculated
under the Collateral Trust Agreement), in each case without the written consent
of all the Lenders, or (iii) amend, modify or waive any provision of Section 11
without the written consent of the then Administrative Agent and the then
Collateral Agent and (b) the Collateral Agent shall be permitted to consent to
amendments under Section 8.04(a) of the Collateral Trust Agreement which do not
require
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55
the approval of the Lenders pursuant to the proviso to such Section 8.04. Any
such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Parent, the
Borrower, the Lenders, the Agents and all future holders of the Loans. In the
case of any waiver, the Parent, the Borrower, the Lenders and the Agents shall
be restored to their former positions and rights hereunder and under the other
Loan Documents, and any Default, Event of Default or Blocking Event waived shall
be deemed to be cured and not continuing; no such waiver shall extend to any
subsequent or other Default, Event of Default or Blocking Event or impair any
right consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, when delivered, or (c) in
the case of delivery by facsimile transmission, when sent and receipt has been
confirmed, addressed as follows in the case of the Parent, the Borrower, the
Collateral Agent and the Administrative Agent, and as set forth below their
signatures hereto in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:
The Parent: Southern Peru Copper Corporation
180 Maiden Lane
New York, New York 10038
Telephone Number: (212) 510-2316
Telecopy Number: (212) 510-1990
Attention: Treasurer
with a copy to: E. Waide Warner, Jr., Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone Number: (212) 450-4460
Telecopy Number: (212) 450-5560
The Borrower: Southern Peru Limited
180 Maiden Lane
New York, New York 10038
Telephone Number: (212) 510-2316
Telecopy Number: (212) 510-1990
Attention: Treasurer
with a copy to: E. Waide Warner, Jr., Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone Number: (212) 450-4460
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56
Telecopy Number: (212) 450-5560
The Administrative
Agent: Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services Inc.
500 Stanton Christina Road
Newark, Delaware 19713
Telephone Number: (302) 634-4204
Telecopy Number: (302) 634-4267
Attention: William Wood
The Collateral Agent: Deutsche Bank AG, New York Branch
31 West 52nd Street, 9th Floor
New York, New York 10019
Telecopy Number: (212) 469-8979
Attention: James R. Lewis
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 3.2, 3.4, 4.2 or 4.13 shall not
be effective until received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent, the
Collateral Agent or any Lender, any right, remedy, power or privilege hereunder
or under the other Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein and therein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
12.4 Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Agents for all their reasonable out-of-pocket costs and
expenses incurred in connection with the preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of common
counsel to the Agents, (b) to pay or reimburse each Lender, the Administrative
Agent and the Collateral Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the fees and disbursements of counsel to the Administrative
Agent and the Collateral Agent or, if a
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57
Lender reasonably determines that it is advisable, because of a reasonably
apparent conflict of interest, for such Lender to be represented by outside
counsel, outside counsel to such Lender (c) to pay, indemnify and hold each
Lender, the Administrative Agent and the Collateral Agent harmless from any and
all recording and filing fees and any and all liabilities with respect to, or
resulting from any delay of the Borrower in paying, any stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, this Agreement, the other Loan Agreements and
any such other documents or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender, the Administrative Agent and the Collateral Agent harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement and
performance of this Agreement, the other Loan Documents and any such other
documents, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any of
their respective properties (all the foregoing in this clause (d), collectively,
the "indemnified liabilities"), provided that the Borrower shall not have any
obligation hereunder to the Administrative Agent, the Collateral Agent or any
Lender with respect to indemnified liabilities arising from the gross negligence
or willful misconduct of the Administrative Agent, the Collateral Agent or such
Lender. The agreements in this subsection shall survive repayment of the Loans
and all other amounts payable hereunder.
12.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the Parent,
the Borrower, the Lenders, the Agents and their respective successors and
assigns, except that neither the Parent nor the Borrower may assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of each Lender.
(b) Any Lender may, in the ordinary course of its lending
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Parent,
the Borrower, the Administrative Agent and the Collateral Agent shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan Documents. No
Lender shall be entitled to create in favor of any Participant, in the
participation agreement pursuant to which such Participant's participating
interest shall be created or otherwise, any right to vote on, consent to or
approve any matter relating to this Agreement or any other Loan Document except
for those specified in clauses (i) and (ii) of the proviso to subsection 12.1.
The Parent and the Borrower agree that if
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58
amounts outstanding under this Agreement are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall, to the maximum extent permitted by applicable
law, be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 12.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 4.9, 4.10 and 4.11 (subject, however, to
the obligations set forth in subsection 4.12) with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it were a
Lender; provided that, in the case of subsection 4.10, such Participant shall
have complied with the requirements of said subsection and provided, further,
that no Participant shall be entitled to receive any greater amount pursuant to
any such subsection than the transferor Lender would have been entitled to
receive in respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its lending
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any Affiliate thereof or, with the consent of the
Borrower and the Administrative Agent (which in each case shall not be
unreasonably withheld), to an additional bank or financial institution (an
"Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit G, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender or
an affiliate thereof, by the Administrative Agent and, subject to clause (iv)
below, the Borrower) and delivered to the Administrative Agent for its
acceptance and recording in the Register, provided that, (i) in the case of any
such assignment to an additional bank or financial institution, the sum of the
aggregate principal amount of the Loans and the aggregate amount of the unused
Commitments being assigned and, if such assignment is of less than all of the
rights and obligations of the assigning Lender, the sum of the aggregate
principal amount of the Loans and the aggregate amount of the unused Commitments
remaining with the assigning Lender are each not less than $5,000,000 (or such
lesser amount as may be agreed to by the Borrower and the Administrative Agent),
(ii) in the case of any such assignment to a Lender or any Affiliate thereof,
the Administrative Agent shall promptly following its receipt of the relevant
Assignment and Acceptance notify the Borrower thereof, (iii) any assignment by a
Lender of a portion of its Term Loan Commitment or Term Loans must include an
assignment of an equal percentage of its Revolving Credit Commitment or, in the
case of assignments after the Commitment Termination Date, Revolving Loans, (iv)
any assignment by a Lender of its Revolving Credit Commitment or in the case of
assignments after the Commitment Termination Date, Revolving Loans must include
an assignment of an equal percentage of its Term Loan Commitment or Term Loans,
and (iv) notwithstanding the foregoing, the consent of the Borrower shall not be
required with respect to any such assignment by a Lender which has incurred
costs of the type described in the proviso to subsection 4.9(a) or 4.9(b) for
which it is not then being compensated by the Borrower. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such
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59
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with Commitments as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this subsection, the
consent of the Borrower shall not be required, and, unless requested by the
Assignee and/or the assigning Lender, new Notes shall not be required to be
executed and delivered by the Borrower for any assignment which occurs at any
time when any of the events described in subsection 9.1(f) shall have occurred
and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
12.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Parent, the Borrower, the Administrative
Agent, the Collateral Agent and the Lenders may (and, in the case of any Loan or
other obligation hereunder not evidenced by a Note, shall) treat each Person
whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being made
in the Register.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an Affiliate thereof, by the Borrower (when required in
accordance with paragraph (c) above) and the Administrative Agent), together
with payment to the Administrative Agent of a registration and processing fee of
$3,500, the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower.
(f) The Parent and the Borrower authorize each Lender to
disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee any and all financial information in such Lender's
possession concerning the Parent and the Borrower which has been delivered to
such Lender by or on behalf of the Parent and the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Parent and the Borrower in connection with such Lender's credit evaluation of
the Parent, the Borrower and its Subsidiaries prior to becoming a party to this
Agreement, provided that any such Transferee and prospective Transferee shall
agree in writing to keep confidential all non-public information provided to
such Lender by the Parent or the Borrower pursuant to this Agreement that is
designated by the Parent or the Borrower in
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60
writing as confidential; provided, further that such Transferee or prospective
Transferee shall not be prevented from disclosing any such information (i) to
any Agent or any other Lender, (ii) to its employees, directors, agents,
attorneys, accountants and other professional advisors, (iii) upon the request
or demand of any Governmental Authority having jurisdiction over such Person,
(iv) in response to any order of any court or other Governmental Authority or as
may otherwise be required pursuant to any Requirement of Law, (v) which has been
publicly disclosed other than in breach of such agreement, or (vi) in connection
with the exercise of any remedy hereunder. All such information shall be treated
confidentially by any Transferee or prospective Transferee, and the respective
Lender shall take appropriate measures to assure such confidentiality.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
12.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof, in a greater
proportion than any such payment to or collateral received by any other relevant
Lender, if any, in respect of such other Lender's Loans, or interest thereon,
such benefitted Lender shall purchase for cash from the other relevant Lenders a
participating interest in such portion of each such other Lender's Loans, or
shall provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Parent or the Borrower, any such notice being expressly waived by the Parent and
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Parent or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the Parent
or the Borrower. Each Lender agrees promptly to notify the Parent, the Borrower
and the Administrative Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
12.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile
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transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
12.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Parent, the Borrower, the Agents and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by any Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12.12 Submission To Jurisdiction; Waivers. Each of the Parent
and the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives to the extent permitted by law any objection
that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to it at its address set forth in subsection 12.2 or at such
other address of which the Administrative Agent shall have been
notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
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12.13 Waiver of Immunities. To the extent that the Parent or
the Borrower has or hereafter may acquire any immunity (sovereign or otherwise)
from any legal action, suit or proceeding, from jurisdiction of any court or
from set-off or any legal process (whether service or notice, attachment prior
to judgment, attachment in aid of execution of judgment, execution of judgment
or otherwise) with respect to itself or any of its property, each of the Parent
and the Borrower hereby irrevocably waives and agrees not to plead or claim such
immunity in respect of its obligations under this Agreement and the other Loan
Documents. Each of the Parent and the Borrower agrees that the waivers set forth
above shall have the fullest extent permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States of America and are intended to be
irrevocable and not subject to withdrawal for purposes of such Act.
12.14 Judgment Currency. (a) If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due hereunder in one
currency into another currency, the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Administrative Agent
could purchase the first currency with such other currency in the city in which
is located the Administrative Agent's account for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of each party hereto in respect of any sum
due to any other party hereto shall, notwithstanding any judgment in a currency
(the "Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by such party of any sum adjudged to be so due in the Judgment Currency,
such party may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of the Agreement
Currency so purchased is less than the sum originally due to such party in the
Agreement Currency, such other party agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such party against such loss,
and if the amount of the Agreement Currency so purchased exceeds the sum
originally due to any party to this Agreement, such party agrees to remit to
such other party such excess.
12.15 Acknowledgements. Each of the Parent and the Borrower
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither any Agent nor any Lender has any fiduciary
relationship with or duty to the Parent or the Borrower arising out of
or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Administrative Agent, the
Collateral Agent and the Lenders, on the one hand, and the Parent and
the Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
<PAGE> 69
63
(c) neither a joint venture nor a partnership is created
hereby or by the other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Lenders or among the
Parent, the Borrower, the Agents and the Lenders.
12.16 WAIVERS OF JURY TRIAL. THE PARENT, THE BORROWER,
THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.17 Peruvian Branch. Without prejudice to any other
provision or agreement contained herein, the Borrower hereby represents and
warrants that all obligations of the Borrower under this Agreement and the other
Loan Documents (without any further action by the Borrower or the Peruvian
Branch) constitute legal, valid and binding obligations of the Peruvian Branch
enforceable against the Peruvian Branch in accordance with their respective
terms, subject to the effects of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
<PAGE> 70
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
SOUTHERN PERU COPPER CORPORATION
By: /s/ Thomas J. Findley
-------------------------------------
Title: Treasurer
SOUTHERN PERU LIMITED
By: /s/ Thomas J. Findley
-------------------------------------
Title: Treasurer
<PAGE> 71
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent and as a
Lender
By: /s/ Robert A. Gray
---------------------------------------
Title: Vice President
<PAGE> 72
THE CHASE MANHATTAN BANK, as
Documentation Agent and as a Lender
By: /s/ Dan Rouse
-----------------------------------
Title: Vice President
<PAGE> 73
CITICORP SECURITIES, INC., as Syndication
Agent
By: /s/ Richard Noritake
--------------------------------------
Title: Vice President
CITIBANK N.A., as a Lender
By: /s/ Raymond G. Dunning
--------------------------------------
Title: Vice President
<PAGE> 74
CREDIT SUISSE FIRST BOSTON
By: /s/ Drew von Glahn
---------------------------------
Title: Director
By: /s/ Clemens Kramer
---------------------------------
Title: Associate
<PAGE> 75
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Collateral Agent and as a Lender
By: /s/ Richard G. Reeves
----------------------------------
Title: Vice President
By: /s/ Jim Lewis
----------------------------------
Title: Vice President
<PAGE> 76
GOLDMAN SACHS CREDIT PARTNERS L.P.
By: /s/ Ed Forst
----------------------------------
Title: Managing Director
<PAGE> 77
THE BANK OF NOVA SCOTIA
By: /s/ J. Alan Edwards
-------------------------------
Title: Authorized Signatory
<PAGE> 78
DRESDNER BANK LUXEMBOURG S.A.
By: /s/ Adrian Glaesner
---------------------------------
Title: Legal Advisor
By: /s/ Peter Wanken
---------------------------------
Title: Manager
<PAGE> 79
BANCO BILBAO VIZCAYA,
NEW YORK BRANCH
By: /s/ Carlos Deprit
----------------------------------
Title: Senior Vice President
By: /s/ Alejandro Lorca
----------------------------------
Title: Vice President
<PAGE> 80
BANCO CONTINENTAL
By: /s/ Alfonso Zarate Rivas
----------------------------------
Title: Central Manager
By: /s/ Enrique Hermosa Hoyle
----------------------------------
Title: Central Manager
<PAGE> 81
BANQUE NATIONALE DE PARIS
By: /s/ Eva Millas Russo
-------------------------------------
Title: Vice President
<PAGE> 82
CREDIT LYONNAIS
By: /s/ James F. Guidera
------------------------------------
Title: Vice President
<PAGE> 83
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/ David Thackray
-------------------------------------------
Title: Vice President, Foreign Corporate Group
By: /s/ Michelle Vensel
----------------------------------------------
Title: Assistant Vice President,
Foreign Corporate Group
<PAGE> 84
BANCO DE CREDITO DEL PERU
By: /s/ Jesus Zamora Leon
----------------------------------
Title: Managing Director
<PAGE> 85
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By: /s/ Richard J. Pearse
-----------------------------------
Title: Managing Director
By: /s/ Arminee Bowler
-----------------------------------
Title: Managing Director
<PAGE> 86
CIBC INC.
By: /s/ Lindsey Gordon
-------------------------------------------
Title: Director CIBC Wood Gundy Securities
Corp., as agent
<PAGE> 87
BANKERS TRUST COMPANY
By: /s/ Robert R. Bose
-----------------------------------
Title: Managing Director
<PAGE> 88
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/ Alan Loisy
-----------------------------------
Title: First Vice President and
Manager
By: /s/ Jean-Baptiste Gauthier
-----------------------------------
Title: Vice President
<PAGE> 89
BANCO LATINOAMERICANO DE
EXPORTACIONES, S.A.
By: /s/ Daniel Casal
-----------------------------------
Title: Senior Vice President
By: /s/ Gianni Versari
-----------------------------------
Title: Vice President
<PAGE> 90
BANQUE INDOSUEZ
By: /s/ S. de Beaufort
-----------------------------------
Title: First Vice President
By: /s/ M. Annez de Taboada
-----------------------------------
Title: Vice President
<PAGE> 91
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Sylvia Noriega
--------------------------------------
Title: Director
<PAGE> 92
BANQUE SUDAMERIS
MIAMI AGENCY
By: /s/ Kenneth Granberry
-----------------------------------
Title: First Vice President
By: /s/ Margarita Ruiz
-----------------------------------
Title: Officer
<PAGE> 93
GENERALE BANK
By: /s/ E. Matthews
-----------------------------------
Title: Senior Vice President
By: /s/ Paul Cardoen
-----------------------------------
Title: Senior Vice President
<PAGE> 94
ROYAL BANK OF CANADA
By: /s/ Peter D. Steffen
---------------------------------
Title: Senior Manager
<PAGE> 1
EXHIBIT 10.10
CONFORMED COPY
FIRST AMENDMENT, dated as of July 14, 1997 (this "AMENDMENT"), to the
Credit and Guarantee Agreement, dated as of March 31, 1997 (the "CREDIT
AGREEMENT"), among SOUTHERN PERU COPPER CORPORATION, a Delaware Corporation (the
"PARENT"), SOUTHERN PERU LIMITED, a Delaware corporation (the "BORROWER"), the
several banks and other financial institutions from time to time parties to the
Credit Agreement (collectively, the "LENDERS"); individually, a "LENDER"),
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), THE CHASE MANHATTAN
BANK, as Documentation Agent for the Lenders, CITICORP SECURITIES, INC., as
Syndication Agent, and DEUTSCHE BANK AG, NEW YORK BRANCH, as Security and
Collateral Agent for the Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to subsection 8.6(b) of the Credit Agreement (as
waived pursuant to the Waiver, dated as of May 30, 1997), the Borrower has
agreed to amend the Credit Agreement on or prior to July 15, 1997 to include any
representations and warranties, covenants or events of default applicable to the
Series A Secured Export Notes which are more favorable to the holders of such
Series A Secured Export Notes than those contained in the Credit Agreement;
WHEREAS, the Borrower and the Lenders have agreed upon the amendments
to be made in order for the Borrower to comply with subsection 8.6(b) of the
Credit Agreement; and
WHEREAS, the Borrower has requested an amendment to subsection 8.5 of
the Credit Agreement and certain amendments to the Collateral Trust Agreement,
and the Lenders wish to take certain action in respect of the Collateral Trust
Agreement, all as provided herein;
NOW THEREFORE, in consideration of the premises contained herein,
the parties hereto agree as follows;
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein are so used as so defined.
2. Amendments to Subsection 1.1. Subsection 1.1 of the Credit Agreement
is hereby amended as follows:
<PAGE> 2
(a) by deleting the definition of "Blocked Collections", "Ilo
Smelter" and "Ilo Refinery" in their entireties and substituting in
lieu thereof the following new definitions:
"BLOCKED COLLECTIONS": at any time, (a) if the Outstanding Principal
Amount is less than $300,000,000 at such time, 100% of the Collections
transferred to the Credit Facility Collateral Account pursuant to the Collateral
Trust Agreement, (b) if the Outstanding Principal Amount is less than or equal
to $500,000,000 but greater than or equal to $300,000,000 at such time, 75% of
the Collections transferred to the Credit Facility Collateral Account pursuant
to the Collateral Trust Agreement and (c) if the Outstanding Principal Amount is
greater than $500,000,000 at such time, 50% of the Collections transferred to
the Credit Facility Collateral Account pursuant to the Collateral Trust
Agreement. Such percentages shall be calculated following funding of the Credit
Facility Reserve Account to the extent necessary to cause the amount on deposit
in the Credit Facility Reserve Account to be equal to the Required Balance at
such time.
"ILO REFINERY" means the copper refinery located in Ilo, Peru,
including, without limitation, the essential buildings, structures and equipment
and the processing and other concessions relating thereto.
"ILO SMELTER" means the copper smelter located in Ilo, Peru, including,
without limitation, the essential buildings, structures and equipment and the
process and other concessions relating thereto.
(b) by adding the words "after March 31, 1997" after the word
"change" the first time such word appears in clause (iii) of the
definition of "Consolidated Net Worth";
(c) by (i) deleting the word "and" after clause (b) of the
first sentence of the definition of "Indebtedness" and (ii) adding a
new clause after such clause (c) to read in its entirety as follows:
"and (d) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed
or otherwise become liable for the payment thereof";
(d) by adding the words "or replaced" after the word "amended"
in the definition of "PAMA";
(e) by deleting the words "by more than 30 days" appearing in
clause (c) of the definition of "Permitted Principal Property Liens";
2
<PAGE> 3
(f) by adding the following definitions in the proper
alphabetical order:
"ANNUAL SALES CERTIFICATE": as defined in subsection 8.10.
"CERTIFIED EXPORT SALES": as defined in subsection 8.10.
"COPPER SUBSIDIARY": as defined in subsection 8.11.
"DOMESTIC PERCENTAGE": as defined in subsection 8.10.
"DOMESTIC SALES": as defined in subsection 8.10.
"EXCESS DOMESTIC PERCENTAGE": as defined in subsection 8.10.
"RESTRICTED PAYMENTS": as defined in subsection 8.5.
"TOTAL SALES": as defined in subsection 8.10.
3. Amendments to Section 7. Section 7 of the Credit Agreement is hereby
amended by adding a new subsection at the end of such Section to read in its
entirety as follows:
"7.10 Preservation of Security Interest. The Borrower shall,
at its own cost and expense, make all filings and recordings in the
United States, Peru, if any, and any other applicable jurisdictions
(including, without limitation, financing statements and continuation
statements) and take all other steps in the United States, Peru, if
any, and any other applicable jurisdictions necessary to preserve,
perfect and protect the Collateral Trustee's interest in the Collateral
(as defined in the Collateral Trust Agreement) and the Administrative
Agent's interest in the Credit Facility Collateral (as defined in the
Collateral Account Agreement), and will defend, at its own cost and
expense, the right, title and interest of the Collateral Trustee in and
to the Collateral (as defined in the Collateral Trust Agreement) and
the right, title and interest of the Administrative Agent in and to the
Credit Facility Collateral (as defined in the Collateral Account
Agreement)."
4. Amendments to Section 8. Section 8 of the Credit Agreement is hereby
amended as follows:
3
<PAGE> 4
(a) by deleting the words "all or substantially all of the
assets constituting" appearing in subsection 8.4;
(b) by deleting the proviso in subsection 8.5 and substituting
in lieu thereof the following:
"other than in connection with employee benefit or stock award
plans (whether now existing or hereafter created) in the
ordinary course of business (such declarations, payments,
setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein
called "Restricted Payments"), provided that long as no Event
of Default shall have then occurred and be continuing or would
result therefrom, the Parent may make Restricted Payments in
an amount equal to 50% of Consolidated Net Income for any
fiscal quarter so long as such Restricted Payments are paid on
or before June 30 of the fiscal year next succeeding the
fiscal year in which such Consolidated Net Income was earned";
(c) by adding the words "or Blocking Event" after the words
"Event of Default" appearing in paragraph (a) of subsection 8.9; and
(d) by adding two new subsections at the end of such Section
to read in their entireties as follows:
"8.10 Export Sales. On or prior to January 15 of each calendar
year, the Borrower shall deliver to the Collateral Trustee and the
Administrative Agent a certificate of Responsible Officer (the "Annual
Sales Certificate") certifying for such calender year (i) the budgeted
amount of short tons of Copper to be sold to customers located within
Peru (other than sales effected through any Peruvian Governmental
Authority to customers located outside Peru) ("Domestic Sales"), (ii)
the budgeted amount of short tons of Copper to be sold to customers
located outside Peru (including sales effected through any Peruvian
Governmental Authority to customers located outside Peru, but excluding
Copper to be sold under Excluded Export Contracts for such year) (the
"Certified Export Sales") and (iii) the aggregate budgeted amount of
short tons of Copper to be sold pursuant to Excluded Export Contracts
(the sum of clauses (i), (ii) and (iii) (the "Total Sales")). If, in
any calendar year when the Certified Export Sales are less than 320,000
short tons, the ratio of Domestic Sales to Total Sales, expressed as a
percentage (the "Domestic Percentage") exceeds 20% (such percentage, to
the extent exceeding 20%, shall
4
<PAGE> 5
hereinafter be referred to as the "Excess Domestic Percentage"), then
the Program Amount in effect for such year shall be reduced for such
year by an amount equal to the product of the Excess Domestic
Percentage and the Program Amount which would otherwise have been in
effect on the first day of such year (after giving effect to the
application of Section 2.02 of the Collateral Trust Agreement). If
during any calendar year the Borrower becomes aware that the Domestic
Percentage will be increased as a result of an increase in Domestic
Sales in excess of the budgeted amount set forth on the Annual Sales
Certificate previously delivered for such calendar year (calculated on
a pro rata basis for the portion of the calendar year remaining) and
the Domestic Percentage will, as a result thereof, exceed 20% (or
increase further above 20%), then, within 5 Business Days of becoming
so aware, the Borrower shall deliver to the Collateral Trustee and the
Administrative Agent a certificate of a Responsible Officer in
replacement for the Annual Sales Certificate previously delivered and
the Program Amount shall be recalculated on a pro rata basis as set
forth in the preceding sentence for the remainder of the calendar year;
provided, however, that for purposes of this sentence the increase in
Domestic Sales shall be deemed to equal the amount by which the
increase in Domestic Sales exceeds the increase, if any, in the amount
of the Total Sales, each as set forth in the Annual Sales Certificate
previously delivered for such calendar year.
8.11 Subsidiaries. In the event that any direct or indirect
Subsidiary (other than the Borrower) of the Parent sells Copper (which
is produced at any of the Principal Properties or the SX/EW Facility
(as defined in the Collateral Trust Agreement) from copper mined or
leached at any of the Principal Properties or from purchased copper
(each such Subsidiary, a "Copper Subsidiary")), the Parent shall cause,
immediately after any such sale, each Copper Subsidiary to enter into a
supplement or amendment to the Collateral Trust Agreement to grant a
security interest to the Collateral Trustee (for the benefit of the
Secured Parties) in such Copper Subsidiary's Export Contracts, Export
Receivables and Proceeds thereof and any other interests described in
Section 2.01(a) of the Collateral Trust Agreement and to take the other
actions with respect to such Copper Subsidiary's Export Receivables,
Export Contracts and Proceeds thereof required to be taken by the
Issuer under the Collateral Trust Agreement with respect to Export
Receivables, Export Contracts and the Proceeds thereof, including,
without limitation, the notification obligations and obligations with
respect to Acknowledgments set forth in Section 3.02 of the Collateral
Trust Agreement, and the obligations to perfect the security interest
granted under the Collateral Trust Agreement."
5
<PAGE> 6
5. Amendments to Section 9. Section 9 of the Credit Agreement is hereby
amended as follows:
(a) by deleting clause (ii) of paragraph (c) of subsection 9.1
and substituting in lieu thereof the following:
"(ii) subsection 8.2(a) or 8.2(c) and such default under
subsection 8.2(a) or 8.2(c) shall continue unremedied (x) in
the case of a Lien created, incurred or assumed by the
Borrower or the Parent in violation of such subsections, for
10 days after the earlier of the day on which the Borrower or
the Parent receives written notice thereof or the day on which
a Responsible Officer of the Borrower or the Parent first
obtains knowledge thereof and (y) in the case of a Lien
permitted to exist in violation of such subsections, for 45
days after the earlier of the day on which a Responsible
Officer of the Borrower or the Parent receives written notice
thereof or the day on which the Borrower or the Parent first
obtains knowledge thereof":
(b) by adding the word "or" at the end of paragraph (k) of
subsection 9.1;
(c) by adding a new paragraph after paragraph (k) of
subsection 9.1 to read in its entirety as follows:
"(l) it becomes unlawful for the Borrower or the Parent to
perform any of its obligations under this Agreement or any
other Loan Document if the failure to so perform would result
in a Material Adverse Effect; the Obligations cease to be
valid, binding and enforceable in accordance with their terms
or the binding effect or enforceability thereof shall be
contested by the Borrower or the Parent; or the Borrower or
the Parent shall deny in writing or by public announcement
that it has any further liability or obligation hereunder or
in respect hereof;"; and
(d) by adding a proviso at the end of the first sentence of
subsection 9.2 to read in its entirety as follows:
"; provided that, in the event that any Collections are
retained in any SENS Collateral Account solely as a result of
a Debt Service Retention Event (as defined in the Indenture,
dated as of May 30, 1997 (the "Indenture"), among the
Borrower, the Parent and
6
<PAGE> 7
Citibank, N.A., as trustee, relating to the Secured Export
Notes), the Collateral Agent shall retain the Blocked
Collections in the Credit Facility Collateral Account as
additional collateral for the Obligations pursuant to the
Collateral Account Agreement for so long as Collections are
being retained in any SENS Collateral Account as a result of
such Debt Service Retention Event and, upon the release or
application of such Collections from such SENS Collateral
Account, the Collateral Agent shall, so long as no Default or
Event of Default shall have then occurred and be continuing
and so long as no Blocking Event (other than as a result of
such Debt Service Retention Event) shall have then occurred
and be continuing, use the Blocked Collections so retained in
the Credit Facility Collateral Account to make any payment
then due and payable hereunder in respect of the principal of
or interest on the Loans or, if no such amount is then due and
payable, shall release such Blocked Collections to the
Borrower".
6. Amendment to Collateral Trust Agreement; Direction to Collateral
Trustee. (a) The Lenders hereby consent to the amendment of the Collateral Trust
Agreement substantially in the form set forth in Exhibit A hereto.
(b) The Lenders hereby authorize the Administrative Agent, in
its discretion, to direct the Collateral Trustee to make the transfer
of funds required pursuant to the second sentence of Section 3.02 of
the Collateral Trust Agreement as of 3:00 P.M. on every Business Day
with respect to funds then on deposit in the Collection Account rather
than as of the opening of business of such Business Day as currently
specified in such sentence.
7. Effectiveness. This Amendment shall become effective as of the date
hereof upon receipt by the Administrative Agent of counterparts of this
Amendment duly executed and delivered by the Parent, the Borrower and the
Required Lenders.
8. Continuing Effect; No Other Amendments. Except as expressly amended
hereby, all the terms and provisions of the Credit Agreement are and shall
remain in full force and effect. The amendments provided for herein are limited
to the specified subsections of the Credit Agreement specified herein and shall
not constitute an amendment or waiver of, or an indication of any Agent's or
Lender's willingness to amend or waive, any other provisions of the Credit
Agreement or the same subsection for any other date or time period (whether or
7
<PAGE> 8
not such other provisions or compliance with such subsection for another date or
time period are affected by the circumstances addressed in this Amendment).
9. Expenses. The Borrower agrees to pay and reimburse the
Administrative Agent for all its reasonable costs and out-of-pocket expenses
incurred in connection with the preparation and delivery of this Amendment,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent.
10. Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Amendment
signed by all the parties shall be delivered to the Borrower and the
Administrative Agent.
11. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first above written.
SOUTHERN PERU COPPER CORPORATION
By: /s/ Thomas J. Findley
----------------------------------------
Title: Treasurer
SOUTHERN PERU LIMITED
By: /s/ Thomas J. Findley
----------------------------------------
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent and
as a Lender
By: /s/ Kathryn Collins
----------------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, as
Documentation Agent and as a Lender
By: /s/ James H. Ramage
----------------------------------------
Title: Vice President
CITIBANK N.A., as a Lender
By: /s/ Raymond G. Dunning
----------------------------------------
Title: Managing Director
9
<PAGE> 10
CREDIT SUISSE FIRST BOSTON
By: /s/ Drew von Glahn
----------------------------------------
Title: Director
Title: Director
By: /s/ Clemens Kramer
----------------------------------------
Title: Associate
DEUTSCHE BANK AG, NEW YORK BRANCH, as
Collateral Agent and as a Lender
By: /s/ Richard G. Reeves
----------------------------------------
Title: Vice President
By: /s/ Daniel C. Cillie
----------------------------------------
Title: Assistant Vice President
GOLDMAN SACHS CREDIT PARTNERS L.P.
By: /s/ Stephen B. King
----------------------------------------
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA
By: /s/ J. Alan Edwards
----------------------------------------
Title: Authorized Signatory
10
<PAGE> 11
DRESDNER BANK LUXEMBOURG S.A.
By: /s/ H. Rabelt
----------------------------------------
Title: Authorized Signature
By: /s/ K. Diederich
----------------------------------------
Title: Assistant Manager Loans
BANCO BILBAO VIZCAYA, NEW YORK BRANCH
By: /s/ John Martin Caneras
----------------------------------------
Title: Vice President
By: /s/ Alejandro Lorca
----------------------------------------
Title: Vice President
BANCO CONTINENTAL
By: /s/ Alfonso Zarate Rivas
----------------------------------------
Title: Central Manager
By: /s/ Enrique Hermosa Hoyle
----------------------------------------
Title: Central Manager
BANQUE NATIONALE DE PARIS
By: /s/ Eva Millas Russo
----------------------------------------
Title: Vice President
By: /s/ Sally S. Hammer
----------------------------------------
Title: Vice President
CREDIT LYONNAIS
By: /s/ Richard Garcia
----------------------------------------
Title: Senior Vice President
11
<PAGE> 12
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/ Michelle Vensel
----------------------------------------
Title: Vice President
By: /s/ Karen M. Sager
----------------------------------------
Title: Vice President
BANCO DE CREDITO DEL PERU
By: /s/ Jesus Zamora Leon
----------------------------------------
Title: Managing Director
WESTDEUTCHE LANDESBANK GIROZENTRALE
By: /s/ Richard J. Pearse
----------------------------------------
Title: Managing Director
By: /s/ Arminee Bowler
----------------------------------------
Title: Associate
CIBC INC.
By: /s/ Timothy E. Doyle
----------------------------------------
Title: Managing Director
CIBC Wood Gundy
Securities Corp., as agent
BANKERS TRUST COMPANY
By: /s/ Stephen P. Haley
----------------------------------------
Title: Managing Director
12
<PAGE> 13
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By: /s/ Alan Loisy
----------------------------------------
Title: First Vice President
By: /s/ Richard J. Wernli
----------------------------------------
Title: Assistant Vice President
BANCO LATINOAMERICANO DE EXPORTACIONES, S.A.
By: /s/ Irene Arrocha de Carrizo
----------------------------------------
Title: Assistant Vice President
By: /s/ Daniel Casal
----------------------------------------
Title: Senior Vice President
BANQUE INDOSUEZ
By: /s/ S. de Beaufort
----------------------------------------
Title: First Vice President
By: /s/ M. Annez de Taboada
----------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Sylvia Noriega
----------------------------------------
Title: Director
13
<PAGE> 14
BANQUE SUDAMERIS MIAMI AGENCY
By: /s/ Kenneth Granberry
----------------------------------------
Title: First Vice President &
Deputy Manager
By: /s/ Efrain Lopez
----------------------------------------
Title: Assistant Vice President
GENERALE BANK
By: /s/ Paul Cardoen
----------------------------------------
Title: Senior Vice President
By: /s/ E. Matthews
----------------------------------------
Title: Senior Vice President
ROYAL BANK OF CANADA
By: /s/ Peter D. Steffen
----------------------------------------
Title: Senior Manager
BANQUE WORMS CAPITAL CORPORATION
By: /s/ M. Fleming
----------------------------------------
Title: Vice President and General
Counsel
By: /s/ Frederick Gamet
----------------------------------------
Title: Senior Vice President
RAIFFEISEN ZENTRALBANK DEUTERREICH AG
By: /s/ Robert L. Montarr
----------------------------------------
Title: Vice President
By: /s/ John A. Valiska
----------------------------------------
Title: Vice President
14
<PAGE> 1
Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of
earnings to fixed charges for the periods shown.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------- ------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges......... 30.55 21.49 19.95 23.35 15.14 123.57 294.51
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
operating income by interest expense.
<PAGE> 1
Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated July 21, 1997 on our review of the
interim financial information of Southern Peru Copper Corporation and
Subsidiaries as of June 30, 1997 and for the three month and six month periods
ended June 30, 1997 and 1996 and included in this Form 10-Q for the quarter
ended June 30, 1997 is incorporated by reference in the Company's Registration
Statement on Form S-4 (File No. ). Pursuant to Rule 436(c) under
the Securities Act of 1933, this report should not be considered a part of the
Registration Statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
New York, New York
August 25, 1997
<PAGE> 1
Exhibit 21
SOUTHERN PERU COPPER CORPORATION
Subsidiaries
(More than 50% ownership)
<TABLE>
<CAPTION>
PERCENTAGE OF
VOTING
SECURITIES
OWNED KEY TO
OR OTHER BASES NOTES
NAME OF COMPANY OF CONTROL BELOW
--------------- -------------- ------
<S> <C> <C>
PARENT: ASARCO Incorporated (New Jersey)
- ------
Registrant: Southern Peru Copper Corporation (Delaware)
Southern Peru Limited (Delaware) 100.0 (A)
Fomenta, S.A. (Peru) 99.50 (A)
Pegasus Travels, S.A. (Peru) 90.0 (A)
Logistics Services Incorporated (Delaware) 100.0 (A)
LSI-Peru, S.A. (Peru) 98.18 (A)
Global Natural Resources Inc. (Delaware) 100.0 (C)
Multimines Corporation (Delaware) 100.0 (B)
Multimines Insurance Company, Ltd. (Bermuda) 100.0 (A)
Recursos e Inversiones Andinas, S. A. (Peru) 99.99 (A)
Compania Minera Los Tolmos, S.A. (Peru) 98.05 (B)
Pacific Mining Investments Ltd. (Cayman Islands) 100.0 (C)
</TABLE>
(A) Included in financial statements of SPCC and consolidated subsidiaries at
December 31, 1996.
(B) Excluded from financial statements of SPCC and consolidated subsidiaries
(these companies are not in the aggregate considered significant);
(C) Inactive (having no assets or liabilities or undergoing liquidation);
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 (File
No. ) of our report dated January 28, 1997, except for Note 22,
which was as of February 21, 1997 on our audits of the financial statements of
Southern Peru Copper Corporation. We also consent to the references to our firm
as experts under the caption "Independent Public Accountants."
/s/ Coopers & Lybrand L.L.P.
New York, New York
August 22, 1997
<PAGE> 1
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2) ____
------------------------
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
-----------------------
SOUTHERN PERU LIMITED
(Exact name of obligor as specified in its charter)
Delaware 13-5644139
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
180 Maiden Lane
New York, New York 10038
(Address of principal executive offices) (Zip Code)
-------------------------
7.90% Series A Secured Export Notes due May 30, 2007
(Title of the indenture securities)
<PAGE> 2
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
33 Liberty Street
New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this Statement of
Eligibility.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as exhibits hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to commence
business. (Exhibit 2 to T-1 to Registration Statement No. 2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise corporate
trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1
to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
2
<PAGE> 3
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of March 31, 1997 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the August 14,
1997.
CITIBANK, N.A.
By /s/Denise Banaszek
------------------
Denise Banaszek
Vice President
3
<PAGE> 4
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of March 31, 1997- attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the August 14,
1997.
CITIBANK, N.A.
By /s/Denise Banaszek
------------------
Denise Banaszek
Vice President
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
7.90% SERIES A SECURED EXPORT EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
7.90% SERIES A SECURED EXPORT NOTES DUE 2007
OF
SOUTHERN PERU LIMITED
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
[EXPIRATION DATE], 1997 (THE "EXPIRATION DATE") UNLESS EXTENDED BY
SOUTHERN PERU LIMITED.
Exchange Agent:
<TABLE>
<S> <C> <C>
CITIBANK, N.A.
By Hand: By Mail: By Overnight Carrier:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window c/o Citicorp Data Distribution, c/o Citicorp Data Distribution,
Inc. Inc.
111 Wall Street, 5th Floor P.O. Box 7072 404 Sette Drive
New York, New York 10043 Paramus, New Jersey 07653 Paramus, New Jersey 07652
Facsimile for Eligible Institutions: (201) 262-3240
To confirm fax only (800) 422-2077
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated [DATE], 1997
(the "Prospectus") of Southern Peru Limited and Southern Peru Copper Corporation
(together, "the Company") which, together with this Letter of Transmittal (the
"Letter of Transmittal"), describes the Company's offer (the "Exchange Offer")
to exchange $1,000 in principal amount of a new issue of 7.90% Series A Secured
Export Notes due 2007 (the "New Notes") for each $1,000 in principal amount of
its outstanding 7.90% Series A Secured Export Notes due 2007 (the "Old Notes").
The terms of the New Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the Old
Notes for which they may be exchanged pursuant to the Exchange Offer, except
that the offering of the New Notes will have been registered under the
Securities Act of 1933, as amended, and, therefore, the New Notes will not bear
legends restricting the transfer thereof.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OR TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule affixed hereto.
<PAGE> 2
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) CERTIFICATE AMOUNT REPRESENTED BY PRINCIPAL AMOUNT
(PLEASE FILL IN) NUMBER(S)* NOTES* TENDERED**
------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by Old Notes. See Instruction
2.
================================================================================
This Letter of Transmittal is to be used either if certificates for Old
Notes are to be forwarded herewith or if delivery of Old Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company ("DTC"), pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer" in the Prospectus. Delivery of documents
to a book-entry transfer facility does not constitute delivery to the Exchange
Agent.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder or any person whose Old
Notes are held of record by DTC who desires to deliver such Old Notes by
book-entry transfer at DTC.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date may tender their Old Notes according to the
guaranteed delivery procedure set forth in the Prospectus under the caption "The
Exchange Offer -- Guaranteed Delivery Procedures."
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITORY
TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
- --------------------------------------------------------------------------------
The Depository Trust Company
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
- --------------------------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery
- ------------------------------------------------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Account Number
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described principal amount
of Old Notes. Subject to, and effective upon, the acceptance for exchange of the
Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that said Exchange Agent also acts as the
agent of the Company) with respect to tendered Old Notes, with full power of
substitution, to cause the Old Notes to be assigned, transferred and exchanged.
The power of attorney granted in this paragraph shall be deemed irrevocable and
coupled with interest.
The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Old Notes and to acquire
New Notes issuable upon the exchange of such tendered Old Notes, and that, when
the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered Old Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim. The
undersigned also warrants that it will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or the Company to be necessary
or desirable to complete the exchange, assignment and transfer of tendered Old
Notes or transfer ownership of such Old Notes on the account books maintained by
the Depository Trust Company.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer." The undersigned recognizes
that as a result of these conditions (which may be waived, in whole or in part,
by the Company), as more particularly set forth in the Prospectus, the Company
may not be required to exchange any of the Old Notes tendered hereby and, in
such event, the Old Notes not exchanged will be returned to the undersigned at
the address shown below the signature of the undersigned.
The undersigned agrees that acceptance of any tendered Old Notes by the
Company and the issuance of New Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement (as defined in the Prospectus) and that, upon the issuance of
the New Notes, the Company will have no further obligations or liabilities
thereunder (except in certain limited circumstances). By tendering, each holder
of Old Notes represents to the Company that (i) any New Notes received by such
holder will be acquired in the ordinary course of business, (ii) such holder has
no arrangements or understanding with any person to participate in the
distribution of the Old Notes or the New Notes within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), (iii) the holder is
not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company
or if it is an "affiliate", such holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable,
(iv) if the holder is not a broker-dealer, that it is not engaged in, and does
not intend to engage in, the distribution of the New Notes and (v) if the holder
is a broker-dealer, that it will receive New Notes for its own account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with any resale of such New Notes.
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Old Notes may be withdrawn
only in accordance with the procedures set forth in the Instructions contained
in the Letter of Transmittal.
Certificates for all New Notes delivered in exchange for tendered Old Notes
and any Old Notes delivered herewith but not exchanged, in each case registered
in the name of the undersigned, shall be delivered to the undersigned at the
address shown below the signature of the undersigned.
<PAGE> 4
TENDERING HOLDER(S) SIGN HERE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated:
- ------------------------, 199
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Old Notes or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith or, if the Old
Notes are held of record by DTC, the person in whose name such Old Notes are
registered on the books of DTC. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please set forth the
full title of such person.) See Instruction 3.
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX IDENTIFICATION NO.
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTION 3)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Area Code and Telephone No.
- --------------------------------------------------------------------------------
Dated:
- ------------------------, 199
<PAGE> 5
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1 DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates
for all physically delivered Old Notes or confirmation of any book-entry
transfer to the Exchange Agent's account at The Depository Trust Company of Old
Notes tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT
AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED
THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED.
Guaranteed Delivery Procedures. Holders whose Old Notes are not
immediately available or who cannot deliver their Old Notes and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
comply with book-entry transfer procedures on a timely basis may tender their
Old Notes pursuant to the guaranteed delivery procedure set forth in the
Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedures."
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution (as defined therein); (ii) on or prior to the Expiration
Date the Exchange Agent must have received from such Eligible Institution, a
letter, telegram or facsimile transmission setting forth the name and address of
the tendering holder, the names in which such Old Notes are registered, and, if
possible, the certificate numbers of the Old Notes to be tendered; and (iii) all
tendered Old Notes (or a confirmation of any book-entry transfer of such Old
Notes into the Exchange Agent's account at The Depository Trust Company) as well
as this Letter of Transmittal and all other documents required by this Letter of
Transmittal must be received by the Exchange Agent within five New York Stock
Exchange trading days after the date of execution of such letter, telegram or
facsimile transmission, all as provided in the Prospectus under the caption "The
Exchange Offer -- Guaranteed Delivery Procedures." Unless Old Notes being
tendered by the above-described method (or a timely confirmation of a book-entry
transfer of Old Notes into the Exchange Agent's account at The Depository Trust
Company are deposited with the Exchange Agent within the time period set forth
above (accompanied or preceded by a properly completed Letter of Transmittal (or
facsimile thereof) and any other required documents), or a properly completed
Notice of Guaranteed Delivery is received by the Exchange Agent within the
period set forth above, the Company may, at its option, reject the tender copies
of a Notice of Guaranteed Delivery which may be used by Eligible Institutions
for the purposes described in this paragraph are available from the Exchange
Agent.
A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Old Notes (or a timely Book-Entry Confirmation) is received
by the Exchange Agent. Issuances of New Notes in exchange for Old Notes tendered
pursuant to a Notice of Guaranteed Delivery or letter, telegram or facsimile
transmission to similar effect (as provided above) by an Eligible Institution
will be made only against deposit of the Letter of Transmittal (and any other
required documents) and the tendered Debentures (or a timely Book-Entry
Confirmation).
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Notes for exchange.
2 PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted in
all denominations of $1,000 and integral multiples in excess thereof. If less
than the entire principal amount of Old Notes evidenced by a submitted
certificate is tendered, the tendering holder must fill in the principal amount
tendered in the box entitled "Principal Amount Tendered." A newly issued
certificate for the principal amount of Old Notes submitted but not tendered
will be sent to such holder as soon as practicable after the Expiration Date.
All Old Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
<PAGE> 6
Tenders of Old Notes pursuant to the Exchange Offer are irrevocable, except
that Old Notes tendered pursuant to the Exchange Offer may be withdrawn prior to
the Expiration Date. To be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Exchange Agent.
Any such notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered Old Notes to be withdrawn, the certificate
numbers of the Old Notes to be withdrawn, the principal amount of Old Notes
delivered for exchange, a statement that such a holder is withdrawing its
election to have such Old Notes exchanged, and the name of the registered holder
of such Old Notes, and must be signed by the holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Old Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly following receipt of notice of withdrawal. If Old
Notes have been tendered pursuant to the procedure for book-entry transfer, any
notice of withdrawal must specify the name and number of the account at The
Depository Trust Company to be credited with the withdrawn Old Notes or
otherwise comply with The Depository Trust Company's procedures. All questions
as to the validity of notices of withdrawals, including time of receipt, will be
determined by the Company, and such determination will be final and binding on
all parties.
3 SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of certificates without
alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered holder or
holders of Old Notes listed and tendered hereby, no endorsements of certificates
or separate written instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Old Notes listed, such Notes must be
endorsed or accompanied by separate written instruments of transfer or exchange
in form satisfactory to the Company and duly executed by the registered holder,
in either case signed exactly as the name or names of the registered holder or
holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a registered
holder of such Old Notes and the certificates for New Notes to be issued in
exchange therefor are to be issued (or any untendered amount of Old Notes are to
be reissued) to the registered holder; or (ii) for the account of any Eligible
Institution.
4 TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Old Notes to it or its order pursuant
to the Exchange Offer. If, however, New Notes are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if a transfer tax is imposed for any
reason other than the transfer of Old Notes to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exception therefrom
is not submitted herewith the amount of such transfer taxes will be billed
directly to such tendering holder.
<PAGE> 7
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
5 WAIVER OF CONDITIONS. The Company reserves the absolute right to waive,
in whole or in part, any of the conditions to the Exchange Offer set forth in
the Prospectus.
6 MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any holder whose Old Notes
have been mutilated, lost, stolen or destroyed should contact the Exchange Agent
at the address indicated below for further instructions.
7 REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth below.
8 IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or Old
Notes will be resolved by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all Letters of
Transmittal or tenders that are not in proper form or the acceptance of which
would, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the right to waive any irregularities or conditions of tender as to the
particular Old Notes covered by any Letter of Transmittal or tendered pursuant
to such letter. None of the Company, the Exchange Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Company's interpretation of the terms and conditions of the Exchange Offer shall
be final and binding.
9 DEFINITIONS. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR OLD NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
OFFER TO EXCHANGE
7.90% SERIES A SECURED EXPORT EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
7.90% SERIES A SECURED EXPORT NOTES DUE 2007
OF
SOUTHERN PERU LIMITED
Registered holders of outstanding 7.90% Series A Secured Export Notes due
2007 (the "Old Notes") who wish to tender their Old Notes in exchange for a like
principal amount of 7.90% Series A Secured Export Exchange Notes due 2007 (the
"New Notes") and, in each case, whose Old Notes are not immediately available or
who cannot deliver their Old Notes and Letter of Transmittal (and any other
documents required by the Letter of Transmittal) to Citibank, N.A. (the
"Exchange Agent") prior to the Expiration Date, may use this Notice of
Guaranteed Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
(receipt confirmed by telephone and an original delivered by guaranteed
overnight delivery) or by mail to the Exchange Agent. See "The Exchange
Offer -- Guaranteed Delivery Procedures" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
By Hand: By Mail: By Overnight Carrier:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window c/o Citicorp Data Distribution, c/o Citicorp Data Distribution,
111 Wall Street, 5th Floor Inc. Inc.
New York, New York 10043 P.O. Box 7072 404 Sette Drive
Paramus, New Jersey 07653 Paramus, New Jersey 07652
</TABLE>
FACSIMILE FOR ELIGIBLE INSTITUTIONS: (201) 262-3240
TO CONFIRM FAX ONLY: (800) 422-2077
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on Letter of Transmittal is required to be guaranteed
by an Eligible Institution, such signature guarantee must appear in the
applicable space provided on the Letter of Transmittal for Guarantee of
Signatures.
<PAGE> 2
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOTE TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the certificates
representing the Old Notes, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, and any other documents required by the Letter of Transmittal within
five New York Stock Exchange, Inc. trading days after the date of execution of
this Notice of Guaranteed Delivery.
<TABLE>
<S> <C>
Name of Firm: --------------------------------------------
------------------------------------- (AUTHORIZED SIGNATURE)
Address: Title:
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- Name:
--------------------------------------------
(ZIP CODE) (PLEASE TYPE OR PRINT)
Area Code and Telephone Number: Date:
--------------------------------------------
- --------------------------------------------
</TABLE>
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. NOTES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT 99.3
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER OF PARTICIPANT FROM OWNER
OF
SOUTHERN PERU LIMITED
7.90% SERIES A SECURED EXPORT NOTES DUE 2007
TO REGISTERED HOLDER AND/OR PARTICIPANT OF THE BOOK-ENTRY TRANSFER FACILITY:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1997 (the "Prospectus") of Southern Peru Limited and Southern Peru
Copper Corporation (the "Company"), and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meaning as ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Old Notes held by you for the account of the
undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount):
$ of the 7.90% Series A Secured Export Notes due 2007
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[ ] To TENDER the following Old Notes held by you for the account of the
undersigned (insert principal amount of Old Notes to be tendered, if
any):
$ of the 7.90% Series A Secured Export Notes due 2007
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) any
New Notes will be acquired in the ordinary course of business, (ii) the
undersigned has no arrangements or understanding with any person to participate
in the distribution of the Old Notes or the New Notes within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), (iii) the undersigned
is not an "affiliate", as defined in Rule 405 of the Securities Act, of the
Company or if it is an "affiliate", the undersigned will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable, (iv) if the undersigned is not a broker-dealer, that it is
not engaged in, and does not intend to engage in, the distribution of the New
Notes and (v) if the undersigned is a broker-dealer, that it will receive New
Notes for its own account in exchange for Old Notes that were acquired as a
result of market-making activities or other trading activities and that it will
deliver a prospectus in connection with any resale of such New Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes, the undersigned is not deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
<PAGE> 2
SIGN HERE
Name of beneficial owner(s):
- --------------------------------------------------------------------------------
Signature(s):
- --------------------------------------------------------------------------------
Name(s) (please print):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- -----------------------------------------------------------
- --------------------------------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 99.4
OFFER TO EXCHANGE
7.90% SERIES A SECURED EXPORT EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
7.90% SERIES A SECURED EXPORT NOTES DUE 2007
OF
SOUTHERN PERU LIMITED
To Our Clients:
We are enclosing herewith a Prospectus, dated [ ], 1997, of
Southern Peru Limited and Southern Peru Copper Corporation (together, the
"Company"), and a related Letter of Transmittal (which together constitute the
"Exchange Offer") relating to the offer by the Company to exchange its 7.90%
Series A Secured Export Exchange Notes due 2007 (the "New Notes"), pursuant to
an offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of its issued and outstanding
7.90% Series A Secured Export Notes due 2007(the "Old Notes") upon the terms and
subject to the conditions set forth in the Exchange Offer.
PLEASE NOTE THAT THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[ ], 1997, UNLESS EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
We are the holder of record and/or participant in the book-entry transfer
facility of Old Notes held by us for your account. A tender of such Old Notes
can be made only by us as the record holder and/or participant in the book-entry
transfer facility and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may on your behalf
make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) any New Notes received by such holder will be
acquired in the ordinary course of business, (ii) the holder has no arrangements
or understanding with any person to participate in the distribution of the Old
Notes or the New Notes within the meaning of the Securities Act, (iii) the
holder is not an "affiliate", as defined in Rule 405 of the Securities Act, of
the Company or if it is an affiliate, the holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable, (iv) if the holder is not a broker-dealer, that it is not
engaged in, and does not intend to engage in, the distribution of the New Notes
and (v) if the holder is a broker-dealer, that it will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities and that it will deliver a
prospectus in connection with any resale of such New Notes. By acknowledging
that it will deliver and by delivering a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Notes, the holder
is not deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
Very truly yours,
<PAGE> 1
EXHIBIT 99.5
OFFER TO EXCHANGE
7.90% SERIES A SECURED EXPORT EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
7.90% SERIES A SECURED EXPORT NOTES DUE 2007
OF
SOUTHERN PERU LIMITED
TO REGISTERED HOLDERS AND
DEPOSITORY TRUST COMPANY PARTICIPANTS:
We are enclosing herewith the material listed below relating to the offer
by Southern Peru Limited and Southern Peru Copper Corporation (together, the
"Company"), to exchange its 7.90% Series A Secured Export Exchange Notes due
2007, (the "New Notes"), pursuant to an offering registered under the Securities
Act of 1933, as amended (the "Securities Act"), for a like principal amount of
its issued and outstanding 7.90% Series A Secured Export Notes due 2007, (the
"Old Notes") upon the terms and subject to the conditions set forth in the
Company's Prospectus, dated [ ], 1997, and the related Letter of
Transmittal (which together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1997;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Owner; and
5. Letter which may be sent to your clients for whose account you hold
Old Notes in your name or in the name of your nominee, to accompany the
instruction form referred to above, for obtaining such client's instruction
with regard to the Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [ ], 1997, UNLESS
EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) any New Notes received by such holder will be
acquired in the ordinary course of business, (ii) the holder has no arrangements
or understanding with any person to participate in the distribution of the Old
Notes or the New Notes within the meaning of the Securities Act, (iii) the
holder is not an "affiliate", as defined in Rule 405 of the Securities Act, of
the Company or if it is an "affiliate", the holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable, (iv) if the holder is not a broker-dealer, that it is not
engaged in, and does not intend to engage in, the distribution of the New Notes
and (v) if the holder is a broker-dealer, that it will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities and that it will deliver a
prospectus in connection with any resale of such New Notes. By acknowledging
that it will deliver and by delivering a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Notes, the holder
is not deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The enclosed Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Owner contains an authorization by the beneficial owners of the
Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Offer. The
<PAGE> 2
Company will pay or cause to be paid any transfer taxes payable on the transfer
of Old Notes to it, except as otherwise provided in Instruction 4 of the
enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
Exchange Agent, Citibank N.A., telephone (212) 412-6221.
Very truly yours,
SOUTHERN PERU LIMITED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU THE AGENT
OF SOUTHERN PERU LIMITED OR CITIBANK, N.A., OR AUTHORIZE YOU TO USE ANY DOCUMENT
OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
