**Exhibit4(d)**

 

 

**SEN SECURITY AGREEMENT**

 

Dated as ofApril 29, 2003

 

among

 

GRUPO MINEROMEXICO, S.A. DE C.V.,as Borrower

 

THE BANK OF NEWYORK, not in its individual capacity but solely as trustee of GRUPO MEXICO EXPORT MASTER TRUST NO.1,as SEN Trustee

 

MINERA MEXICO,S.A. DE C.V.INDUSTRIAL MINERA MEXICO, S.A. DE C.V.MINERA MEXICO INTERNACIONAL, INC.MEXICANA DE COBRE, S.A. DE C.V.MINERALES METALICOS DEL NORTE, S.A.MEXICANA DE CANANEA, S.A. DE C.V.MEXICANA DEL ARCO, S.A. DE C.V., MINERALES Y MINAS MEXICANAS, S.A. DE C.V.,COMPANIA DE TERRENOS E INVERSIONES DE SAN LUIS POTOSI, S.C. POR A., S.A.MEXICO COMPANIA INMOBILIARIA, S.A.PROYECCIONES URBANISTICAS, S. DE R.L. DE C.V.,as Guarantors

 

and

 

HSBC BANK USA,as SEN Collateral Agent

 

 

----

 

**TABLE OF CONTENTS**

 
| ARTICLE  I DEFINITIONS; RULES OF CONSTRUCTION |
|-----------------------------------------------|
|                                          |
| Section 1.1.                                  | Definitions |
| Section 1.2.                                  | Rules of Construction |
| Section 1.3.                                  | Conflict with the Common Agreement |
|                                          |   |
| ARTICLE  II GRANTS OF SECURITY INTERESTS      |
|                                          |
| Section 2.1.                                  | Grant of Security Interests by Borrower |
| Section 2.2.                                  | Subordination of SEN Holders Borrower Lien |
| Section 2.3.                                  | Grant of Security Interests by Guarantors |
| Section 2.4.                                  | Subordination of SEN Holders Guarantor  Lien |
| Section 2.5.                                  | Grant of Security Interest by SEN Trustee |
|                                          |   |
| ARTICLE III ACCOUNTS                          |
|                                          |
| Section 3.1.                                  | Collection Accounts |
| Section 3.2.                                  | Required Deposits to the Collection  Accounts |
| Section 3.3.                                  | Application of Funds in the Collection  Accounts; Advance Payments |
| Section 3.4.                                  | SEN Interest Reserve Account; Borrower  Collection Account |
| Section 3.5.                                  | Investment Account |
| Section 3.6.                                  | Statements; Investment of Funds |
| Section 3.7.                                  | Obligations Absolute |
|                                          |   |
| ARTICLE  IV REPRESENTATIONS AND WARRANTIES    |
|                                          |
| Section 4.1.                                  | Ownership of Collateral |
| Section 4.2.                                  | Filings |
| Section 4.3.                                  | Voting Rights |
| Section 4.4.                                  | Names; Organizational Identification  Numbers, etc. |
| Section 4.5.                                  | Changes in Legal Name; Jurisdiction of  Organization, etc. |
|                                          |   |
| ARTICLE  V AFFIRMATIVE COVENANTS              |
|                                          |
| Section 5.1.                                  | Common Agreement Affirmative Covenants |
| Section 5.2.                                  | Payment Denominations |
| Section 5.3.                                  | Investment Losses |
| Section 5.4.                                  | Defense of SEN Collateral |
| Section 5.5.                                  | Notice of Adverse Effect on SEN Collateral |
| Section 5.6.                                  | Guarantor Designations |
|                                          |   |
| ARTICLE  VI NEGATIVE COVENANTS                |
|                                          |
| ARTICLE VII THE SEN COLLATERAL AGENT          |
|                                          |
| Section 7.1.                                  | Power and Authority of SEN Collateral  Agent |
| Section 7.2.                                  | Notice of an Actionable Event |

 

i

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| Section 7.3.                         | Appointment of SEN Collateral Agent as  Attorney-in-Fact |
|--------------------------------------|----------------------------------------------------------|
| Section 7.4.                         | Directions by SEN Holders                                |
| Section 7.5.                         | Individual Action                                        |
| Section 7.6.                         | Holders’ Consents                                   |
| Section 7.7.                         | Exculpatory Provisions                                   |
| Section 7.8.                         | Appointment of Co-Agent                                  |
| Section 7.9.                         | Direction from Required SEN Holders                      |
| Section 7.10.                        | Indenture Provisions                                     |
|                                 |                                                     |
| ARTICLE VIII REMEDIES OF THE HOLDERS |
|                                 |
| Section 8.1.                         | Remedies                                                 |
| Section 8.2.                         | Rights Not Exclusive                                     |
|                                 |                                                     |
| ARTICLE  IX MISCELLANEOUS            |
|                                 |
| Section 9.1.                         | Authorization to File Financing Statements               |
| Section 9.2.                         | Control of Accounts                                      |
| Section 9.3.                         | Termination; Continuing Security Interests               |
| Section 9.4.                         | Notices                                                  |
| Section 9.5.                         | Limitation on Rights                                     |
| Section 9.6.                         | Successors and Assigns                                   |
| Section 9.7.                         | Amendments and Waivers                                   |
| Section 9.8.                         | Effect of Headings                                       |
| Section 9.9.                         | Severability                                             |
| Section 9.10.                        | Counterparts                                             |
| Section 9.11.                        | Currency                                                 |
| Section 9.12.                        | GOVERNING LAW                                            |
| Section 9.13.                        | Consent to Jurisdiction; Process Agent                   |
| Section 9.14.                        | Waiver of Jury Trial                                     |
| Section 9.15.                        | Waiver of Immunity                                       |
| Section 9.16.                        | Tax Treatment                                            |
| Section 9.17.                        | Disclosure to Other Persons                              |
| Section 9.18.                        | SEN Trustee Acting on Behalf of SEN Trust                |
| Section 9.19.                        | No Third Party Beneficiaries                             |
| Section 9.20.                        | Amendment and Restatement                                |
| Section 9.21.                        | Use of English Language                                  |
| Section 9.22.                        | Fees and Expenses                                        |

 

ii

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| Appendices     |                                                |
|----------------|-----------------------------------------------------|
|           |                                                |
| Appendix  A    | Defined  Terms                                      |
|           |                                                |
| Schedules      |                                                |
|           |                                                |
| Schedule I     | Guarantors                                          |
| Schedule II    | Bank Holders                                        |
| Schedule III   | SEN Holders                                         |
| Schedule 3.3   | Transfer Instructions                               |
| Schedule 4.2-A | Filings - Filing Offices                            |
| Schedule 4.2-B | Filings - Financing Statements                      |
| Schedule 4.4   | Names, Organizational Identification Numbers, etc.  |
| Schedule 4.5   | Changes in Legal Name, Jurisdiction of Organization |
|           |                                                |
| Exhibits       |                                                |
|           |                                                |
| Exhibit A      | Form of Customer Notice and Acknowledgement         |

 

iii

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SEN SECURITY AGREEMENT(this “**Agreement**”),dated as of April 29, 2003, among THE BANK OF NEW YORK (“**BONY**”),a banking corporation organized and existing under the laws of the State of NewYork, not in its individual capacity but solely as trustee (in such capacity,the “**SENTrustee**”) of GRUPO MEXICO EXPORT MASTER TRUST NO. 1, a trust formedunder the laws of the State of New York (the **“SEN Trust”**), GRUPO MINEROMEXICO, S.A. DE C.V., a *sociedad anónimade capital variable*organizedand exiting under the laws of Mexico (the “**Borrower**”), each of theGuarantors set forth on Schedule I hereto (each, individually a “**Guarantor**”and, collectively, the “**Guarantors**”), HSBC BANK USA (“**HSBC**”),a bank and trust company organized and existing under the laws of the State ofNew York, not in its individual capacity but solely as collateral agent foreach of the Secured Parties (in such capacity, the “**SEN Collateral Agent**”), andHSBC, in its individual capacity solely for purposes of  Section 9.2.

 

**W I T NE S S E T H****:**

** **

WHEREAS, Borrower, theSEN Trustee, certain Guarantors signatories thereto and Chemical Bank, a bankand trust company organized and existing under the laws of the State of NewYork, previously entered into that certain Trust Indenture, Security Agreementand Guaranty, dated as of November 20, 1995 (as amended, supplemented ormodified from time to time, the “**Original Trust Indenture**”), pursuant towhich (i) Borrower issued the Existing Medimsa Notes (as defined in the Indenturereferred to below) and granted a security interest in favor of the SEN Trusteeas security for the performance of its obligations thereunder and (ii) the SENTrustee issued the Existing Secured Notes (as defined in the Indenture referredto below) and granted a security interest in favor of the SEN Collateral Agent,for itself and the ratable benefit of the SEN Holders (as defined herein), assecurity for the performance of its obligations thereunder;

 

WHEREAS, concurrentlywith the execution hereof, Borrower and the SEN Trustee are entering into thatcertain Amended and Restated Trust Indenture, dated as of April 29, 2003(the “**Indenture**”),among Borrower, the SEN Trustee and the SEN Collateral Agent, pursuant to whichBorrower shall issue the Borrower Notes (as defined in the Indenture) and theSEN Trustee shall issue the Secured Notes (as defined in the Indenture);

 

WHEREAS, the partieshereto desire to amend and restate certain provisions of the Original TrustIndenture with respect to the security interests granted by each of the SENTrustee and Borrower thereunder pursuant to the terms and conditions hereof andof that certain Common Agreement, dated as of April 29, 2003 (the “**CommonAgreement**”), among Borrower, Minera México, S.A. de C.V., a *sociedadanónima de capital variable*organized and existing under the laws ofMexico (“**MM**”)and each of the other Guarantors, the SEN Trustee, the SEN Holders, the BankHolders signatories thereto (the “**Bank Holders**”), Bank of America, N.A., asadministrative agent for the Bank Holders (in such capacity, the “**Bank HoldersAdministrative Agent**”), HSBC, as shared payment and collateral agentfor the SEN Holders and the Bank Holders (in such capacity, the “**SharedPayment and Collateral Agent**”) and the SEN Collateral Agent; and

 

----

 

WHEREAS, in connectiontherewith, the parties hereto desire to provide for the ratable security ofeach of the Secured Obligations, upon the terms and subject to the conditionsset forth herein.

 

NOW, THEREFORE, inconsideration of the foregoing and the mutual covenants and agreementscontained herein and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto agree that, onthe Effective Date (as defined herein), certain provisions of the OriginalTrust Indenture with respect to the security interests granted by each of theSEN Trustee and Borrower thereunder shall be amended and restated as follows(it being understood that certain provisions of the Original Trust Indentureare concurrently herewith being amended and restated pursuant to the Indentureand the Common Agreement, and that this Agreement, the Indenture and the CommonAgreement, collectively, constitute an amendment and restatement of theOriginal Trust Indenture in its entirety with respect to the security interestsgranted by each of the SEN Trustee and Borrower):

 

# ARTICLE I

 

# DEFINITIONS;RULES OF CONSTRUCTION

 

Section 1.1.                Definitions.  Capitalized terms used but not otherwisedefined herein or in Appendix A hereto shall have the meanings ascribedthereto in Appendix A to the Common Agreement or Appendix A tothe Indenture, as applicable.

 

Section 1.2.                Rules ofConstruction.  For all purposes ofthis Agreement, terms used herein shall be interpreted in accordance withparagraphs A through F of Appendix A to the Common Agreement.

 

Section 1.3.                Conflict withthe Common Agreement.  Other thanwith respect to Sections 2.2, 2.4 and 8.2 and any rights,protections and obligations of the SEN Collateral Agent hereunder, in the eventof any conflict between this Agreement and the Common Agreement, the terms ofthe Common Agreement shall control.

 

# ARTICLE II

 

# GRANTS OFSECURITY INTERESTS

 

Section 2.1.                Grant ofSecurity Interests by Borrower.

 

#### (a)                                  As security for the prompt andcomplete payment and performance in full of all of the Borrower SEN TrustObligations, Borrower hereby assigns, pledges and transfers to the SENCollateral Agent, for itself and the ratable benefit of the SEN Trustee, andgrants to the SEN Collateral Agent, for itself and the ratable benefit of theSEN Trustee, a security interest in and continuing lien on all of Borrower’sright, title and interest in, to and under the Borrower Collateral, in eachcase, whether now owned or existing or hereafter acquired or arising, andwherever located (the “**SEN Trust Borrower Lien**”).

####  

#### 2

#### 

####  

#### (b)                                 As security for the prompt andcomplete payment and performance in full of all of the Borrower SEN HoldersObligations, Borrower hereby assigns, pledges and transfers to the SENCollateral Agent, for itself and the ratable benefit of each of the SENHolders, and grants to the SEN Collateral Agent, for itself and the ratablebenefit of the SEN Holders, a security interest in and continuing lien on allof Borrower’s right, title and interest in, to and under the BorrowerCollateral, in each case, whether now owned or existing or hereafter acquiredor arising, and wherever located (the “**SEN Holders Borrower Lien**”), which Lienshall be subordinate in all material respects to the SEN Trust Borrower Lien asset forth in Section 2.2.

####  

#### (c)                                  Notwithstanding anything herein tothe contrary, (i) Borrower shall remain liable for all of its obligations underthe Borrower Collateral and nothing contained herein is intended or shall be adelegation of duties to the SEN Collateral Agent or any other Secured Party,(ii) Borrower shall remain liable under each of the agreements included in orrelated to the Borrower Collateral and neither the SEN Collateral Agent nor anyother Secured Party shall have any obligation or liability under suchagreements by reason of or arising out of this Agreement or any other documentrelated thereto, nor shall the SEN Collateral Agent or any other Secured Partyhave any obligation to make any inquiry as to the nature or sufficiency of anypayment received by Borrower or have any obligation to take any action tocollect or enforce any rights under such agreements and (iii) the exercise bythe SEN Collateral Agent of any of its rights hereunder shall not releaseBorrower from any of its duties or obligations under each of the agreementsincluded in or related to the Borrower Collateral.

####  

Section 2.2.                Subordinationof SEN Holders Borrower Lien.

 

#### (a)                                  Each SEN Holder hereby agrees that,regardless of the time or order of attachment or the time, order or manner ofperfection or the time or order of filing financing statements, mortgages orother security arrangements or documents with respect to the SEN HoldersBorrower Lien, or anything in any Operative Document to the contrary, until theBorrower SEN Trust Obligations have been indefeasibly satisfied in full incash, (i) the SEN Holders Borrower Lien, and the security interests of the SENCollateral Agent, for itself and the ratable benefit of each SEN Holder, in theBorrower Collateral (as it may hereafter be amended from time to time) shall inall respects be, and are hereby expressly made, subject and subordinate at alltimes to the SEN Trust Borrower Lien and the security interest of the SENCollateral Agent, for itself and the ratable benefit of the SEN Trustee, in theBorrower Collateral (as it may hereafter be amended from time to time) and (ii)neither the SEN Collateral Agent, for itself or the ratable benefit of the SENHolders, nor any SEN Holder shall at any time contest (x) the validity,perfection, priority or enforceability of the SEN Trust Borrower Lien or thesecurity interest of the SEN Collateral Agent, for itself and the ratablebenefit of the SEN Trustee, in the Borrower Collateral or (y) the subordinationof the SEN Holders Borrower Lien to the SEN Trust Borrower Lien in accordancewith the terms hereof.

####  

#### (b)                                 Nothing contained in this Agreementshall in any way impair or affect any Borrower Lien except as to the terms ofsubordination set forth in this Section 2.2.

####  

#### 3

#### 

####  

Section 2.3.                Grant ofSecurity Interests by Guarantors.

 

#### (a)                                  As security for the prompt andcomplete payment and performance in full of all the Guarantor SEN TrustObligations, each Guarantor hereby assigns, pledges and transfers to the SENCollateral Agent, for itself and the ratable benefit of the SEN Trustee, andgrants to the SEN Collateral Agent, for itself and for the ratable benefit of theSEN Trustee, a security interest in and continuing lien on all of suchGuarantor’s right, title and interest in, to and under the GuarantorCollateral, in each case, whether now owned or existing or hereafter acquiredor arising, and wherever located (the “**SEN Trust Guarantor Lien**”).

####  

#### (b)                                 As security for the prompt andcomplete payment and performance in full of all the Guarantor SEN HoldersObligations, each Guarantor hereby assigns, pledges and transfers to the SENCollateral Agent, for itself and the ratable benefit of each of the SENHolders, and grants to the SEN Collateral Agent, for itself and for the ratablebenefit of each of the SEN Holders, a security interest in and continuing lienon all of such Guarantor’s right, title and interest in, to and under theGuarantor Collateral, in each case, whether now owned or existing or hereafteracquired or arising, and wherever located (the “**SEN Holders Guarantor Lien**”),which Lien shall be subordinate in all material respects to the SEN TrustGuarantor Lien as set forth in Section 2.4.

####  

#### (c)                                  Notwithstanding anything herein tothe contrary, (i) each Guarantor shall remain liable for all of its obligationsunder the Guarantor Collateral and nothing contained herein is intended orshall be a delegation of duties to the SEN Collateral Agent or any otherSecured Party, (ii) each Guarantor shall remain liable under each of theagreements included in or related to the Guarantor Collateral to which it is aparty and neither the SEN Collateral Agent nor any other Secured Party shallhave any obligation or liability under such agreements by reason of or arisingout of this Agreement or any other document related thereto, nor shall the SENCollateral Agent nor any other Secured Party have any obligation to make anyinquiry as to the nature or sufficiency of any payment received by anyGuarantor or have any obligation to take any action to collect or enforce anyrights under such agreements and (iii) the exercise by the SEN Collateral Agentof any of its rights hereunder shall not release the Guarantor from any of itsduties or obligations under each agreements included in or related to theGuarantor Collateral to which it is a party.

####  

Section 2.4.                Subordinationof SEN Holders Guarantor Lien.

 

#### (a)                                  Each SEN Holder hereby agrees that,regardless of the time or order of attachment or the time, order or manner ofperfection or the time or order of filing financing statements, mortgages orother security arrangements or documents with respect to the SEN HoldersGuarantor Lien, or anything in any Operative Document to the contrary, untilthe Guarantor SEN Trust Obligations have been indefeasibly satisfied in full incash, (i) the SEN Holders Guarantor Lien, and the security interest of the SENCollateral Agent, for itself and the ratable benefit of each of the SENHolders, in the Guarantor Collateral (as it may hereafter be amended from timeto time) shall in all respects be, and is hereby expressly made, subject andsubordinate at all times to the SEN Trust Guarantor Lien and the securityinterest of the SEN Collateral Agent, for itself and the ratable benefit of theSEN Trustee, in the Guarantor Collateral (as it may hereafter be amended fromtime to time) and (ii) neither the SEN Collateral Agent, for

####  

#### 4

#### 

####  

#### itselfand the ratable benefit of the SEN Holders, nor the SEN Holders shall at anytime contest (x) the validity, perfection, priority or enforceability of theSEN Trust Guarantor Lien or the security interest of the SEN Collateral Agent,for itself and the ratable benefit of the SEN Trustee, in the GuarantorCollateral or (y) the subordination of the SEN Holders Guarantor Lien to theSEN Trust Guarantor Lien in accordance with the terms hereof.

####  

#### (b)                                 Nothing contained in this Agreementshall in any way impair or affect any Guarantor Lien except as to thesubordination set forth in this Section 2.4.

####  

Section 2.5.                Grant ofSecurity Interest by SEN Trustee.

 

#### (a)                                  As security for the prompt andcomplete payment and performance in full of all the SEN Trust Obligations, theSEN Trustee hereby assigns, pledges and transfers to the SEN Collateral Agent,for itself and the ratable benefit of each of the SEN Holders, and grants tothe SEN Collateral Agent, for itself and for the ratable benefit of each of theSEN Holders, a security interest in and continuing lien on all of the SENTrustee’s right, title and interest in, to and under the SEN Trust Collateral,in each case, whether now owned or existing or hereafter acquired or arising,and wherever located (the “**SEN Trust Lien**”).

####  

#### (b)                                 Notwithstanding anything herein tothe contrary, (i) the SEN Trustee shall remain liable for all obligations underthe SEN Trustee Collateral and nothing contained herein is intended or shall bea delegation of duties to the SEN Collateral Agent nor any other Secured Party,(ii) the SEN Trustee shall remain liable under each of the agreements includedin or related to the SEN Trustee Collateral and neither the SEN CollateralAgent nor any other Secured Party shall have any obligation or liability underany of such agreements by reason of or arising out of this Agreement or anyother document related thereto, nor shall the SEN Collateral Agent nor anyother Secured Party (other than the SEN Trustee) have any obligation to makeany inquiry as to the nature or sufficiency of any payment received by the SENTrustee or have any obligation to take any action to collect or enforce anyrights under any such agreements and (iii) the exercise by the SEN CollateralAgent of any of its rights hereunder shall not release the SEN Trustee from anyof its duties or obligations under each agreement included in or related to theSEN Trustee Collateral.

####  

# ARTICLE III

#  

# ACCOUNTS

#  

Section 3.1.                CollectionAccounts.

 

#### (a)                                  The SEN Collateral Agent hasestablished the following segregated collection accounts, each denominated inDollars and maintained by the SEN Collateral Agent in New York City at itsCorporate Trust Office, for the benefit of the SEN Collateral Agent(collectively, the “**Collection Accounts**” and each,individually, a “**Collection Account**”):

####  

##### (i)                                     account number 10-877141 titled“Minera México, S.A. de C.V. Collection Account for the benefit of HSBC BankUSA, as SEN Collateral Agent”;

#####  

##### 5

##### 

#####  

##### (ii)                                  account number 10-877698 titled“Industrial Minera México, S.A. de C.V. Collection Account for the benefit ofHSBC Bank USA, as SEN Collateral Agent”;

#####  

##### (iii)                               account number 10-877700 titled“Mexicana de Cobre, S.A. de C.V. Collection Account for the benefit of HSBCBank USA, as SEN Collateral Agent”;

#####  

##### (iv)                              account number 10-877697 titled“Minera Mexico Internacional, Inc. Collection Account for the benefit of HSBCBank USA, as SEN Collateral Agent”;

#####  

##### (v)                                 account number 10-877699 titled“Minerales Metálicos del Norte, S.A. Collection Account for the benefit of HSBCBank USA, as SEN Collateral Agent”;

#####  

##### (vi)                              account number 10-877701 titled“Mexicana de Cananea, S.A. de C.V. Collection Account for the benefit of HSBCBank USA, as SEN Collateral Agent”;

#####  

##### (vii)                           account number 10-878142 titled“Mexicana del Arco, S.A. de C.V. Collection Account for the benefit of HSBCBank USA, as SEN Collateral Agent”;

#####  

##### (viii)                        account number 10-878143 titled“Minerales y Minas Mexicanas, S.A. de C.V. Collection Account for the benefitof HSBC Bank USA, as SEN Collateral Agent”;

#####  

##### (ix)                                account number 10-878144 titled“Compania de Terrenos e Inversiones de San Luis Potosí, S.C. por A., S.A.Collection Account for the benefit of HSBC Bank USA, as SEN Collateral Agent”;

#####  

##### (x)                                   account number 10-878145 titled“México Compañía Inmobiliaria, S.A. Collection Account for the benefit of HSBCBank USA, as SEN Collateral Agent”;

#####  

##### (xi)                                account number 10-878146 titled“Proyecciones Urbanísticas, S. de R.L. de C.V. Collection Account for the benefitof HSBC Bank USA, as SEN Collateral Agent”;

#####  

##### (xii)                             account number 10-878147 titled“Guarantor Advance Payment Account for the benefit of HSBC Bank USA, as SENCollateral Agent” (the **“Guarantor Advance Payment Account”**); and

#####  

##### (xiii)                          account number 10-878148 titled“Borrower Collection Account for the benefit of HSBC Bank USA, as SENCollateral Agent” (the**“Borrower Collection Account**”)**.**

#####  

For purposes hereof, each of the accounts listed in subclauses (i)through (xii) above shall constitute, collectively, the “**Guarantor Collection Accounts**”.

 

#### (b)                                 The SEN Collateral Agent hasestablished the following segregated accounts, each denominated in Dollars andmaintained by the SEN Collateral Agent in New York City at its Corporate TrustOffice, for the benefit of the SEN Collateral Agent:

####  

#### 6

#### 

####  

##### (i)                                     account number 10-877994 titled“Borrower Investment Account for the benefit of HSBC Bank USA, as SENCollateral Agent” (the “**Investment Account**”); and

#####  

##### (ii)                                  account number 10-877702 titled “SENInterest Reserve Account for the benefit of HSBC Bank USA, as SEN CollateralAgent” (the “**SEN Interest Reserve Account**”).

#####  

For purposes hereof, (x) the account listed in Section 3.1(a)(xiii)and each of the accounts listed in subclauses (i) and (ii) above shallconstitute, collectively, the “**Borrower Accounts**” and (y) the GuarantorCollection Accounts and the Borrower Accounts shall constitute, collectively,the “**PledgedAccounts**”.

 

#### (c)                                  All funds will be deposited andwithdrawn from each Pledged Account in accordance with the terms and provisionshereof.  Until the Obligations of eachof Borrower, the Guarantors and the SEN Trustee under the Operative Documentsshall have been indefeasibly satisfied in full in cash, Borrower, the Guarantorsand the SEN Trustee shall not have any rights to any funds credited to thePledged Accounts, except as expressly provided in Section 3.3.

####  

#### (d)                                 Upon the occurrence and during thecontinuance of a Default or Event of Default, all monies retained in theCollection Accounts shall be transferred to the Investment Account and pooledand invested in Permitted Investments in accordance with the terms andconditions set forth herein.

####  

Section 3.2.                RequiredDeposits to the Collection Accounts.

 

#### (a)                                  Each of Borrower and each Guarantoragrees that it will cause all amounts payable to it with respect to ExportSales to be made in accordance with Section 5.2 and paid directly to theSEN Collateral Agent for credit to the applicable Collection Account.  Any payments received by the SEN CollateralAgent in respect of Export Sales not denominated in Dollars shall be convertedinto Dollars by the SEN Collateral Agent in accordance with Section  14.06 of the Common Agreement promptlyfollowing receipt thereof.  In furtheranceof the foregoing, each Guarantor will comply with Section 4.03 of theCommon Agreement and deliver to each of its Customers, on or prior to theEffective Date, a Customer Notice and Acknowledgement (x) notifying suchCustomer that the Export Receivables and the Export Proceeds have been pledgedand assigned to the SEN Collateral Agent for the ratable benefit of the SecuredParties, (y) irrevocably authorizing and directing such Customer to pay allamounts owed by it under or in respect of present or future sales of metalsproducts by Borrower or such Guarantor, as applicable, directly into theCollection Account specified in the Customer Notice and (z) directing suchCustomer to execute and deliver such Customer Notice and Acknowledgement.  A copy of each Customer Notice andAcknowledgement received by Borrower and each Guarantor on or prior to theEffective Date shall be delivered to the SEN Collateral Agent on the EffectiveDate.  After the Effective Date, fromtime to time, Borrower and each Guarantor shall deliver a Customer Notice andAcknowledgement to Customers as necessary in order to comply with Section4.03 of the Common Agreement. Borrower and each Guarantor shall require that each Customer (other thanany Customer located, or the principal place of business of which is located,in a country with a Dollar denominated long-term 

####  

#### 7

#### 

####  

#### indebtednessrated at all times “BBB-“ or better by Standard & Poor’s) for an ExportSale provide Borrower or such Guarantor, as applicable, with (x) a Letter ofCredit; provided that with respect to this Section 3.2(a) only,the rating required for the depositary institution issuing or guaranteeing suchLetter of Credit shall be at least “BBB-“ from Standard & Poor’s or (y) anadvance cash payment, in each case in an amount sufficient to pay any and allamounts due by such Customer in connection with each such Export Sale.  The SEN Collateral Agent shall credit allamounts paid by any Customer with respect to any Export Sale to the applicableCollection Account in accordance with this Section 3.2(a) promptly uponreceipt thereof and shall apply such funds in accordance with Section 3.3.

####  

#### (b)                                 Notwithstanding the foregoing, if atany time Borrower or any Guarantor receives any payments under or in connectionwith any Export Proceed or Export Receivable or otherwise that have beenassigned to the SEN Collateral Agent pursuant to this Agreement, all suchamounts (i) shall be held by Borrower or such Guarantor, as applicable, asagent of and in trust for the SEN Collateral Agent, (ii) shall be segregatedfrom other funds of Borrower or such Guarantor, as applicable, and shall,immediately upon receipt (and in any event no later than three (3) BusinessDays thereafter) be turned over to the SEN Collateral Agent by Borrower or suchGuarantor, as applicable, for credit to the applicable Collection Account inthe same form as received by Borrower or such Guarantor (and, if received inthe form of a check, note or any other instrument, duly endorsed in favor ofthe SEN Collateral Agent).

####  

Section 3.3.                Application ofFunds in the Collection Accounts; Advance Payments.

 

#### (a)                                  Unless a Responsible Officer of theSEN Collateral Agent shall have received written notice that an Event of Defaultshall have occurred and be continuing, or except as set forth in (i) Section3.3(b) with respect to any Excess Advance Payment, (ii) Section 3.3(c)with respect to notice from a Qualified L/C Provider or (iii) Section 3.4(a)with respect to any Account Deficit, the SEN Collateral Agent shall, on eachBusiness Day, transfer any (i) amounts deposited in each Guarantor CollectionAccount or (ii) Excess Funds in the Borrower Collection Account, in each caseas of 3:00 p.m. New York City time, in accordance with the TransferInstructions, as such Transfer Instructions may be modified at any time andfrom time to time by notice to the SEN Collateral Agent from any Guarantor orBorrower, as applicable, and any and all Liens created on such Export Proceedsor Export Receivables hereunder shall be released and discharged with respectto such amounts paid to each Guarantor or to Borrower.

####  

#### (b)                                 If any payment under an Export Saleis made by a Customer in connection with the shipment of metals products tosuch Customer more than ninety (90) days after the date of such payment (anysuch payment, an “**Advance Payment**”), Borrower or theGuarantor party to such Export Sale shall notify the SEN Collateral Agent,prior to receipt of such Advance Payment, of the character of such payment, theamount of such payment and the amount of all Advance Payments owed to Borrowerand all Guarantors then outstanding and whether the amount of such AdvancePayment together with the amount of all other Advance Payments owed to Borrowerand all Guarantors then outstanding exceeds $50,000,000 (the “**AdvancePayment Limit**”).  If Borroweror any Guarantor notifies the SEN Collateral Agent that the Advance Paymentsowed to Borrower and all Guarantors then outstanding exceeds the AdvancePayment Limit, such amount in excess of the Advance Payment Limit (the “**ExcessAdvance Payment**”)

####  

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#### 

####  

#### shall(i) not be paid by the SEN Collateral Agent to Borrower or the relevantGuarantor as otherwise provided in Section 3.3(a), (ii) be credited tothe Guarantor Advance Payment Account and (iii) be invested in accordance with Section3.6(b).  Portions of such ExcessAdvance Payment shall be paid by the SEN Collateral Agent to Borrower or anyapplicable Guarantor in accordance with Section 3.3(a) (any suchportion, a “**Released Portion**”) upon the SEN Collateral Agent’s receipt ofa certificate of a Responsible Officer of Borrower or such Guarantor certifyingthe amount of the Released Portion and that the metals products subject to theExport Sale giving rise to such Released Portion have been delivered byBorrower or the Guarantor party to such Export Sale in accordance with theterms of such Export Sale.

####  

#### (c)                                  If on any Business Day (a “**TransferDate**”) when funds in any Collection Account would (but for theprovisions of this Section 3.3(c)) be transferred to Borrower or aGuarantor as provided in Section 3.3(a), any Qualified L/C Providershall have delivered to the SEN Collateral Agent at least one (1) Business Dayprior to such Transfer Date a Qualified L/C Provider Notice, which notice shallnot have been withdrawn by any subsequent notice, the SEN Collateral Agentshall apply such funds (to the payment of any amount specified in suchQualified L/C Provider Notice) to such Qualified L/C Provider.

####  

Section 3.4.                SEN InterestReserve Account; Borrower Collection Account.

 

#### (a)                                  On the Effective Date, Borrowershall cause the SEN Required Reserve Amount to be credited to the SEN InterestReserve Account; provided, however, that Borrower may satisfythis condition through the delivery to the SEN Collateral Agent of a Letter ofCredit complying with and governed by the terms of Section 3.4(b) in theamount of the SEN Required Reserve Amount. From and after the Effective Date, the amount deposited in the SENInterest Reserve Account shall always be at least equal to the SEN RequiredReserve Amount (less the amount of any undrawn Letter of Credit provided as setforth in Section 3.4(b)).  If atany time the SEN Required Reserve Amount (less the amount of any undrawn Letterof Credit provided as set forth in Section 3.4(b)) is reduced, or if,after payment of Scheduled Debt Service on any Monthly Payment Date there arefunds in the SEN Interest Reserve Account in excess of the SEN Required ReserveAmount (the “**Excess Funds**”), the SEN Collateral Agent shall cause all suchExcess Funds, if any, in the SEN Interest Reserve Account to be creditedpromptly to the Borrower Collection Account and disbursed in accordance with Section3.3(a).  If at any time the SENRequired Reserve Amount (less the amount of any undrawn Letter of Creditprovided as set forth in Section 3.4(b)) is increased, or the SENRequired Reserve Amount is in excess of the funds in the SEN Interest ReserveAccount (an “**Account Deficit**”), the SEN Collateral Agent shall notifyBorrower and each other Secured Party in writing of such Account Deficit andshall simultaneously cause funds, if any, in any Collection Account to betransferred and credited to the SEN Interest Reserve Account in an amount up tothe Account Deficit; provided, however, that failure of the SENCollateral Agent to give, or of any other Secured Party or Borrower to receive,any such notice shall not impair the validity of such transfer and credit.

####  

#### (b)                                 Borrower may provide one or moreLetters of Credit (i) for a minimum initial term of three hundred and sixtyfive (365) days and (ii) by its terms allowing the SEN Collateral Agent, uponpresentation of a sight draft, to make same day drawings under such Letter ofCredit in an amount sufficient at all times to satisfy the requirements of thisSection 3.4.  Borrower shallnotify the SEN Collateral Agent and each Secured Party at least forty five (45)

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####  

#### days priorto the expiration date of any Letter of Credit referred to in the previoussentence as to whether Borrower intends to obtain a replacement Letter ofCredit.  If, two (2) Business Days priorto the expiration date of any such Letter of Credit, Borrower fails to (i)deliver to the SEN Collateral Agent a replacement irrevocable Letter of Creditcomplying with the terms of this Section 3.4(b) and (ii) fund the SENInterest Reserve Account in cash (excluding the amount of the expiring Letterof Credit), the SEN Collateral Agent shall draw on the Letter of Credit andapply the proceeds thereof to fund the SEN Interest Reserve Account in anamount sufficient to satisfy the requirements of this Section 3.4.

####  

#### (c)                                  If (i) Borrower fails to make anyinterest (including Additional Amounts) payments on any Borrower Note on the date when due and as specifiedherein or in the Common Agreement or (ii) the SEN Trustee fails to make anyinterest (including Additional Amounts) payments on any Secured Notes on thedate when due and as specified herein or in the Common Agreement, the SENCollateral Agent will, on such date, draw on the SEN Interest Reserve Accountas required to permit Borrower to make such payments due on the Borrower Notesand to permit the SEN Trustee to make the payments due on the SecuredNotes.  In the event of any suchdrawing, the SEN Interest Reserve Account shall immediately (and in any eventno later than two (2) Business Days thereafter) be replenished by Borrower orthe Guarantors to satisfy the requirements of this Section 3.4; provided,that the SEN Collateral Agent shall notify Borrower and each Secured Partyof any such drawing; provided, further, that the failure of theSEN Collateral Agent to give, or of any Secured Party and Borrower to receive,any such notice shall not modify the obligation of Borrower or the Guarantorsto replenish the SEN Interest Reserve Account in accordance with this Section3.4(c).  The SEN Collateral AgentAmounts due and owing hereunder as of any Monthly Payment Date that haveremained unpaid after demand upon Borrower for payment given not less than ten(10) Business Days prior to such Monthly Payment Date may be transferred fromthe SEN Interest Reserve Account to effect such payment (but not in excess ofthe SEN Collateral Agent Scheduled Amount for any calendar year).

####  

#### (d)                                 Any withdrawal of funds by the SENCollateral Agent in accordance with and pursuant to this Section 3.4 issubject in all respects to Section 12.08 of the Common Agreement.

####  

Section 3.5.                Cash TrappingEvents.

 

#### (a)                                  Upon the receipt by a ResponsibleOfficer of the SEN Collateral Agent of written notice of the occurrence of anImmediate SEN Cash Trapping Event of Default, the SEN Collateral Agent shall,without notice to Borrower, any Guarantor or any other Secured Party, andwithout any further action being taken on the part of the SEN Trustee, the SENHolders or the Bank Holders, cease to allow withdrawal by Borrower, anyGuarantor or any Affiliates of Borrower or any Guarantor of cash in any PledgedAccount, which action by the SEN Collateral Agent shall continue for theduration of the Immediate SEN Cash Trapping Period.  During the Immediate SEN Cash Trapping Period, the SEN CollateralAgent shall transfer daily all amounts in any Collection Account to theInvestment Account and shall thereafter apply all amounts in the InvestmentAccount in accordance with the terms and conditions set forth in ArticleVIII of the Common Agreement.

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#### 10

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####  

#### (b)                                 Upon the occurrence of a SEN CashTrapping Event of Default, the SEN Collateral Agent shall, upon receipt ofwritten direction signed by the Required SEN Holders and without notice toBorrower or any Guarantor, cease to allow withdrawal by Borrower, any Guarantoror any Affiliates of Borrower or any Guarantor of cash in any Pledged Account,which action by the SEN Collateral Agent shall continue for the duration of theSEN Cash Trapping Period.  During theSEN Cash Trapping Period, the SEN Collateral Agent shall transfer daily allamounts in any Collection Account  tothe Investment Account and shall thereafter apply all amounts in the InvestmentAccount in accordance with the terms and conditions set forth in ArticleVIII of the Common Agreement.

####  

#### (c)                                  Upon the receipt by a ResponsibleOfficer of the SEN Collateral Agent of written direction from the FinancialAdvisor that an Acknowledgement SEN Cash Trapping Event has occurred, the SENCollateral Agent shall, without notice to Borrower, any Guarantor or any other SecuredParty, and without any further action being taken on the part of the SENTrustee, the SEN Holders or the Bank Holders, cease to allow withdrawal byBorrower, any Guarantor or any Affiliates of Borrower or any Guarantor of cashin any Pledged Account in an amount equal to the Acknowledgement Cash TrappingAmount set forth in such direction, which action by the SEN Collateral Agentshall continue for the duration of the applicable Acknowledgement SEN CashTrapping Period.  During eachAcknowledgement SEN Cash Trapping Period, the SEN Collateral Agent shalltransfer daily amounts in any Collection Account to the Investment Accountuntil such amounts are equal to the Acknowledgement Cash Trapping Amount forsuch Acknowledgement SEN Cash Trapping Period, and shall thereafter apply allamounts in the Investment Account in accordance with the terms and conditionsset forth in Article VIII of the Common Agreement.

####  

Section 3.6.                Statements;Investment of Funds.

 

#### (a)                                  The SEN Collateral Agent shallprovide the Financial Advisor, Borrower, the SEN Trustee and each other SecuredParty with a written statement of the balances from time to time in eachCollection Account, the Investment Account and the SEN Interest Reserve Accountand of each credit or debit on each such account during the prior calendarmonth (i) by the fifteenth day of each calendar month and (ii) promptly afterany payment pursuant to the last two sentences of Section 3.4(a), thelast sentence of Section 3.4(b), the first sentence of Section 3.4(c)or the last sentence of Section 3.4(c).

####  

#### (b)                                 To the extent not applied asprovided in Section 3.3 or Section 3.4, funds (i) in the SENInterest Reserve Account, the Borrower Collection Account or the InvestmentAccount, (ii) remaining on deposit in the Guarantor Advance Payment Accountwith respect to any Advance Payment or (iii) remaining on deposit in any otherCollection Account during the continuance of a Default or an Event of Defaultshall be invested  by the SEN CollateralAgent, as specified in a Borrower Order, in Permitted Investments.  Borrower shall deliver to the SEN CollateralAgent on the Effective Date a Borrower Order specifying its initial investmentinstructions that shall remain in effect until changed by a subsequent BorrowerOrder given not less than five (5) Business Days before the effective date ofsuch change.  All such PermittedInvestments shall be maintained in the name of the SEN Collateral Agent andpledged to the SEN Collateral Agent to be held by it as part of the SENCollateral hereunder, and the SEN Collateral Agent shall be authorized toendorse any of such Permitted Investments in any manner

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#### satisfactoryto it, on behalf of Borrower.  The SENCollateral Agent may rely and shall be fully protected in its reliance on aBorrower Order that complies with the provisions hereof, and shall beindemnified in accordance with the terms of Section 11.01 of the CommonAgreement.  During the continuance of aDefault or an Event of Default, all earnings on Permitted Investments shall becredited to the Investment Account upon receipt thereof by the SEN CollateralAgent and will become part of the SEN Collateral; provided, however,that in the case of a Default or an Event of Default after all outstandingamounts (including any Additional Amounts and any Make-Whole Amount) owed onthe Notes are indefeasibly paid in full in cash, in each case such earningswill no longer constitute SEN Collateral and the SEN Collateral Agent willcause such earnings to be credited to the appropriate Collection Account andpaid to Borrower or the relevant Guarantor in accordance with Section 3.3(a).  All earnings on Permitted Investments in theSEN Interest Reserve Account shall be remitted to Borrower in accordance with Section3.4 promptly after being credited and so long as at the time of suchremittance no Event of Default has occurred and is continuing, so long as suchearnings constitute Excess Funds. Whenever the SEN Collateral Agent is required or permitted to make anypayment or transfer under this Agreement, the SEN Collateral Agent shall havethe right, and is hereby irrevocably authorized, to sell or otherwise liquidateany Permitted Investments to the extent necessary to make such payment or transferand shall have no liability to Borrower, the SEN Trustee or the SEN Holders forand shall be fully protected by Borrower from and against any losses incurredin connection with such sale or liquidation.

####  

Section 3.7.                ObligationsAbsolute.  Notwithstanding anythingto the contrary in this Article III, nothing herein shall be construedto relieve or diminish the absolute obligation of Borrower, the Guarantors andthe SEN Trustee to pay and perform in full its obligations under each OperativeDocument to which it is a party in accordance with the terms thereof.

 

# ARTICLE IV

#  

# REPRESENTATIONSAND WARRANTIES

#  

Each of Borrower, eachGuarantor and the SEN Trustee represents and warrants to the SEN CollateralAgent and each Holder, as of the date hereof, as follows:

 

Section 4.1.                Ownership ofCollateral.  Each of Borrower, eachGuarantor and the SEN Trustee owns the SEN Collateral purported to be owned byit or otherwise has the rights it purports to have in each item of the SENCollateral and, as to all SEN Collateral whether now existing or hereafteracquired, will continue to own or otherwise have such rights as it purports tohave in each item of the SEN Collateral, in each case free and clear of any andall Liens, rights or claims of other Persons (other than Permitted Liens).

 

Section 4.2.                Filings.  Upon the filing of all UCC financingstatements naming each of Borrower, each Guarantor and the SEN Trust as“Debtor” and the SEN Collateral Agent as “Secured Party” and describing the SENCollateral in the filing offices set forth opposite the name of each suchBorrower, each Guarantor and the SEN Trust on Schedule 4.2-A (as suchschedule may be amended or supplemented from time to time), the securityinterests granted to the SEN Collateral Agent hereunder constitute valid andperfected Liens.  Other than the

 

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financing statements filed in favor of the SEN Collateral Agentpursuant to this Agreement, no effective UCC financing statement, fixturefiling or other instrument similar in effect under any Applicable Law coveringall or any part of the SEN Collateral is on file in any filing or recordingoffice, except for (a) the financing statements filed in favor of the SENCollateral Agent pursuant to the Original Trust Indenture set forth on Schedule4.2-B, which financing statements shall be amended as required by the SENHolders and the SEN Trustee in their sole discretion and copies of which shallbe filed prior to or on the Effective Date and (b) financing statements filedin connection with Permitted Liens.

 

Section 4.3.                Voting Rights.  All actions and consents, including allfilings, notices, registrations and recordings necessary or desirable for theexercise by the SEN Collateral Agent of the voting or other rights provided forin this Agreement or the exercise of remedies in respect of the SEN Collateralhave been made or obtained.

 

Section 4.4.                Names;Organizational Identification Numbers, etc.  Set forth on Schedule 4.4 (as such schedule may be amendedor supplemented from time to time) is the following information with respect toeach of Borrower, each Guarantor and the SEN Trustee: (a) full legal name, (b)type of organization, (c) jurisdiction of organization, (d) organizationalidentification number and (e) jurisdiction of chief executive office or soleplace of business as of the Effective Date and for the year prior to theEffective Date.

 

Section 4.5.                Changes inLegal Name; Jurisdiction of Organization, etc.  Except as may be set forth on Schedule 4.5, none ofthe Borrower, the Guarantors and the SEN Trust (a) has changed its name,jurisdiction of organization, chief executive office or sole place of businessor its corporate structure in any way (e.g. by merger, consolidation, change incorporate form or otherwise) within the past five (5) years or (b) become bound(whether as a result of merger or otherwise) as debtor under a securityagreement entered into by another Person, which has not heretofore beenterminated.

 

# ARTICLE V

#  

# AFFIRMATIVECOVENANTS

#  

Each of Borrower, eachGuarantor and the SEN Trustee agrees that, until the Secured Obligations havebeen satisfied in full, it shall comply with each of the Affirmative Covenantsset forth in this Article V, as applicable.

 

Section 5.1.                CommonAgreement Affirmative Covenants. Each of the Affirmative Covenants set forth in Article IV of theCommon Agreement with respect or relating to the SEN Collateral and theobligations of Borrower and each Guarantor hereunder shall be deemed to beincorporated herein as if the same were set out in full herein.

 

Section 5.2.                PaymentDenominations.  All Export Sales forany metals products shall provide for payment to the relevant CollectionAccount in Dollars, Pounds Sterling or Euros and at least eighty percent (80%)of the Export Proceeds received in any fiscal year shall be denominated inDollars.

 

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Section 5.3.                InvestmentLosses.  In the event of a loss onany investment of funds credited to any Pledged Account, Borrower and anyGuarantor shall, on or before the next Monthly Payment Date at least five (5)Business Days following the date Borrower receives notice and quantification ofsuch loss by notice from the SEN Collateral Agent and in addition to allamounts otherwise required to be credited to subject Pledged Account, as thecase may be, pursuant to this Agreement, pay to the SEN Collateral Agent inimmediately available funds an amount equal to the amount of such loss forcredit to the subject Pledged Account (and with respect to the SEN InterestReserve Account, to the extent necessary to maintain the SEN Required ReserveAmount therein measured as of such Monthly Payment Date), as the case maybe.  The SEN Collateral Agent shallreceive and be entitled to rely on notice from the Financial Advisor of anysuch loss prior to providing any notice hereunder.

 

Section 5.4.                Defense of SENCollateral.  Each of Borrower, eachGuarantor and the SEN Trustee shall defend the SEN Collateral against allPersons at any time claiming an interest therein.

 

Section 5.5.                Notice ofAdverse Effect on SEN Collateral. Each of Borrower, each Guarantor and the SEN Trust shall promptly notifythe SEN Collateral Agent in writing of any event that may materially adverselyaffect the value of the SEN Collateral or any portion thereof, its ability orthe ability of the SEN Collateral Agent to dispose of the SEN Collateral or anyportion thereof or the rights and remedies of the SEN Collateral Agent inrelation thereto, including the levy of any legal process against the SENCollateral or any portion thereof.

 

Section 5.6.                GuarantorDesignations.  Borrower shalldesignate any Subsidiary or newly acquired or formed Subsidiary as a Guarantorhereunder (each such Subsidiary, a **“New Guarantor”**) in accordance with Section4.19 of the Common Agreement and subject to the satisfaction of thefollowing conditions:

 

##### (i)                                     each New Guarantor shall become aparty to this Agreement by executing and delivering to the SEN Collateral Agenta signature page to this Agreement identifying such New Guarantor as a “**Guarantor**”hereunder, which signature page shall be dated its date of execution, andBorrower and such New Guarantor shall execute and deliver, or cause to beexecuted and delivered, all such other documentation that would have beenrequired to be executed and delivered pursuant hereto if such New Guarantor hadbeen a “**Guarantor**”as of the Effective Date, each subject to the satisfaction of each SecuredParty;

#####  

##### (ii)                                  each New Guarantor that executes anddelivers the items set forth in this Section 5.6 by such execution anddelivery shall be (i) deemed to be a “**Guarantor**” for all purposes hereof as ofthe date of such New Guarantor’s signature page to this Agreement, (ii) boundby all of the terms and provisions of this Agreement and (iii) representing andwarranting that, subject to any applicable exceptions, all of therepresentations and warranties contained in Article III of the CommonAgreement and any other Operative Document, as applied to such New Guarantor,are true and correct on and as of the date of such New Guarantor’s signaturepage to this Agreement; and

#####  

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##### 

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##### (iii)                               the delivery of a written notice tothe SEN Collateral Agent identifying such New Guarantor and the establishmentby the SEN Collateral Agent of a new Collection Account for such New Guarantorin accordance with the terms hereof.

#####  

On and after the date of any designation in accordance with this Section5.6, such New Guarantor shall be deemed a “**Guarantor**” for all purposeshereof (including, without limitation, for purposes of becoming a guarantorunder any guarantee) and under any other Operative Document.

 

# ARTICLE VI

#  

# NEGATIVECOVENANTS

#  

Each of the NegativeCovenants set forth in Article V of the Common Agreement with respect orrelating to the SEN Collateral and the obligations of Borrower and eachGuarantor hereunder shall be deemed to be incorporated herein as if the samewere set out in full herein.

 

# ARTICLE VII

#  

# THE SENCOLLATERAL AGENT

#  

Section 7.1.                Power andAuthority of SEN Collateral Agent.

 

#### (a)                                  The SEN Collateral Agent shall agreeto any modification, amendment or waiver of any provision of this Agreementonly at the written direction of the Required SEN Holders; provided,that the SEN Collateral Agent shall not be required to enter into anymodification, amendment or waiver that affects the SEN Collateral Agent’srights, duties or obligations hereunder.

####  

#### (b)                                 Unless a Notice of an ActionableEvent shall have been given and be outstanding, the SEN Collateral Agent shallnot take any action hereunder or under any other Operative Document or withrespect to the SEN Collateral except for the performance of such other dutiesas are expressly set forth herein, including pursuant to Section 3.5.

####  

#### (c)                                  If a Notice of an Actionable Eventhas been given and is outstanding, the SEN Collateral Agent shall, upon andonly at the written direction of the Required SEN Holders, exercise suchrights, powers and remedies (whether vested in it by this Agreement, anyOperative Document or by law or in equity or by statute or otherwise) for theprotection and enforcement of its rights and the ratable rights of all Holdershereunder, under any other Operative Document and in the SEN Collateral as theRequired SEN Holders may direct in writing.

####  

#### (d)                                 at no time shall the SEN CollateralAgent be obliged to use its own funds, or the funds of any Affiliate, for anypurpose hereunder.

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Section 7.2.                Notice of anActionable Event.  Upon the receiptby the SEN Collateral Agent of a Notice of an Actionable Event, the SENCollateral Agent shall promptly notify each of Borrower and each other SecuredParty of the receipt of such Notice of Actionable Event.  Whether or not the SEN Collateral Agentshall have knowledge of the occurrence of any Event of Default, the SENCollateral Agent shall not be deemed to have actual, constructive, direct orindirect notice or knowledge of the occurrence of any Event of Default for anypurpose under this Agreement unless and until a Responsible Officer of the SENCollateral Agent shall have actually received from the Shared Payment andCollateral Agent or Borrower, a written notice to that effect.  The SEN Collateral Agent shall have no obligationwhatsoever either prior to or after receiving such a Notice of an ActionableEvent to inquire whether an Event of Default has in fact occurred and iscontinuing and shall be entitled to rely conclusively, and shall be fullyprotected in relying, on any such notice or Notice of an Actionable Eventfurnished to it.  The SEN CollateralAgent shall not take any action hereunder on the basis of any Event of Defaultunless the SEN Collateral Agent shall have received a Notice of an ActionableEvent with respect to such Event of Default.

 

Section 7.3.                Appointment ofSEN Collateral Agent as Attorney-in-Fact.

 

#### (a)                                  Each of Borrower, the SEN Trusteeand each Guarantor hereby irrevocably constitutes and appoints the SENCollateral Agent and any officer or agent thereof, with full power ofsubstitution, as its true and lawful attorney-in-fact with full irrevocablepower and authority in the place and stead of each of Borrower, the SEN Trustand each Guarantor, as applicable, and in the name of each of Borrower, the SENTrust and each Guarantor, as applicable, from time to time for the purpose ofcarrying out the terms of this Agreement, to take any and all appropriateaction required to be taken by each of Borrower, the SEN Trustee or anyGuarantor, as applicable, and to execute any and all documents and instrumentsrequired to be executed by each of Borrower, the SEN Trustee or any Guarantorthat may be necessary or desirable to accomplish the purposes of this Agreementand, without limiting the generality of the foregoing, hereby gives the SENCollateral Agent the power and right, without notice to or assent by Borrower,the SEN Trustee or any Guarantor, as applicable, to do the following to theextent the SEN Collateral Agent does not have the power and right to do each ofthe following in its own name by virtue of the provisions hereof:

####  

##### (i)                                     upon the occurrence of an Event ofDefault and for so long as such Event of Default is continuing, to ask, demand,collect, receive and give acquaintances and receipts for any and all monies dueand to become due, or any performance to be rendered under any of the SecuredObligations, to take possession of and endorse and collect any checks, drafts,notes, acceptances or other instruments for the payment of monies due under or withrespect to any of the Secured Obligations, and to file any claim or to take anyother action or proceeding in any court of law or equity or otherwise deemedappropriate for the purpose of collecting any and all such monies due orsecuring any performance to be rendered with respect to any of the SecuredObligations;

#####  

##### (ii)                                  to pay or discharge Taxes, liens,security interests or other encumbrances or charges levied or placed on orthreatened against the SEN Collateral;

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#####  

##### (iii)                               (A) to direct any party liable forany payment or performance under any of the Secured Obligations to make paymentof any and all monies due and to become due thereunder or to render anyperformance provided for therein directly to the SEN Collateral Agent, as theSEN Collateral Agent shall direct, (B) to receive payment of and give receiptfor any and all monies, claims and other amounts due and to become due atanytime in respect of or arising out of any SEN Collateral, (C) to sign andendorse any invoices, freight or express bills, bills of lading, storage orwarehouse receipts, drafts against debtors, assignments, verifications andnotices in connection with accounts and other documents relating to the SENCollateral, (D) to commence and prosecute any suits, actions or proceedings atlaw or in equity in any court of competent jurisdiction to collect the SENCollateral or any portion thereof or proceeds relating thereto and to enforceany other right in respect of any SEN Collateral, (E) to defend any suit,action or proceeding brought against Borrower, the SEN Trust or any Guarantor,as applicable, with respect to any SEN Collateral, (F) to settle, compromise oradjust any suit, action or proceeding described above and, in connectiontherewith, to give such discharges or releases as are appropriate and (G)generally to sell, transfer, pledge, make any agreement with respect to orotherwise deal with any of the SEN Collateral as fully and completely as thoughthe SEN Collateral Agent were the absolute owner thereof for all purposes, andto do, at the SEN Collateral Agent’s option and the expense of Borrower, theSEN Trust or any Guarantor, as applicable, at any time, or from time to time,all acts and things that are necessary to protect, preserve or realize upon theSEN Collateral and the security interest created therein in order to effect theintent of this Agreement, all as fully and effectively as Borrower, the SENTrustee or any Guarantor, as applicable, might do; and

#####  

##### (iv)                              to take such actions as may benecessary or appropriate from time to time to preserve, perfect and protect thesecurity interest created hereby or enable the SEN Collateral Agent to exerciseand enforce its rights and remedies hereunder.

#####  

The foregoing power of attorney is a power coupled with an interest andshall be irrevocable for so long as any amount remains outstanding under theNotes, and each of Borrower, the SEN Trustee and each Guarantor hereby ratifiesall that said attorneys shall lawfully do or cause to be done by virtuethereof.  Each of Borrower, the SENTrustee and each Guarantor also authorizes the SEN Collateral Agent, at anytime and from time to time, to execute, in connection with any sale providedfor in accordance with the terms hereof, any endorsements, assignments, billsof sale or other instruments of conveyance or transfer with respect to the SENCollateral.

 

Section 7.4.                Directions bySEN Holders.  The Required SENHolders shall have the right to direct the time, method and place of conductingany proceeding hereunder, or to exercise any remedy available to the SENCollateral Agent hereunder; provided, however, that (i) no such direction shallmodify any provision that is intended to benefit the SEN Collateral Agent, (ii)the SEN Collateral Agent shall have the right to decline to follow any suchdirection if the SEN Collateral Agent, being advised by counsel, determinesthat such action would involve it in personal liability and, (iii) the SENCollateral Agent shall not be required to take any such action unless anyindemnity or security that the SEN Collateral Agent may reasonably require inrespect of such action has been provided. The SEN Collateral Agent may rely on any direction given to it by theRequired SEN Holders and shall be fully protected, and shall under nocircumstances be liable to Borrower, the SEN Trustee, any Guarantor or any ofthe Holders or

 

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any other Person, for taking or refraining from taking any such actionin accordance with the directions of the Required SEN Holders.

 

Section 7.5.                IndividualAction.  No Holder or any otherPerson may require the SEN Collateral Agent to take or refrain from taking anyaction hereunder or with respect to any of the SEN Collateral except as and tothe extent expressly set forth in this Agreement.  Notwithstanding the foregoing or any other provision of any otherOperative Document, each Holder shall have the right that is absolute and unconditionalto receive payment of the Notes owing to it as and when such obligations becomedue and payable and to institute legal proceedings for the enforcement of suchpayment.

 

Section 7.6.                Holders’Consents.  Any consent or otherinstrument required by this Agreement to be signed by the Holders may be in anynumber of counterpart documents and may be signed by a Holder or by theHolder’s agent duly appointed in writing.

 

Section 7.7.                ExculpatoryProvisions.

 

#### (a)                                  The SEN Collateral Agent makes norepresentations as to the value or condition of the SEN Collateral or any partthereof, or as to the title of the Borrower, the Guarantors or the SEN Trusteeor any other Person to the SEN Collateral or as to the security afforded by theOperative Documents, or as to the validity, execution (except its ownexecution), enforceability, legality or sufficiency of any of the OperativeDocuments, or as to the tax treatment of any of the transactions contemplatedby the Operative Documents and the SEN Collateral Agent shall not incur anyliability or responsibility with respect of any such matters.  The SEN Collateral Agent shall not beresponsible for insuring the SEN Collateral, for the payment of taxes, charges,assessments or Liens upon the SEN Collateral or upon the SEN Trust or otherwiseas to the maintenance of the SEN Collateral, except as provided in theimmediately following sentence when the SEN Collateral Agent has possession ofthe SEN Collateral.  To the extentpermitted by applicable law, the SEN Collateral Agent shall have no duty toBorrower, any Guarantor, the SEN Trustee or to the SEN Holders as to any SENCollateral in its possession or control or in the possession or control of anyagent or nominee of the SEN Collateral Agent or any income thereon or as to thepreservation of rights against prior parties or any other rights pertainingthereto, except the duties of safe custody of the such of the SEN Collateral asmay be in its possession and the duty to account for monies received by it andexcept the duty to comply with the specific provisions hereof.

####  

#### (b)                                 The SEN Collateral Agent shall haveno duty to file, perfect or record or to maintain filed, perfected or recordedany UCC-1 financing statements or other documents relating to the SENCollateral.

####  

Section 7.8.                Appointment ofCo-Agent.

 

#### (a)                                  It is the purpose of this Agreementthat there shall be no violation of any law of any jurisdiction denying orrestricting the right of banking corporations or associations to transactbusiness as a collateral agent in such jurisdiction.  It is recognized that in case of litigation under any of theOperative Documents, and in particular in case of the enforcement of anydefault, or in case the SEN Collateral Agent deems that by reason of anypresent or future

####  

#### 18

#### 

####  

law of any jurisdiction it may not exercise any of the powers, rightsor remedies granted to the SEN Collateral Agent or hold title to theproperties, in trust, as so granted, or take any other action which may bedesirable or necessary, the SEN Collateral Agent may appoint an additionalinstitution as a separate collateral agent or co-agent and shall give notice ofsuch appointment to Borrower and each SEN Holder; provided, that thefailure of the SEN Collateral Agent to give, or of any of the SEN Holders orBorrower to receive, any such notice shall not impair the validity of suchappointment; and provided, further that the SEN Collateral Agentshall not be required to give any notice to Borrower during the existence of aDefault or any Event of Default.  Thefollowing provisions of this Section are adapted to these ends.

####  

#### (b)                                 In the event that the SEN CollateralAgent appoints an additional institution as a separate collateral agent or co-agent,each and every remedy, power, right, claim, demand, cause of action, immunity,estate, title, interest and lien expressed or intended by any of the OperativeDocuments to be exercised by or vested in or conveyed to the SEN CollateralAgent with respect thereto shall be exercisable by and vest in such separate collateralagent or co-agent but only to the extent necessary to enable such separatecollateral agent or co-agent to exercise such powers, rights and remedies, andevery covenant and obligation necessary to the exercise thereof by suchseparate agent or co-agent shall run to and be enforceable by either ofthem.  Such co-agent may beremoved by the SEN Collateral Agent at any time, with or without cause.

####  

#### (c)                                  Should any instrument in writingfrom the SEN Trustee, Borrower or any Guarantor be required by the separateagent or co-agent so appointed by the SEN Collateral Agent for more fully andcertainly 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 SEN Trustee,Borrower, or such Guarantor as applicable. In case any separate collateral agent or co-agent, or a successor toeither, shall become incapable of acting, resign or be removed, all theestates, properties, rights, powers, trusts, duties and obligations of suchseparate collateral agent or co-agent, so far as permitted by law, shall vestin and be exercised by the SEN Collateral Agent until the appointment of a newcollateral agent or successor to such separate collateral agent or co-agent.

####  

Section 7.9.                Direction fromRequired SEN Holders.  In each casethat the SEN Collateral Agent may or is required hereunder, or under any otherOperative Document, to take any action (an “**Action**”), including, withoutlimitation, to formulate opinions, to make determinations, to make requests, togive consents, to exercise rights, powers or remedies, to release or sellsecured property, or otherwise to act hereunder or under any other OperativeDocument, the SEN Collateral Agent may seek written direction from the RequiredSEN Holders.  The SEN Collateral Agentshall not be liable with respect to any Action taken or omitted to be taken byit in good faith in accordance with the written direction of the Required SENHolders.  If the SEN Collateral Agentshall request direction from the Required SEN Holders with respect to anyAction, the SEN Collateral Agent shall be entitled to refrain from such Actionunless and until the SEN Collateral Agent shall have received written directionfrom the Required SEN Holders, and the SEN Collateral Agent shall not incurliability to any Person by reason of so refraining.

 

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Section 7.10.          Indenture Provisions.  The provisions of Article XIII of theIndenture shall be deemed to be incorporated herein as if the same were set outin full herein.

 

# ARTICLE VIII

#  

# REMEDIES OF THEHOLDERS

#  

Section 8.1.                Remedies.  If an Event of Default has occurred and iscontinuing, the SEN Collateral Agent may exercise any and all rights andremedies set forth in Article X of the Common Agreement at the writtendirection of the Required SEN Holders (which rights and remedies shall bedeemed to be incorporated herein as if the same were set out in full herein).

 

Section 8.2.                Rights NotExclusive.  The rights, powers,privileges and remedies provided for herein and in any Operative Documents arecumulative and are not exclusive of any other rights, powers, privileges orremedies provided by law or in equity, or under any other documents nowexisting or hereafter arising.

 

# ARTICLE IX

#  

# MISCELLANEOUS

#  

Section 9.1.                Authorizationto File Financing Statements. Each of Borrower, each Guarantor and the SENTrustee hereby authorizes the filing of any financing statements orcontinuation statements, amendments to financing statements or any similardocument in any jurisdiction with any filing offices as the SEN Holders maydetermine, in their sole discretion, are necessary or advisable to perfect thesecurity interests granted to the SEN Collateral Agent herein.  Such financing statements may describe theSEN Collateral in the same manner as described herein or may contain anindication or description of collateral that describes such property in anyother manner as the SEN Holders may determine, in their sole discretion, isnecessary, advisable or prudent to ensure the perfection of the securityinterest in the SEN Collateral granted to the SEN Collateral Agent herein.  Each of Borrower, each Guarantor and the SENTrustee shall furnish to the SEN Collateral Agent from time to time statementsand schedules further identifying and describing the SEN Collateral and suchother reports in connection with the SEN Collateral as the SEN Holders mayreasonably request, all in reasonable detail.

 

Section 9.2.                Control ofAccounts.  Without limiting anyother means of obtaining perfection of the SEN Collateral Agent’s securityinterest in any or all of the SEN Collateral, the Borrower, each Guarantor, theSEN Collateral Agent and HSBC hereby agree, with respect to the Accounts, thatHSBC will comply with instructions originated by the SEN Collateral Agentdirecting disposition of the funds in the Accounts without further consent bythe Borrower or any Guarantor.

 

20

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Section 9.3.                Termination;Continuing Security Interests.

 

#### (a)                                  This Agreement shall create acontinuing security interest in the SEN Collateral and shall remain in fullforce and effect until the indefeasible satisfaction in full of all SecuredObligations and the termination or cancellation of any commitments and anyother contingent obligations included in the Secured Obligations, be bindingupon each of Borrower, each Guarantor and the SEN Trustee, its successors andassigns, and inure, together with the rights and remedies of the SEN CollateralAgent, to the benefit of the SEN Collateral Agent and its successors,transferees and assigns.

####  

#### (b)                                 Upon termination of this Agreementin accordance with this Section 9.3, the SEN Collateral Agent shall, atthe written request and sole cost and expense of each of Borrower, eachGuarantor and the SEN Trustee, and upon receipt of a certificate from aResponsible Officer of each of Borrower, each Guarantor and the SEN Trusteestating that the conditions for such termination have been satisfied, executeand deliver to each of Borrower, each Guarantor and the SEN Trustee suchdocuments as each of Borrower, each Guarantor and the SEN Trustee shallreasonably request to evidence such termination reversions or reassignment,without recourse, representation or warranty of any kind.

####  

Section 9.4.                Notices.  With respect to all notices to be givenhereunder, Section 14.14 of the Common Agreement shall be deemed to beincorporated herein as if the same were set out in full herein.

 

Section 9.5.                Limitation onRights.  Nothing expressed orimplied in this Agreement or the Notes shall give any Person other than the SENCollateral Agent, the SEN Trustee, Borrower or any Guarantor any right, remedyor claim under or with respect to this Agreement.

 

Section 9.6.                Successors andAssigns.  All of the covenants,stipulations, promises and agreements in this Agreement contained made by or onbehalf of Borrower or the SEN Trustee shall bind each such party’s successorsand assigns, whether so expressed or not.

 

Section 9.7.                Amendments andWaivers.  Section 14.01(b) ofthe Common Agreement shall be deemed to be incorporated herein as if the samewere set out in full herein.

 

Section 9.8.                Effect ofHeadings.  With respect to anyheadings contained herein, Section 14.04 of the Common Agreement shallbe deemed to be incorporated herein as if the same were set out in full herein.

 

Section 9.9.                Severability.  Section 14.05 of the Common Agreementshall be deemed to be incorporated herein as if the same were set out in fullherein.

 

Section 9.10.          Counterparts.  This Agreement may be executed in one ormore counterparts, each of which shall be an original and all of which whentaken together shall constitute one and the same instrument.

 

Section 9.11.          Currency.  Section 14.06 of the Common Agreementshall be deemed to be incorporated herein as if the same were set out in fullherein.

 

21

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Section 9.12.          GOVERNING LAW.  THIS AGREEMENT AND THE NOTES SHALL BEGOVERNED BY AND INTERPRETED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF THESTATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF (OTHERTHAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OFTHE STATE OF NEW YORK).

 

Section 9.13.          Consent toJurisdiction; Process Agent.  Section14.22 of the Common Agreement shall be deemed to be incorporated herein asif the same were set out in full herein.

 

Section 9.14.          Waiver of Jury Trial.  Section 14.20 of the Common Agreementshall be deemed to be incorporated herein as if the same were set out in fullherein.

 

Section 9.15.          Waiver of Immunity.  Section 14.17 of the Common Agreementshall be deemed to be incorporated herein as if the same were set out in full herein.

 

Section 9.16.          Tax Treatment.  Section 14.11 of the Common Agreementshall be deemed to be incorporated herein as if the same were set out in fullherein.

 

Section 9.17.          Disclosure to OtherPersons.  Section 14.12 ofthe Common Agreement shall be deemed to be incorporated herein as if the samewere set out in full herein.

 

Section 9.18.          SEN Trustee Acting onBehalf of SEN Trust.  The SEN Trustshall act only by and through the SEN Trustee acting as such in its capacity astrustee under the Trust Agreement.  Forthe avoidance of doubt, the affirmative and negative covenants or any otherrepresentations or warranties contained in this Indenture shall not be deemedto be made by BONY.

 

Section 9.19.          No Third PartyBeneficiaries.  Section 14.16of the Common Agreement shall be deemed to be incorporated herein as if thesame were set out in full herein.

 

Section 9.20.          Amendment andRestatement.  As of the EffectiveDate, certain provisions of the Original Trust Indenture with respect to thesecurity interests granted by each of the SEN Trustee and Borrower thereundershall be amended and restated in accordance with the terms of this Agreement(it being understood that certain other provisions of the Original TrustIndenture are concurrently herewith being amended and restated pursuant to theIndenture and the Common Agreement, and that this Agreement, the Indenture andthe Common Agreement, collectively constitute an amendment and restatement ofthe Original Trust Indenture in its entirety with respect to the securityinterests granted by each of the SEN Trustee and Borrower).

 

Section 9.21.          Use of EnglishLanguage.  Section 14.18 ofthe Common Agreement shall be deemed to be incorporated herein as if the samewere set out in full herein.

 

Section 9.22.          Fees and Expenses.  Article XI of the Common Agreementshall be deemed to be incorporated herein as if the same were set out in fullherein.

 

22

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**[**Remainder of thispage intentionally left blank**]**

 

23

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IN WITNESS WHEREOF, theparties hereto have caused this SEN Security Agreement to be duly executed asof the date first written above.

 
|   | GRUPO MINERO MEXICO, S.A. DE C.V.,  as Borrower                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                    |
|   | By:                                                                                                                                     | /s/ Daniel Tellechea Salido |   |
|   |                                                                                                                                    | Name:  Daniel  Tellechea Salido |   |
|   |                                                                                                                                    | Title: Attorney-in-fact |   |
|   |                                                                                                                                    |   |   |
|   |                                                                                                                                    |   |   |
|   | By:                                                                                                                                     | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                                                                                                    | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                                                                                                    | Title:   Attorney-in-fact |   |
|   |                                                                                                                                    |
|   |                                                                                                                                    |
|   | THE BANK OF NEW YORK,  not in its individual capacity but solely as trustee of  GRUPO MEXICO EXPORT MASTER TRUST NO. 1,  as SEN Trustee |
|   |                                                                                                                                    |
|   | By:                                                                                                                                     | /s/ Janie K. Choi |   |
|   |                                                                                                                                    | Name:  Janie  K. Choi |   |
|   |                                                                                                                                    | Title:  Vice  President |   |

 

24

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|   | MINERA MEXICO, S.A. DE C.V.,  as Guarantor            |
|--------|-------------------------------------------------------|
|   |                                                  |
|   | By:                                                   | /s/ Daniel Tellechea Salido |   |
|   |                                                  | Name:  Daniel  Tellechea Salido |   |
|   |                                                  | Title:   Attorney-in-fact |   |
|   |                                                  |   |   |
|   | By:                                                   | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                  | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                  | Title:   Attorney-in-fact |   |
|   |                                                  |
|   |                                                  |
|   | INDUSTRIAL MINERA MEXICO, S.A. DE C.V.,  as Guarantor |
|   |                                                  |
|   | By:                                                   | /s/ Daniel Tellechea Salido |   |
|   |                                                  | Name:  Daniel  Tellechea Salido |   |
|   |                                                  | Title:   Attorney-in-fact |   |
|   |                                                  |   |   |
|   | By:                                                   | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                  | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                  | Title:   Attorney-in-fact |   |

 

25

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|   | MINERA MEXICO INTERNACIONAL, INC.,  as Guarantor |
|--------|--------------------------------------------------|
|   |                                             |
|   | By:                                              | /s/ Daniel Tellechea Salido |   |
|   |                                             | Name:  Daniel  Tellechea Salido |   |
|   |                                             | Title:   Attorney-in-fact |   |
|   |                                             |   |   |
|   |                                             |   |   |
|   | By:                                              | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                             | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                             | Title:  Attorney-in-fact |   |
|   |                                             |   |   |
|   |                                             |   |   |
|   | MEXICANA DE COBRE, S.A. DE C.V.,  as Guarantor   |
|   |                                             |   |   |
|   | By:                                              | /s/ Daniel Tellechea Salido |   |
|   |                                             | Name:  Daniel  Tellechea Salido |   |
|   |                                             | Title:   Attorney-in-fact |   |
|   |                                             |   |   |
|   |                                             |   |   |
|   | By:                                              | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                             | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                             | Title:   Attorney-in-fact |   |

 

26

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|   | MINERALES METALICOS DEL NORTE, S.A.,  as Guarantor |
|--------|----------------------------------------------------|
|   |                                               |   |   |
|   | By:                                                | /s/ Daniel Tellechea Salido |   |
|   |                                               | Name:  Daniel  Tellechea Salido |   |
|   |                                               | Title:   Attorney-in-fact |   |
|   |                                               |   |   |
|   |                                               |   |   |
|   | By:                                                | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                               | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                               | Title:   Attorney-in-fact |   |
|   |                                               |   |   |
|   |                                               |   |   |
|   | MEXICANA DE CANANEA, S.A. DE C.V.,  as Guarantor   |
|   |                                               |
|   | By:                                                | /s/ Daniel Tellechea Salido |   |
|   |                                               | Name:  Daniel  Tellechea Salido |   |
|   |                                               | Title:   Attorney-in-fact |   |
|   |                                               |   |   |
|   |                                               |   |   |
|   | By:                                                | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                               | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                               | Title:   Attorney-in-fact |   |

 

27

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|   | MEXICANA DEL ARCO, S.A. DE C.V.,  as Guarantor            |
|--------|-----------------------------------------------------------|
|   |                                                      |   |   |
|   | By:                                                       | /s/ Daniel Tellechea Salido |   |
|   |                                                      | Name:  Daniel  Tellechea Salido |   |
|   |                                                      | Title:   Attorney-in-fact |   |
|   |                                                      |   |   |
|   |                                                      |   |   |
|   | By:                                                       | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                      | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                      | Title:   Attorney-in-fact |   |
|   |                                                      |   |   |
|   |                                                      |   |   |
|   | MINERALES Y MINAS MEXICANAS, S.A. DE  C.V.,  as Guarantor |
|   |                                                      |
|   | By:                                                       | /s/ Daniel Tellechea Salido |   |
|   |                                                      | Name:  Daniel  Tellechea Salido |   |
|   |                                                      | Title:   Attorney-in-fact |   |
|   |                                                      |   |   |
|   |                                                      |   |   |
|   | By:                                                       | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                      | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                      | Title:   Attorney-in-fact |   |

 

28

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|   | COMPANIA DE TERRENOS E INVERSIONES  DE SAN LUIS POTOSI, S. C. POR A., S.A.,  as Guarantor |
|--------|-------------------------------------------------------------------------------------------|
|   |                                                                                      |
|   | By:                                                                                       | /s/ Daniel Tellechea Salido |   |
|   |                                                                                      | Name:  Daniel  Tellechea Salido |   |
|   |                                                                                      | Title:   Attorney-in-fact |   |
|   |                                                                                      |   |   |
|   |                                                                                      |   |   |
|   | By:                                                                                       | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                                                      | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                                                      | Title:   Attorney-in-fact |   |
|   |                                                                                      |   |   |
|   |                                                                                      |   |   |
|   | MEXICO COMPANIA INMOBILIARIA, S.A.,  as Guarantor                                         |
|   |                                                                                      |   |   |
|   | By:                                                                                       | /s/ Daniel Tellechea Salido |   |
|   |                                                                                      | Name:  Daniel  Tellechea Salido |   |
|   |                                                                                      | Title:   Attorney-in-fact |   |
|   |                                                                                      |   |   |
|   |                                                                                      |   |   |
|   | By:                                                                                       | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                                                      | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                                                      | Title:   Attorney-in-fact |   |

 

29

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|   | PROYECCIONES URBANISTICAS, S. DE R.L.  DE C.V.,  as Guarantor |
|--------|---------------------------------------------------------------|
|   |                                                          |   |   |
|   | By:                                                           | /s/ Daniel Tellechea Salido |   |
|   |                                                          | Name:  Daniel  Tellechea Salido |   |
|   |                                                          | Title:   Attorney-in-fact |   |
|   |                                                          |   |   |
|   |                                                          |   |   |
|   | By:                                                           | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                          | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                          | Title:   Attorney-in-fact |   |
|   |                                                          |   |   |
|   |                                                          |   |   |
|   | HSBC BANK USA,  as SEN Collateral Agent                       |
|   |                                                          |
|   | By:                                                           | /s/ Daniel Tellechea Salido |   |
|   |                                                          | Name:  Daniel  Tellechea Salido |   |
|   |                                                          | Title:   Attorney-in-fact |   |
|   |                                                          |   |   |
|   |                                                          |   |   |
|   | By:                                                           | /s/ J. Eduardo Gonzalez Felix |   |
|   |                                                          | Name:  J.  Eduardo Gonzalez Felix |   |
|   |                                                          | Title:   Attorney-in-fact |   |

 

30

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|   | HSBC BANK USA,  in its individual capacity |
|--------|--------------------------------------------|
|   |                                       |
|   | By:                                        | /s/ Harriet Drandoff |   |
|   |                                       | Name:   Harriet Drandoff |   |
|   |                                       | Title:  Vice  President |   |

 

31

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**AppendixA****to the SEN Security Agreement**

 

As used in this Agreementand any other document that, by its terms, incorporates these definitions, thefollowing terms shall have the following meanings, except to the extentotherwise expressly defined therein. Except as otherwise indicated, all the agreements or instruments hereindefined or referred to shall mean such agreements or instruments as the samemay be supplemented or amended from time to time or the terms thereof waived ormodified to the extent permitted by, and in accordance with, the terms thereof.

 

“**Accounts**” shall mean,collectively, the Pledged Accounts.

 

“**Acknowledgement SEN Cash Trapping Event**”shall mean an event that, upon written direction from the Financial Advisor tothe SEN Collateral Agent, causes a trapping of cash in the Collection Accountsand the Investment Account in accordance with Section 4.03(b) of theCommon Agreement.

 

“**Acknowledgement SEN Cash Trapping Period**”shall mean the period beginning on the date upon which a Responsible Officer ofthe SEN Collateral Agent receives written direction from the Financial Advisorthat an Acknowledgement SEN Cash Trapping Event has occurred and ending on thedate upon which the SEN Collateral Agent receives another such writtendirection or an Acknowledgement SEN Cash Trapping Termination Notice.

 

“**Acknowledgement SEN Cash TrappingTermination Notice**” shall mean a written notice received by the SENCollateral Agent from the Financial Advisor stating that any AcknowledgementSEN Cash Trapping Event has been cured or waived.

 

“**Borrower Collateral**” shallmean all of Borrower’s rights, title and interest in, to and under each of theBorrower Collection Account, the SEN Interest Reserve Account, the InvestmentAccount, and any and all proceeds thereof.

 

“**Borrower Liens**” shall mean,collectively, the SEN Trust Borrower Lien and the SEN Holders Borrower Lien.

 

“**Borrower SEN Holders Obligations**”shall mean all of the Obligations of Borrower for the benefit of each of theSEN Holders under each Operative Document.

 

“**Borrower SEN Trust Obligations**”shall mean all of the Obligations of Borrower for the benefit of the SENTrustee under each Operative Document.

 

“**Customers**” shall mean eachCustomer listed on Schedule 3.23 to the Common Agreement.

 

“**Customer Notice and Acknowledgement**”shall mean any written notice substantially in the form of Exhibit Aattached hereto.

 

A-1

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“**Determination Date**” shallmean the Effective Date and the last day of each calendar quarter thereafter.

 

“**Effective Date**” shall meanthe date of execution and delivery of this Agreement and the date upon whichall of the conditions precedent set forth in Article II of the CommonAgreement shall have been satisfied or waived.

 

“**Export Proceeds**” shall meanmeans proceeds (including, without limitation, advance payments) of ExportReceivables or Export Sales.

 

“**Export Receivables**” shallmean any and all accounts receivable arising from Export Sales.

 

“**Fitch**” shall mean FitchRatings Ltd. or any successor thereto.

 

“**Guarantor Collateral**” shallmean, with respect to each Guarantor, all of such Guarantor’s right, title andinterest in, to and under each of the Guarantor Collection Accounts, all ExportReceivables and Export Proceeds (including any such proceeds in the GuarantorCollection Accounts), and any and all proceeds thereof.

 

“**Guarantor Liens**” shall mean,collectively, the SEN Trust Guarantor Lien and the SEN Holders Guarantor Lien.

 

“**Guarantors**” shall mean eachof the Guarantors listed on Schedule I hereto.

 

“**Guarantor SEN Holders Obligations**”shall mean all of the Obligations of each Guarantor for the benefit of the SENHolders under each Operative Document.

 

“**Guarantor SEN Trust Obligations**”shall mean all of the Obligations of each Guarantor for the benefit of the SENTrustee under each Operative Document.

 

“**Immediate SEN Cash Trapping Event ofDefault**” shall mean an Event of Default as described in Sections9.01(a), (i) or (j) of the Common Agreement.

 

“**Immediate SEN Cash Trapping Period**”shall mean the period beginning on the date upon which a Responsible Officer ofthe SEN Collateral Agent receives written notice that an Immediate SEN CashTrapping Event of Default has occurred and is continuing and ending on the dateupon which the SEN Collateral Agent receives an Immediate SEN Cash TrappingTermination Notice.

 

“**Immediate SEN Cash Trapping TerminationNotice**” shall mean a written notice received by the SEN CollateralAgent from the Required SEN Holders stating that any Immediate SEN CashTrapping Event of Default has been cured or waived.

 

“**Legal Requirements**” shallmean all requirements having the force of law applicable at any time and in anyjurisdiction (including, without limitation, the United States of

 

A-2

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America and Mexico) to the Operative Documents, the parties to suchagreements, the rights or interests of such parties therein, or thetransactions contemplated thereby.

 

“**Letter of Credit**” shall meanan irrevocable letter of credit issued in favor of the SEN Collateral Agent byor guaranteed by a depository institution or trust company having a creditrating with respect to its Dollar denominated long-term unsecuredobligations of (i) at least A+ from Standard & Poor’s, A1 from Moody’s andA+ from Fitch or (ii) if not rated by all three such rating agencies, by atleast two such rating agencies (one of which is Standard & Poor’s).

 

“**Liens**” shall mean each of theBorrower Liens, the Guarantor Liens and the SEN Trustee Lien.

 

“**Moody’s**” shall mean Moody’sInvestor Service, Inc.

 

“**Notes**” shall mean,collectively, the Borrower Notes and the Secured Notes.

 

“**Notice of an Actionable Event**”shall mean any notice from the Shared Payment and Collateral Agent that anEvent of Default has occurred and is continuing.

 

“**Qualified L/C Provider**” shallmean a financial institution providing a Letter of Credit as contemplated by Section3.4(b).

 

“**Qualified L/C Provider Notice**”shall mean any notice from a Qualified L/C Provider to the SEN Collateral Agentstating that Borrower or any Guarantor is obligated to pay amounts to suchQualified L/C Provider and that such payment obligation is secured under aQualified L/C Security Agreement.

 

“**Qualified L/C Security Agreement**”shall mean a security agreement granting a security interest in the ExportReceivables, Export Proceeds and funds on deposit in the Collection Accountsand proceeds thereof in favor of a Qualified L/C Provider.

 

“**Rating Agencies**” shall mean,collectively, each of Fitch, Moody’s and Standard & Poor’s.

 

“**Scheduled Debt Service**” shallmean, as of any date of determination and in relation to any period of time,the sum of (i) all interest (assuming, with respect to floating rate SecuredNotes, that the interest rate applicable on the date of determination willremain unchanged), and principal payments and (ii) all Additional Amounts, in eachcase scheduled to be made by the SEN Trustee on the Secured Notes for suchperiod of time based on the principal amount of Secured Notes outstanding onsuch date.

 

“**Secured Obligations**” shallmean, collectively, the Borrower SEN Trust Obligations, the Borrower SENHolders Obligations, the Guarantor SEN Trust Obligations, the Guarantor SENHolders Obligations and the SEN Trust Obligations.

 

“**Secured Parties**” shall mean,collectively, the SEN Collateral Agent, the SEN Trustee and the SEN Holders.

 

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“**SEN Cash Trapping Event of Default**”shall mean shall an Event of Default other than an Immediate SEN Cash TrappingEvent of Default.

 

“**SEN Cash Trapping Period**”shall mean the period beginning on the date upon which the SEN Collateral Agentis directed to trap cash by the Required SEN Holders in accordance with Section7.01(b)(ii) of the Common Agreement and ending on the date upon which theSEN Collateral Agent receives a SEN Cash Trapping Termination Notice.

 

“**SEN Cash Trapping Termination Notice**”shall mean a written notice received by the SEN Collateral Agent from theRequired SEN Holders stating that any SEN Cash Trapping Event of Default hasbeen cured or waived.

 

“**SEN Collateral**” shall mean,collectively, the Borrower Collateral, the Guarantor Collateral and the SENTrust Collateral.

 

“**SEN Collateral Agent Amount**”shall mean the amount, from time to time, of all indemnifications, costs,expenses, fees and other compensation of the SEN Collateral Agent provided for,and all other amounts owed to, the SEN Collateral Agent under the OperativeDocuments.

 

“**SEN Collateral Agent Scheduled Amount**”shall mean **[$100,000]**.

 

“**SEN Holders**” shall mean eachof the SEN Holders listed on Schedule III hereto.

 

“**SEN Required Reserve Amount**”shall mean the SEN Interest Reserve Account Required Balance.

 

“**SEN Trust Collateral**” shallmean, collectively, all of the SEN Trustee’s right, title and interest in, toand under the Borrower Notes, any guarantee of any guaranteed Obligations, andany and all proceeds thereof.

 

“**SEN Trust Obligations**” shallmean all of the Obligations of the SEN Trust for the benefit of the SEN Holdersunder each of the Operative Documents.

 

“**Standard & Poor’s**” shallmean Standard & Poor’s Rating Services, a division of The McGraw - Hill Companies, Inc.

 

“**Transfer Instructions**” shallmean the transfer instructions set forth on Schedule 3.3 hereto.

 

“**UCC**”  shall mean the Uniform Commercial Code as ineffect from time to time in the State of New York or the District of Columbia,as applicable.

 

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