ON THIS AGREEMENT AND THE
FINANCING DOCUMENTS REFERS TO DEFAULT ON ANY OBLIGATION BY ANY OF THE PARTIES,
WITHOUT THE OTHER PARTIES BEING OBLIGED TO DEMAND COMPLIANCE OF SAID OBLIGATION
OR BECOMING A CAUSE FOR INVOKING A DELAYED ACTION BY SAID PARTY.
PROVIDED
PREVAILING LEGISLATIONS ALLOWS IT, ANY DEFAULT WILL BE INCURRED AUTOMATICALLY.
CLAUSE TWO:
BACKGROUND
2.1
DRP IS A PRIVATE COMPANY ENGAGED IN MINING, SMELTING, REFINING
ACTIVITIES, SALE OF METALS AND RELATED ACTIVITIES, INCLUDING BUT NOT LIMITED TO
THE PROCESSING OF MINERALS.
IN OCTOBER 1997, DRP ACQUIRED EMPRESA METALÚRGICA
LA OROYA S.A FROM ITS FORMER OWNER THE STATE-OWNED COMPANY EMPRESA MINERA DEL
CENTRO DEL PERÚ S.A, WITHIN THE FRAMEWORK OF THE PRIVATIZATION
10
PROCESS CARRIED OUT BY THE GOVERNMENT OF THE REPUBLIC OF PERU.
IN DECEMBER
1997, DRP TOOK OVER EMPRESA METALÚRGICA LA OROYA S.A. BY MERGER.
2.2
BY VIRTUE OF PUBLIC DEED DATED JUNE 18, 1998,
ISSUED IN LIMA BEFORE PUBLIC NOTARY, ANÍBAL CORVETTO ROMERO, BANCO DE CRÉDITO
DEL PERU GAVE DRP A CREDIT LINE IN FOREIGN CURRENCY FOR UP TO US$40,000,000.00,
TO FINANCE DRP FOREIGN TRADE OPERATIONS AND/OR DOMESTIC SALES.
2.3
DRR RESTRUCTURING PLAN INCLUDES AS ONE OF ITS
PRECEDENT CONDITIONS FOR THE CLOSING THAT THE CREDIT LINE AGREEMENT MUST HAVE
BEEN SIGNED TO SUBSTITUTE THE AGREEMENT REFERRED TO IN SUBCLAUSE 2.2 HEREOF.
CLAUSE THREE:
OBJECT OF THE
CONTRACT
3.1
DRP REQUIRES WORKING CAPITAL FINANCING FOR ITS
FOREIGN TRADE OPERATION AND/OR DOMESTIC SALES, PURCHASE OF CONCENTRATES, RAW
MATERIALS, SUPPLIES, INVENTORY, SPARE PARTS, OTHER OPERATING COSTS AND OTHER
WORKING CAPITAL NEEDS WHICH IS WHY IT HAS REQUESTED THE BANKS, THROUGH THE
AGENT, A CREDIT LINE OF UP TO US$ 58,000,000.00 (FIFTY-EIGHT MILLION AND 00/100
US DOLLARS) AND, THE BANKS COMPLYING WITH THE REQUEST MADE, HEREBY AGREE TO
GRANT IT, SUBJECT TO THE MAXIMUM AMOUNTS THAT EACH BANK MAY HAVE ASSUMED BY
VIRTUE OF THEIR RESPECTIVE COMMITMENTS, AND UNDER THE TERMS AND CONDITIONS OF
THIS CREDIT LINE AGREEMENT.
The Commitments assumed by each one of the Banks are those listed in Exhibit 1
of this Credit Line Agreement.
Exhibit I shall be updated each and every time
that an additional amount is syndicated during the term established to this end
in Subclause 3.3 of this Credit Line Agreement.
3.2
THE CREDIT LINE GRANTED UNDER THIS AGREEMENT
WILL BE MADE UP OF THE TWO SUB-LINES INDICATED HEREINBELOW:
3.2.1
REVOLVING CREDIT LINE:
IT IS GRANTED IN THAT LESSER OF
(I) US$45,000,000.00 (FORTY-FIVE MILLION AND 00/100 US DOLLARS) AND (II) THE
BASE AMOUNT OF THE LOAN, PROVIDED THEY ARE WITHIN THE LEGAL LIMITS FOR BANKING
OPERATIONS SET FORTH IN THE GENERAL LAW OF THE FINANCIAL SYSTEM AND THE
INSURANCE SYSTEM AND ORGANIC LAW OF THE BANKING AND INSURANCE SUPERINTENDENCY
(LAW NO. 26702) OR ANY OTHER THAT SHOULD REPLACE IT IN THE FUTURE.
DRP may use the Revolving Credit Line that is granted in accordance with this
agreement by requesting the necessary loans to fulfill its working capital
needs.
Likewise, within the Revolving Credit Line referred to in this item, up
to