Exhibit 10.1
EXECUTION VERSION
CREDIT AGREEMENT
Dated as of October 28, 2010
between
Harvest Natural Resources, Inc.
as the Borrower
and
MSD Energy Investments Private II, LLC,
as Lender

 

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TABLE OF CONTENTS

              Page  
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
    1  
1.01. Defined Terms
    1  
1.02. Other Interpretive Provisions
    18  
1.03. Accounting Terms
    19  
1.04. Rounding
    19  
1.05. Times of Day
    19  
1.06. Currency Equivalents Generally
    19  
 
       
ARTICLE II. THE LOAN
    20  
2.01. The Loan
    20  
2.02. Prepayments
    20  
2.03. Repayment of Loan
    21  
2.04. Interest
    21  
2.05. Computation of Interest and Fees
    21  
2.06. Evidence of Debt
    21  
2.07. Payments Generally
    21  
 
       
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
    22  
3.01. Taxes
    22  
3.02. Increased Costs
    25  
3.03. Survival
    26  
 
       
ARTICLE IV. CONDITIONS PRECEDENT TO THE LOAN
    26  
4.01. Conditions of the Loan
    26  
 
       
ARTICLE V. REPRESENTATIONS AND WARRANTIES
    28  
5.01. Existence, Qualification and Power
    28  
5.02. Authorization; No Contravention
    28  
5.03. Governmental Authorization; Other Consents
    28  
5.04. Binding Effect
    28  
5.05. Financial Statements; No Material Adverse Effect
    28  
5.06. Litigation
    29  
5.07. No Default
    29  
5.08. Ownership of Property; Liens; Investments
    29  

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TABLE OF CONTENTS
(continued)

              Page  
5.09. Environmental Compliance
    30  
5.10. Insurance
    31  
5.11. Taxes
    31  
5.12. ERISA Compliance
    31  
5.13. Subsidiaries; Equity Interests; Loan Parties
    32  
5.14. Margin Regulations; Investment Company Act
    32  
5.15. Disclosure
    32  
5.16. Compliance with Laws
    33  
5.17. Intellectual Property; Licenses, Etc.
    33  
5.18. Solvency
    33  
5.19. Casualty, Etc.
    33  
5.20. Labor Matters
    33  
5.21. Foreign Assets Control Regulations, Etc.
    33  
 
       
ARTICLE VI. AFFIRMATIVE COVENANTS
    34  
6.01. Financial Statements
    34  
6.02. Certificates; Other Information
    35  
6.03. Notices
    37  
6.04. Payment of Obligations
    37  
6.05. Preservation of Existence, Etc.
    38  
6.06. Maintenance of Properties
    38  
6.07. Maintenance of Insurance
    38  
6.08. Compliance with Laws
    38  
6.09. Books and Records
    38  
6.10. Inspection Rights
    38  
6.11. Use of Proceeds
    39  
6.12. Covenant to Guarantee Obligations
    39  
6.13. Compliance with Environmental Laws
    39  
6.14. Further Assurances
    39  
6.15. Compliance with Terms of Leaseholds
    39  
6.16. Material Contracts
    40  

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TABLE OF CONTENTS
(continued)

              Page  
ARTICLE VII. NEGATIVE COVENANTS
    40  
7.01. Liens
    40  
7.02. Indebtedness
    41  
7.03. Investments
    43  
7.04. Fundamental Changes
    45  
7.05. Dispositions
    46  
7.06. Restricted Payments
    47  
7.07. Change in Nature of Business
    48  
7.08. Transactions with Affiliates
    48  
7.09. Burdensome Agreements
    48  
7.10. Use of Proceeds
    48  
7.11. Amendments of Organization Documents
    49  
7.12. Accounting Changes
    49  
7.13. Prepayments, Etc. of Indebtedness
    49  
7.14. Terrorism Sanctions Regulations
    49  
 
       
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
    49  
8.01. Events of Default
    49  
8.02. Remedies upon Event of Default
    51  
8.03. Application of Funds
    51  
 
       
ARTICLE IX. MISCELLANENOUS
    52  
9.01. Amendments, Etc
    52  
9.02. Notices; Effectiveness
    52  
9.03. No Waiver; Cumulative Remedies; Enforcement
    52  
9.04. Expenses; Indemnity; Damage Waiver
    52  
9.05. Payments Set Aside
    54  
9.06. Tax Matters
    54  
9.07. Successors and Assigns
    54  
9.08. Right of Setoff
    55  
9.09. Interest Rate Limitation
    55  
9.10. Counterparts; Integration; Effectiveness
    55  

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TABLE OF CONTENTS
(continued)

              Page  
9.11. Survival of Representations and Warranties
    56  
9.12. Severability
    56  
9.13. Governing Law; Jurisdiction; Etc
    56  
9.14. Waiver of Jury Trial
    57  
9.15. Electronic Execution of Assignments and Certain Other Documents
    57  
9.16. USA PATRIOT Act
    57  
9.17. Time of the Essence
    57  
9.18. ENTIRE AGREEMENT
    58  

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SCHEDULES

           
 
  5.03     Certain Authorizations
 
  5.06     Litigation
 
  5.08 (b)   Existing Liens
 
  5.08 (d)   Existing Investments
 
  5.09     Environmental Matters
 
  5.13     Subsidiaries and Other Equity Investments; Loan Parties
 
  6.12     Guarantors
 
  7.02     Existing Indebtedness
 
  7.09     Burdensome Agreements
 
  9.02     Lender’s Office, Certain Addresses for Notices

EXHIBITS

         
 
  Form of    
 
  A   Note
 
  B   Guaranty

 

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CREDIT AGREEMENT
     This CREDIT AGREEMENT (“Agreement”) is entered into as of October 28, 2010,
between Harvest Natural Resources, Inc., a Delaware corporation (the
“Borrower”), and MSD Energy Investments Private II, LLC, a Delaware limited
liability company (the “Lender”).
PRELIMINARY STATEMENTS:
     The Borrower has requested that the Lender provide a term loan facility,
and the Lender has indicated its willingness to lend on the terms and subject to
the conditions set forth herein.
     In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
     1.01. Defined Terms. As used in this Agreement, the following terms shall
have the meanings set forth below:
     “Affiliate” means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
     “Affiliated Entity” means the Subsidiaries of the Borrower and any of their
or the Borrower’s respective Controlled Affiliates.
     “Agreement” means this Credit Agreement.
     “Anti-Money Laundering Laws” has the meaning set forth in Section 5.21(c).
     “Applicable Rate” means (a) ten percent (10%) per annum from the Closing
Date up to but not including the Bridge Date and (b) fifteen percent (15%) on
and after the Bridge Date.
     “Asset Coverage Ratio” means the ratio of (a) Present Value of Proved
Reserves of a Subsidiary to (b) Indebtedness of such Subsidiary (excluding, if
applicable, Indebtedness under the Guaranty of such Subsidiary of the
Obligations).
     “Attributable Indebtedness” means, on any date, (a) in respect of any
Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease or
other agreement or instrument were accounted for as a Capitalized Lease and
(c) all Synthetic Debt of such Person.
     “Audited Financial Statements” means the audited consolidated balance sheet
of the Borrower and its Subsidiaries for the fiscal year ended December 31,
2009, and the related

 

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consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal year of the Borrower and its Subsidiaries, including the
notes thereto.
     “Bank Assignee” has the meaning set forth in Section 3.02(a).
     “Blocked Person” has the meaning set forth in Section 5.21(c).
     “Borrower” has the meaning specified in the introductory paragraph hereto.
     “Borrower Materials” has the meaning set forth in Section 6.02.
     “Bridge Date” means July 28, 2011; provided that so long as no Default or
Event of Default shall be continuing, such date will be extended to October 28,
2011 upon notice by the Borrower to the Lender not less than ten (10) Business
Days prior to July 28, 2011 of Borrower’s intention to extend such date and the
payment by the Borrower to the Lender of an extension fee in the amount of
$3,000,000 on or before July 28, 2011.
     “Budong-Budong, Indonesia Project” means that certain project owned by
Harvest Budong-Budong, B.V. that covers 883,635 acres in West Sulawesi,
Indonesia under a Production Sharing Contract in which Harvest Budong-Budong,
B.V. has a 54.4 percent interest. During the exploration phase, Harvest
Budong-Budong, B.V. and its partner have agreed to acquire and process seismic
data and drill two exploration wells.
     “Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, the State of New York.
     “Capitalized Leases” means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
     “Cash Equivalents” means any of the following types of Investments, to the
extent owned by the Borrower or any of its Subsidiaries free and clear of all
Liens:
     (a) readily marketable obligations issued or directly and fully guaranteed
or insured by the United States of America or any agency or instrumentality
thereof having maturities of not more than 360 days from the date of acquisition
thereof; provided that the full faith and credit of the United States of America
is pledged in support thereof;
     (b) time deposits with, or insured certificates of deposit or bankers’
acceptances of, any commercial bank that (i) (A) is the Lender or (B) is
organized under the laws of the United States of America, any state thereof or
the District of Columbia or is the principal banking subsidiary of a bank
holding company organized under the laws of the United States of America, any
state thereof or the District of Columbia, and is a member of the Federal
Reserve System, (ii) issues (or the parent of which issues) commercial paper
rated as described in clause (c) of this definition and (iii) has combined
capital and surplus of at least $1,000,000,000, in each case with maturities of
not more than 180 days from the date of acquisition thereof;

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     (c) commercial paper in an aggregate amount of no more than $20,000,000
issued by any Person organized under the laws of any state of the United States
of America and rated at least “Prime-1” (or the then equivalent grade) by
Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case
with maturities of not more than 180 days from the date of acquisition thereof;
and
     (d) Investments, classified in accordance with GAAP as current assets of
the Borrower or any of its Subsidiaries, in money market investment programs
registered under the Investment Company Act of 1940, which are administered by
financial institutions that have the highest rating obtainable from either
Moody’s or S&P, and the portfolios of which are limited solely to Investments of
the character, quality and maturity described in clauses (a), (b) and (c) of
this definition.
     “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
     “CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.
     “CFC” means a Person that is a controlled foreign corporation under
Section 957 of the Code.
     “Change in Law” means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any guideline or directive (whether
or not having the force of law) by any Governmental Authority.
     “Change of Control” means an event or series of events by which:
     (a) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, but excluding any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) other than the Equity Investors becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time (such right, an “option right”)), directly or indirectly, of 25%
or more of the equity securities of Borrower entitled to vote for members of the
board of directors or equivalent governing body of the Borrower on a
fully-diluted basis (and taking into account all such securities that such
“person” or “group” has the right to acquire pursuant to any option right); or
     (b) during any period of 12 consecutive months, a majority of the members
of the board of directors or other equivalent governing body of the Borrower
cease to be composed of individuals (i) who were members of that board or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or

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nomination at least a majority of that board or equivalent governing body or
(iii) whose election or nomination to that board or other equivalent governing
body was approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body (excluding, in the case of both clause
(ii) and clause (iii), any individual whose initial nomination for, or
assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or
     (c) any Person or two or more Persons (other than the Equity Investors)
acting in concert shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation thereof, will
result in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the
Borrower, or control over the equity securities of the Borrower entitled to vote
for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and taking into account all such securities
that such Person or Persons have the right to acquire pursuant to any option
right) representing 25% or more of the combined voting power of such securities;
or
     (d) a “Fundamental Change” or any comparable term under, and as defined in,
the Senior Convertible Notes shall have occurred.
     Notwithstanding the foregoing, a Change of Control shall not be deemed to
have occurred upon the execution by the Borrower or any of its Subsidiaries of
an agreement to enter into a Strategic Transaction; provided that no such
Strategic Transaction shall be consummated and no Disposition shall occur
pursuant to such agreement unless and until the Obligations have been paid in
full in cash.
     For avoidance of doubt in determining whether a Change of Control has
occurred, any rights (but excluding any exercise of such rights) of a pledgee in
connection with a pledge by a pledgor of Equity Interests of the Borrower to
secure an obligation shall not be deemed to be control over or beneficial
ownership of those securities and shall not be deemed to confer any controlling
influence over the management or policies of the Borrower.
     “Closing Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 9.01.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

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     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
     “Default” means any event or condition that constitutes an Event of Default
or that, with the giving of any notice, the passage of time, or both, would be
an Event of Default.
     “Default Rate” means an interest rate equal to the interest rate otherwise
applicable to the Loan plus 2% per annum.
     “Disclosed Litigation” has the meaning set forth in Section 5.06.
     “Disposition” or “Dispose” means the sale, transfer, license, lease or
other disposition (including, without limitation, any sale and leaseback
transaction) of any property by any Person (or the granting of any option or
other right to do any of the foregoing) or the taking (including, without
limitation, by way of regulation or other commercially equivalent manner) or
nationalization of any property of such Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith.
     “Dollar” and “$” mean lawful money of the United States.
     “Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
Release of any Hazardous Materials into the environment including those related
to air emissions and discharges to waste or public systems.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the Release or threatened Release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
     “Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
     “Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests),

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and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination.
     “Equity Investors” means any Affiliate of the Lender and the holders of the
Warrants.
     “ERISA” means the Employee Retirement Income Security Act of 1974.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan
(other than a Multiemployer Plan); (b) the withdrawal of the Borrower or any
ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which such entity was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such
a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Pension Plan amendment as a
termination under Section 4041 or 4041A of ERISA; (e) the institution by the
PBGC of proceedings to terminate a Pension Plan; (f) any event or condition
which constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; (g) the
determination that any Pension Plan is considered an at-risk plan or any
Multiemployer Plan is a plan in endangered or critical status within the meaning
of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA;
or (h) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the
Borrower or any ERISA Affiliate.
     “Event of Default” has the meaning specified in Section 8.01.
     “Excluded Taxes” means, with respect to the Lender or any other recipient
of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) taxes imposed on or measured by its overall net income, profits,
or capital (however denominated), and franchise taxes imposed on it (in lieu of
or in addition to net income, profits, or capital taxes), by the jurisdiction
(or any political subdivision thereof) under the Laws of which such recipient is
organized or in which its principal office is located or, in the case of the
Lender, in which its Lending Office is located, (b) any branch profits taxes
imposed by the United States or any similar tax imposed by any other
jurisdiction in which the Borrower is located or described in clause (a),
(c) any withholding tax that (i) is imposed on amounts payable to the Lender (or
any assignee of the Lender) at the time the Lender (or any assignee of the
Lender) becomes a party to this Agreement (or designates a new Lending Office),
or (ii) is imposed on amounts payable to the Lender (or any assignee of the
Lender) as a result of the Lender (or any assignee of the Lender) failing to
comply with Section 3.01(e), and (d) any U.S. federal taxes imposed pursuant to
FATCA on any “withholdable payment” (as defined under FATCA) made to the Lender
(or any assignee of the Lender).

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     “Extraordinary Receipt” means any cash received by or paid to or for the
account of any Person not in the ordinary course of business, including tax
refunds, pension plan reversions, proceeds of insurance (other than proceeds of
business interruption insurance to the extent such proceeds constitute
compensation for lost earnings), condemnation awards (and payments in lieu
thereof), indemnity payments and any purchase price adjustments. Notwithstanding
the foregoing, (i) no receipt, directly or indirectly, by the Borrower or any of
its Subsidiaries of dividends from Petrodelta or of payments of invoices from
Petrodelta shall be deemed to constitute an extraordinary receipt and (ii) no
receipt, directly or indirectly, by the Borrower or any of its Subsidiaries of
payments with respect to capital calls made pursuant to joint operating
agreements shall be deemed to constitute an extraordinary receipt.
     “Facility” means financing to be provided by a third party financial
institution providing for an oil and gas reserve-based loan to any Subsidiary
(other than a CFC and Harvest Holding LLC) of the Borrower, in each case in the
aggregate principal amount not to exceed $200,000,000.
     “FATCA” shall mean Sections 1471 through 1474 of the Code and any Treasury
regulations promulgated thereunder or official interpretations thereof.
     “FRB” means the Board of Governors of the Federal Reserve System of the
United States.
     “GAAP” means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
     “Gabon Project” means Harvest Dussafu B.V.’s 66.667 percent interest in the
Dussafu PSC signed in May 28, 2007 with the Dussafu PSC partners and the
Republic of Gabon, represented by the Ministry of Mines, Energy, Petroleum and
Hydraulic Resources. The Dussafu PSC contract area is located offshore Gabon,
adjacent to the border with the Republic of Congo. It contains 680,000 acres
with water depths to 1,000 feet. The exploration phase includes work commitment
for the acquisition and processing of 500 kilometers of 2-D seismic, geology and
geophysical interpretation, engineering studies and the drilling of a
conditional well.
     “Governmental Authority” means the government of the United States or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).
     “Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any

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manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation, (ii) to
purchase or lease property, securities or services for the purpose of assuring
the obligee in respect of such Indebtedness or other obligation of the payment
or performance of such Indebtedness or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or other obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other obligation of the payment or performance
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), or (b) any Lien on any assets of such Person securing any Indebtedness
or other obligation of any other Person, whether or not such Indebtedness or
other obligation is assumed by such Person (or any right, contingent or
otherwise, of any holder of such Indebtedness to obtain any such Lien). The
amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.
     “Guarantors” means, collectively, the Subsidiaries of the Borrower listed
on Schedule 6.12 and each other Subsidiary of the Borrower that shall be
required to execute and deliver a guaranty or guaranty supplement pursuant to
Section 6.12.
     “Guaranty” means, the Guaranty made by the Guarantors in favor of the
Lender, substantially in the form of Exhibit B, together with each other
guaranty and guaranty supplement delivered pursuant to Section 6.12.
     “Harvest (US) Holdings” means Harvest (US) Holdings, Inc., a Delaware
corporation and wholly-owned Subsidiary of the Borrower.
     “Harvest Holding LLC” means Harvest Holding LLC, a Delaware limited
liability company and wholly-owned Subsidiary of the Borrower.
     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
     “Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
     (a) all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
     (b) the maximum amount of all direct or contingent obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

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     (c) net obligations of such Person under any Swap Contract;
     (d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and not past due for more than 60 days after the date on which such
trade account was created);
     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
     (f) all Attributable Indebtedness in respect of Capitalized Leases and
Synthetic Lease Obligations of such Person and all Synthetic Debt of such
Person;
     (g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person or any warrant, right or option to acquire such Equity
Interest, valued, in the case of a redeemable preferred interest, at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; and
     (h) all Guarantees of such Person in respect of any of the foregoing.
     For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Indemnitees” has the meaning specified in Section 9.04(b).
     “Interest Payment Date” means the last Business Day of each month and the
Maturity Date of the Loan.
     “Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, or (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit or all or a
substantial part of the business of, such Person. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.
     “IP Rights” has the meaning specified in Section 5.17.

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     “IRS” means the United States Internal Revenue Service.
     “Laws” means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.
     “Lender” has the meaning specified in the introductory paragraph hereto and
includes any assignee of the rights and obligations of the Lender hereunder or
under any other Loan Documents.
     “Lending Office” means the office or offices of the Lender as it may from
time to time notify the Borrower.
     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
     “Loan” means an extension of credit by the Lender to the Borrower under
Article II.
     “Loan Documents” means, collectively, (a) this Agreement, (b) the Note,
(c) the Guaranty, (d) the Warrant Purchase Agreement, and (e) the Warrants.
     “Loan Parties” means, collectively, the Borrower and each Guarantor.
     “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, liabilities
(actual or contingent), or condition (financial or otherwise) of the Borrower or
the Borrower and its Subsidiaries taken as a whole (which, for the avoidance of
doubt, shall not include the drilling of one or more dry holes, as such term is
commonly used in the oil and gas industry, but shall include the drilling of a
material number of dry holes that would have a material adverse change in, or a
material adverse effect upon, the operations, business, properties, liabilities
(actual or contingent), or condition (financial or otherwise) of the Borrower or
the Borrower and its Subsidiaries taken as a whole); (b) a material impairment
of the rights and remedies of the Lender under any Loan Document, or of the
ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.
     “Material Contract” means, with respect to any Person, each contract to
which such Person is a party that is of a type that would be required to be
disclosed by Harvest pursuant to Item 1.01 of a current report on Form 8-K under
the rules and regulations of the SEC.

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     “Maturity Date” means October 28, 2012; provided, however, that if such
date is not a Business Day, the Maturity Date shall be the next preceding
Business Day.
     “Merrill Lynch Letter” means that certain engagement letter, dated
September 24, 2010, between the Borrower and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as in effect on the Closing Date.
     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
     “Multiemployer Plan” means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.
     “Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including the Borrower or any ERISA Affiliate) at least two of whom
are not under common control, as such a plan is described in Section 4064 of
ERISA.
     “Net Cash Proceeds” means:
     (a) with respect to any Disposition by the Borrower or any of its
Subsidiaries, or any Extraordinary Receipt received or paid to the account of
the Borrower or any of its Subsidiaries, the excess, if any, of (i) the sum of
cash and Cash Equivalents received in connection with such transaction
(including any cash or Cash Equivalents received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) over (ii) the sum of (A) the principal amount of any
Indebtedness that is secured by the applicable asset and that is required to be
repaid in connection with such transaction (other than Indebtedness under the
Loan Documents), (B) the reasonable and customary out-of-pocket expenses
incurred by the Borrower or such Subsidiary in connection with such transaction
and (C) income taxes reasonably estimated to be actually payable within two
years of the date of the relevant transaction as a result of any gain recognized
in connection therewith; provided that, if the amount of any estimated taxes
pursuant to subclause (C) exceeds the amount of taxes actually required to be
paid in cash in respect of such Disposition, the aggregate amount of such excess
shall constitute Net Cash Proceeds; and
     (b) with respect to the incurrence or issuance of any Indebtedness by the
Borrower or any of its Subsidiaries, the excess of (i) the sum of the cash and
Cash Equivalents received in connection with such transaction over (ii) the
underwriting discounts and commissions, and other reasonable and customary
out-of-pocket expenses, incurred by the Borrower or such Subsidiary in
connection therewith.
     “NewCo” has the meaning set forth in Section 7.02(i).
     “Note” means the promissory note made by the Borrower in favor of the
Lender evidencing the Loan, substantially in the form of Exhibit A.
     “NPL” means the National Priorities List under CERCLA.

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     “Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to the Loan, in each case whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.
     “OFAC” has the meaning set forth in Section 5.21(c).
     “OFAC Listed Person” has the meaning set forth in Section 5.21(c).
     “Oman Project” means Harvest Oman B.V.’s interest in the Exploration and
Production Sharing Agreement (“EPSA”) with Oman for the Al Ghubar/Qarn Alam
license, dated April 11, 2009, under which Harvest Oman B.V. has a 100 percent
working interest in Block 64 EPSA during the exploration phase. Oman Oil Company
has the option to back-in to up to a 20 percent interest in Block 64 EPSA after
the discovery of gas. The work commitment is to drill two wells over a three
year period.
     “Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
     “Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
     “PBGC” means the Pension Benefit Guaranty Corporation.
     “Pension Act” means the Pension Protection Act of 2006.
     “Pension Funding Rules” means the rules of the Code and ERISA regarding
minimum required contributions (including any installment payment thereof) to
Pension Plans and set forth in, with respect to plan years ending prior to the
effective date of the Pension Act, Section 412 of the Code and Section 302 of
ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412,
430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
     “Pension Plan” means any employee pension benefit plan within the meaning
of Section 3(3) of ERISA (including a Multiple Employer Plan or a Multiemployer
Plan) that is maintained

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or is contributed to by the Borrower and any ERISA Affiliate and is either
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Code.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Petrodelta” means Petrodelta, S.A., a Venezuelan corporation, 40% of the
Equity Interests of which are owned by HNR Finance B.V., a Netherlands
corporation, which is an 80% owned Subsidiary of the Borrower.
     “Petroleum Property” means any interest of a Subsidiary in oil and gas
reserves and assets consisting primarily of gas gathering, processing and
storage facilities and transmission pipelines.
     “Plan” means any employee benefit plan within the meaning of Section 3(3)
of ERISA (including a Pension Plan) other than a Multiemployer Plan, maintained
for employees of the Borrower or any ERISA Affiliate or any such Plan to which
the Borrower or any ERISA Affiliate is required to contribute on behalf of any
of its employees.
     “Present Value of Proved Reserves” means, at any time, the net present
value, discounted at 10% per annum, of the future after-tax net revenues
expected to accrue to a Subsidiary’s interests in Proved Reserves expected to be
produced from their Petroleum Properties during the remaining expected economic
lives of such reserves. Each calculation of such expected future after-tax net
revenues shall be made in accordance with the then existing standards of the
Society of Petroleum Engineers, provided that in any event (a) appropriate
deductions shall be made for severance and ad valorem taxes, and for operating,
gathering, transportation and marketing costs required for the production and
sale of such reserves, (b) appropriate adjustments shall be made for hedging
operations, provided that Swap Contracts with non-investment grade
counterparties shall not be taken into account to the extent that such Swap
Contracts improve the position of or otherwise benefit such Subsidiary, (c) the
pricing assumptions used in determining net present value for any particular
reserves shall be based upon the following price decks: (i) for natural gas, the
quotation for deliveries of natural gas for each such year from the New York
Mercantile Exchange for Henry Hub, provided that with respect to quotations for
calendar years after the fifth calendar year, the quotation for the fifth
calendar year shall be applied and (ii) for crude oil, the quotation for
deliveries of West Texas Intermediate crude oil for each such calendar year from
the New York Mercantile Exchange for Cushing, Oklahoma, provided that with
respect to quotations for calendar years after the fifth calendar year, the
quotation for the fifth calendar year shall be applied, and (d) the cash-flows
derived from the pricing assumptions set forth in clause (c) above shall be
further adjusted to account for the historical basis differentials for each
month during the preceding 12-month period calculated by comparing realized
crude oil and natural gas prices to Cushing, Oklahoma and Henry Hub NYMEX prices
for each month during such period; provided that in calculating the Present
Value of Proved Reserves, Proved Undeveloped Reserves shall not be taken into
account to the extent that more than 40% of the Present Value of Proved Reserves
is attributable to Proved Undeveloped Reserves. The Present Value of Proved
Reserves will be determined and adjusted periodically as follows: (x) the
calculation of Present Value of Proved Reserves will be determined from the most
recent Reserve Report; (y) upon any sale by such Subsidiary of any Petroleum
Property owned by such Subsidiary including but not

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limited to a sale of a lesser interest such as a royalty or a net profit
interest to the extent the sale of such lesser interest is not considered to
create a Lien (other than the sale of hydrocarbons after severance occurring in
the ordinary course of such Subsidiary’s business), the calculation of Present
Value of Proved Reserves shall be reduced, effective on the date of consummation
of such sale, by an amount equal to the Present Value of Proved Reserves
attributable to Proved Reserves included in such sale; and (z) immediately upon
acquisition or development by such Subsidiary of any Petroleum Property owned
directly by such Subsidiary and not reflected in the most recent Reserve Report,
the calculation of Present Value of Proved Reserves shall be increased in an
amount equal to the Present Value of Proved Reserves attributable to such
Petroleum Property.
     “Project Financing Indebtedness” means Indebtedness incurred to finance oil
and gas related projects by a special purpose Subsidiary of the Borrower to
finance the acquisition, construction or development of a specific tangible
property or asset (the “Specified Property”) and with respect to which the
obligation to repay such obligation is recourse (a) only to the Specified
Property, and not to the general credit of, or any other asset of, such
Subsidiary or the Borrower or any of its other Subsidiaries and/or (b) only to
contract revenues under a contract for the sale of products or services
manufactured at and/or derived from the Specified Property by such Subsidiary
and entered into in the ordinary course of business, and not to the general
credit of, or any other asset of, such Subsidiary or the Borrower or any of its
other Subsidiaries.
     “Proved Developed Non-Producing Reserves” has the meaning assigned to that
term by the Society of Petroleum Engineers, as it may be amended from time to
time, but generally shall mean the subcategory of “Proved Developed Reserves”
(as defined by the Society of Petroleum Engineers) which will become “Proved
Developed Producing Reserves” upon minor capital expenditures being made with
respect to existing wells which will cause formerly non-producing completions or
intervals to become open and producing to market.
     “Proved Developed Producing Reserves” has the meaning assigned to that term
by the Society of Petroleum Engineers, as it may be amended from time to time,
but generally shall mean the subcategory of “Proved Developed Reserves” (as
defined by the Society of Petroleum Engineers) which are recoverable by natural
reservoir energies (including pumping) from the completion intervals currently
open and producing to market. Additional oil and gas expected to be obtained
through the application of fluid injection or other improved recovery techniques
for supplementing the natural forces and mechanisms of primary recovery will be
included as “Proved Developed Producing Reserves” only after testing by a pilot
project or after the operation of an installed program has confirmed through
production response through existing completions producing to market that
increased recovery will be achieved. Proved Developed Producing Reserves shall
not include any Proved Developed Non-Producing Reserves.
     “Proved Reserves” means and includes Proved Developed Producing Reserves,
Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves.
     “Proved Undeveloped Reserves” has the meaning assigned to that term by the
Society of Petroleum Engineers, as it may be amended from time to time, but
generally shall mean those reserves that are expected to be recovered from new
wells on undrilled acreage, or from existing wells where a relatively major
expenditure is required for recompletion. Proved Undeveloped

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Reserves on undrilled acreage shall be limited to those drilling units
offsetting productive units that are reasonably certain of production when
drilled. Proved Undeveloped Reserves for other undrilled units can be claimed
only where it can be demonstrated with certainty that there is continuity of
production from the existing productive formation. Under no circumstances should
estimates for Proved Undeveloped Reserves be attributable to any acreage for
which an application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual tests
in the area and in the same reservoir.
     “Related Parties” means, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees, agents, trustees
and advisors of such Person and of such Person’s Affiliates.
     “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the environment of any Hazardous Materials (including the abandonment or
discarding of barrels, containers and other closed receptacles containing any
Hazardous Materials).
     “Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
     “Reserve Report” means the reserve report delivered to the Lender for the
fiscal year ended December 31, 2009 and, subsequently, a report delivered by the
Borrower pursuant to Section 6.01(c).
     “Responsible Officer” means the chief executive officer, president, chief
financial officer or general counsel of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.
     “Restricted Payment” means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
Equity Interest of any Person or any of its Subsidiaries, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to any Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment; provided that, notwithstanding the foregoing, the term
“Restricted Payment” shall not include any redemption, retirement, purchase or
other acquisition of, any Warrants and/or any Senior Convertible Notes.
     “S&P” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.
     “SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
     “Second NewCo” has the meaning set forth in Section 7.03(c)(v).

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     “Senior Convertible Notes” means the $32,000,000 8.25% Senor Convertible
Notes due 2013 as evidenced by that certain Indenture dated as of February 17,
2010 between the Borrower and U.S. Bank National Association, as Trustee (the
“Trustee”), as supplemented by that certain First Supplemental Indenture dated
as of February 17, 2010 between the Borrower and the Trustee, in each case as in
effect on the Closing Date.
     “Significant Subsidiary” means a “Significant Subsidiary” as defined in
Regulation S-X of the Securities Act of 1933, as amended from time to time.
     “Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and
(e) such Person is able to pay its debts and liabilities, contingent obligations
and other commitments as they mature in the ordinary course of business. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
     “Strategic Transaction” means a “Transaction” as such term is defined in
the Merrill Lynch Letter.
     “Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower. For the avoidance of doubt, none of Fusion LLC and its
Subsidiaries, nor Petrodelta and its Subsidiaries, shall be deemed to be
Subsidiaries of the Borrower or any of its Subsidiaries as of October 28, 2010
based on the organizational structure and respective ownership percentages of
the Borrower and its Subsidiaries as of such date.
     “Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b)

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any and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a
“Master Agreement”), including any such obligations or liabilities under any
Master Agreement.
     “Swap Termination Value” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include the Lender or any Affiliate of
the Lender).
     “Synthetic Debt” means, with respect to any Person as of any date of
determination thereof, all obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a
borrowing of funds (including any minority interest transactions that function
primarily as a borrowing) but are not otherwise included in the definition of
“Indebtedness” or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP.
     “Synthetic Lease Obligation” means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property (including sale and
leaseback transactions), in each case, creating obligations that do not appear
on the balance sheet of such Person but which, upon the application of any
Debtor Relief Laws to such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).
     “Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments or similar
fees or other charges imposed by any Governmental Authority, including any
interest, additions to tax or penalties applicable thereto.
     “Threshold Amount” means $3,000,000.
     “United States” and “U.S.” mean the United States of America.
     “U.S. Loan Party” means any Loan Party that is organized under the laws of
one of the states of the United States of America and that is not a CFC.
     “WAB-21 Project” means Harvest Offshore China Company’s interest in a
petroleum contract signed in December of 1996 with China National Offshore Oil
Corporation for the WAB-21 area. The WAB-21 petroleum contract covers
6.2 million acres in the South China Sea, with an option for an additional
1.25 million acres under certain circumstances, and lies within an area which is
the subject of a border dispute between the People’s Republic of China and
Socialist Republic of Vietnam. Vietnam has executed an agreement on a portion of
the same

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offshore acreage with another company. The border dispute has lasted for many
years, and there has been limited exploration and no development activity in the
WAB-21 area due to the dispute.
     “Warrants” means those certain common stock warrants issued by the Borrower
evidencing rights to purchase, in the aggregate, 6,000,000 shares of common
stock of the Borrower issued pursuant to the terms of the Warrant Purchase
Agreement.
     “Warrant Purchase Agreement” means that certain Warrant Purchase Agreement,
dated as of the Closing Date, between the Borrower and the purchasers named
therein, as amended from time to time.
     “West Bay Leases” means those certain leases between Harvest (US) Holdings
and third parties with respect to oil and gas properties located along the Gulf
Coast region of the United States.
     “West Bay Project” means Harvest (US) Holdings’s interest in the Area of
Mutual Interest agreement signed in March 2008, with a private third party for
an area in the upper Gulf Coast Region of the United States. Harvest
(US) Holdings has a 50 percent interest in the project and as operator will
lease acreage, process 3-D seismic data and drill wells on the prospects that
have been identified.
     1.02. Other Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
     (a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall
be construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to
Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Preliminary Statements,
Exhibits and Schedules to, the Loan Document in which such references appear,
(v) any reference to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing or interpreting such law and any
reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time,
and (vi) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.

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     (b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”
     (c) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.
     1.03. Accounting Terms. (a) Generally. All accounting terms not
specifically or completely defined herein shall be construed in conformity with,
and all financial data (including financial ratios and other financial
calculations) required to be submitted pursuant to this Agreement shall be
prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing
the Audited Financial Statements, except as otherwise specifically prescribed
herein.
     (b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Lender shall so request, the Lender and
the Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP; provided
that, until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Lender financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.
     1.04. Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).
     1.05. Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).
     1.06. Currency Equivalents Generally. Any amount specified in this
Agreement or any of the other Loan Documents to be in Dollars shall also include
the equivalent of such amount in any currency other than Dollars, such
equivalent amount thereof in the applicable currency to be determined by the
Lender at such time on the basis of the Spot Rate (as defined below) for the
purchase of such currency with Dollars. For purposes of this Section 1.06, the
“Spot Rate” for a currency means the rate determined by the Lender to be the
rate quoted by the Person acting in such capacity as the spot rate for the
purchase by such Person of such currency with another currency through its
principal foreign exchange trading office at approximately 11:00 a.m. on the
date two Business Days prior to the date of such determination; provided that
the Lender may obtain such spot rate from another financial institution
designated by the Lender if the Person acting in such capacity does not have as
of the date of determination a spot buying rate for any such currency.

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ARTICLE II.
THE LOAN
     2.01. The Loan. Subject to the terms and conditions set forth herein, the
Lender agrees to make a single loan to the Borrower on the Closing Date in the
amount of $60,000,000.
     2.02. Prepayments. (a) Optional. Subject to the last sentence of this
Section 2.02(a), the Borrower may, upon notice to the Lender, at any time or
from time to time voluntarily prepay the Loan in whole or in part without
premium or penalty; provided that (A) such notice must be received by the Lender
not later than 11:00 a.m. three Business Days prior to any date of prepayment of
the Loan; and (B) any prepayment shall be in a principal amount of $5,000,000 or
a whole multiple of $1,000,000 in excess thereof or, if less, the entire
principal amount thereof then outstanding. Each such notice shall specify the
date and amount of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein. Any prepayment
shall be accompanied by all accrued interest on the amount prepaid.
Notwithstanding anything to the contrary contained herein, if the Borrower
prepays the Loan, in whole or in part, at any time before the Bridge Date, the
Borrower shall pay a premium with respect to each such prepayment in the amount
of 3.5% of the amount so prepaid.
     (b) Mandatory. (i) If the Borrower or any of its Subsidiaries Disposes of
any property (other than any Disposition of any property permitted (x) by
Sections 7.05(a), (b), (c), (d), (o), (p) or (q) and/or (y) by Sections 7.05(e),
(f), (g), (h), (i), (j), (k), (l), (m), (n) or (r) only to the extent the fair
market value of all Dispositions pursuant to these Sections in this clause
(y) is less than $75,000,000 in the aggregate) which results in the realization
by such Person of Net Cash Proceeds, the Borrower shall prepay an aggregate
principal amount of the Loan equal to 100% of such Net Cash Proceeds immediately
upon receipt thereof by such Person.
     (ii) Upon the incurrence or issuance by the Borrower or any of its
Subsidiaries of any Indebtedness (other than Indebtedness expressly permitted to
be incurred or issued pursuant to Section 7.02), the Borrower shall prepay an
aggregate principal amount of Loan equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by the Borrower or such
Subsidiary.
     (iii) Upon any Extraordinary Receipt received by or paid to or for the
account of the Borrower or any of its Subsidiaries, and not otherwise included
in clause (i) or (ii) of this Section 2.02(b), the Borrower shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by the Borrower or such
Subsidiary.
     If the Borrower prepays the Loan, in whole or in part under this Section
2.02(b) at any time before the Bridge Date, the Borrower shall pay a premium
with respect to each such prepayment in the amount of 3.5% of the amount so
prepaid.
     Nothing in this section 2.02(b) shall be deemed to require a mandatory
prepayment of any amounts or property received by the Borrower upon the sale of
any Equity Interest in the Borrower.

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     2.03. Repayment of Loan. On the Maturity Date the Borrower shall repay to
the Lender the aggregate principal amount of the Loan outstanding, together with
interest accrued thereon and all other amounts due hereunder and under the other
Loan Documents.
     2.04. Interest. (a) Subject to the provisions of Section 2.04(b), the Loan
shall bear interest on the outstanding principal amount thereof at a rate equal
to the Applicable Rate.
     (b) (i) If any amount of principal of the Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.
     (ii) If any amount (other than principal of the Loan) payable by the
Borrower under any Loan Document is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, then such amount shall thereafter bear interest at a rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.
     (iii) While any Event of Default exists, the Borrower shall pay interest on
the principal amount of all outstanding Obligations hereunder at a rate per
annum at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.
     (iv) Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.
     (c) Interest on the Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
     2.05. Computation of Interest and Fees. All computations of fees, if any,
and interest shall be made on the basis of a 360-day year and actual days
elapsed (which results in more fees or interest, as applicable, being paid than
if computed on the basis of a 365-day year). Interest shall accrue on the Loan
for the day on which the Loan is made, and shall not accrue on the Loan, or any
portion thereof, for the day on which the Loan or such portion is paid, provided
that any portion of the Loan that is repaid on the same day on which it is made
shall, subject to Section 2.07, bear interest for one day. Each determination by
the Lender of an interest rate or fee hereunder shall be conclusive and binding
for all purposes, absent manifest error.
     2.06. Evidence of Debt. The Loan made by the Lender shall be evidenced by
one or more accounts or records maintained by the Lender. The accounts or
records maintained by the Lender shall be conclusive absent manifest error of
the amount of the Loan made by the Lender to the Borrower and the interest and
payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower hereunder to
pay any amount owing with respect to the Obligations.
     2.07. Payments Generally. All payments to be made by the Borrower shall be
made without condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as

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otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Lender at the Lender’s office at 645 Fifth Avenue, 21st
Floor, New York, New York 10022 (or such other address as the Lender may from
time to time notify the Borrower) in Dollars and in immediately available funds
not later than 2:00 p.m. on the date specified herein. All payments received by
the Lender after 2:00 p.m. shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. If any
payment to be made by the Borrower shall come due on a day other than a Business
Day, payment shall be made on the next following Business Day, and such
extension of time shall be reflected on computing interest or fees, as the case
may be.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
     3.01. Taxes. (a) Payments Free of Taxes; Obligation to Withhold; Payments
on Account of Taxes. Any and all payments by or on account of any obligation of
the Loan Parties hereunder or under any other Loan Document shall to the extent
permitted by applicable Laws be made free and clear of and without reduction or
withholding for any Taxes. If, however, applicable Laws require the Loan Parties
to withhold or deduct any Tax, such Tax shall be withheld or deducted in
accordance with such Laws as determined by the Loan Parties upon the basis of
the information and documentation to be delivered pursuant to subsection
(e) below. If the Loan Parties shall be required by applicable Law to withhold
or deduct any Taxes, including both United States Federal backup withholding and
withholding taxes, from any payment, then (A) the Loan Parties shall withhold or
make such deductions as are determined by the Loan Parties to be required based
upon the information and documentation it has received pursuant to subsection
(e) below, (B) the Loan Parties shall timely pay the full amount withheld or
deducted to the relevant Governmental Authority in accordance with applicable
Laws, and (C) to the extent that the withholding or deduction is made on account
of Indemnified Taxes or Other Taxes, the sum payable by the Loan Parties shall
be increased as necessary so that after any required withholding or the making
of all required deductions (including deductions applicable to additional sums
payable under this Section) the Lender receives an amount equal to the sum it
would have received had no such withholding or deduction been made.
     (b) Payment of Other Taxes by the Loan Parties. Without limiting the
provisions of subsection (a) above, the Loan Parties shall timely pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law,
to the extent such Other Taxes are imposed on the Loan Parties under applicable
Law.
     (c) Tax Indemnifications. (i) Without limiting the provisions of subsection
(a) or (b) above, the Borrower shall, and does hereby, indemnify the Lender, and
shall make payment in respect thereof within 30 days after demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) paid by the Lender, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of any such payment or liability delivered to the Borrower by the Lender shall
be conclusive absent manifest error.

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     (ii) Without limiting the provisions of subsection (a) or (b) above, the
Lender shall, and does hereby, indemnify the Borrower, and shall make payment in
respect thereof within 30 days after demand therefor, against any and all Taxes
and any and all related losses, claims, liabilities, penalties, interest and
expenses (including the fees, charges and disbursements of any counsel for the
Borrower incurred by or asserted against the Borrower by any Governmental
Authority as a result of the failure by the Lender to deliver, or as a result of
the inaccuracy, inadequacy or deficiency of, any documentation required to be
delivered by the Lender to the Borrower pursuant to subsection (e). The
agreements in this clause (ii) shall survive the repayment, satisfaction or
discharge of all of the Obligations.
     (d) Evidence of Payments. As soon as reasonably practicable after the
request by the Borrower or the Lender, as the case may be, after any payment of
Taxes by the Borrower or the Lender to a Governmental Authority as provided in
this Section 3.01, the Borrower shall deliver to the Lender or the Lender shall
deliver to the Borrower, as the case may be, the original or a certified copy of
a receipt issued by such Governmental Authority evidencing such payment, a copy
of any return required by Laws to report such payment or other evidence of such
payment reasonably satisfactory to the Borrower or the Lender, as the case may
be.
     (e) Status of Lender; Tax Documentation. (i) If the Lender is entitled to
an exemption from or a reduction of withholding taxes with respect to payments
hereunder or under any other Loan Document, then the Lender shall deliver to the
Borrower, on or prior to the date that the Lender becomes a party to this
Agreement (and from time to time thereafter at the time or times prescribed by
applicable Laws or when reasonably requested by the Borrower), such properly
completed and executed documentation prescribed by applicable Laws or by the
taxing authorities of any jurisdiction and such other reasonably requested
information as will permit such payments made to be made without withholding or
at a reduced rate of withholding. Additionally, the Lender shall deliver to the
Borrower, on or prior to the date that the Lender becomes a party to this
Agreement (and from time to time thereafter at the time or times prescribed by
applicable Law or when reasonably requested by the Borrower), such properly
completed and executed documentation prescribed by applicable Law or by the
taxing authorities of any jurisdiction and such other reasonably requested
information as will enable the Borrower (A) to determine whether or not payments
made hereunder or under any other Loan Document are subject to Taxes, (B) to
determine, if applicable, the required rate of withholding or deduction, and
(C) otherwise to establish the Lender’s status for withholding tax purposes in
the applicable jurisdiction.
     (ii) Without limiting the generality of subsection (i), if the Borrower is
resident for tax purposes in the United States and the Lender is resident for
tax purposes in the United States, the Lender shall deliver to the Borrower, on
or prior to the date that the Lender becomes a party to this Agreement (and from
time to time thereafter at the time or times prescribed by applicable Law or
when reasonably requested by the Borrower), properly completed and executed
originals of IRS Form W-9 (or successor form) or such other documentation or
information prescribed by applicable Laws or reasonably requested by the
Borrower as will certify that the Lender is not subject to United States Federal
backup withholding tax and as will enable the Borrower to determine whether or
not the Lender is subject to information reporting requirements.

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     (iii) Without limiting the generality of subsection (i), if the Borrower is
resident for tax purposes in the United States, the Lender is not resident for
tax purposes in the United States and the Lender is entitled under the Code or
any applicable treaty to an exemption from or reduction of withholding tax with
respect to payments hereunder or under any other Loan Document, the Lender shall
deliver to the Borrower on or prior to the date on which the Lender becomes a
party to this Agreement (and from time to time thereafter upon the request of
the Borrower, but only if the Lender is legally entitled to do so), whichever of
the following is applicable: (A) properly completed and executed originals of
IRS W-8BEN (or successor form) claiming eligibility for benefits of an income
tax treaty to which the United States is a party; (B) properly completed and
executed originals of IRS Form W-8ECI (or successor form); (C) in the case of
the Lender claiming the benefits of the exemption for portfolio interest under
Section 881(c) of the Code, (1) a certificate in a form approved by the Borrower
to the effect that (i) the Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (ii) the Lender is not a “10 percent
shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the
Code, (iii) the Lender is not a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code and (iv) no payments made hereunder or under
any other Loan Document are effectively connected with the Lender’s conduct of a
United States trade or business and (2) properly completed and executed
originals of IRS Form W-8BEN or (or successor form); or (D) any other form
prescribed by applicable Law as a basis for claiming exemption from or reduction
in United States Federal withholding tax, properly completed and executed,
together with such other documentation as may be prescribed by applicable Law to
permit the Borrower to determine the withholding or deduction required to be
made.
     (iv) Without limiting the generality of subsection (i), if the Lender would
be subject to United States Federal withholding taxes imposed by FATCA on
payments made hereunder or under any other Loan Document and the Lender fails to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), the Lender
shall provide such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrower as may be necessary for the
Borrower to comply with its obligations under FATCA, to determine that such
Lender has complied with such Lender’s obligations under FATCA, or to determine
the amount to deduct and withhold from any such payments.
     (v) The Lender shall promptly (A) notify the Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction in withholding taxes with respect to payments made hereunder or under
any other Loan Document, and (B) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of the Lender, and as may be
reasonably necessary (including the designation of new Lending Office) to avoid
any requirement of applicable Laws of any jurisdiction that the Borrower make
any withholding or deduction for taxes from amounts payable to the Lender.

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     (f) Treatment of Certain Refunds. If the Lender, in its sole discretion,
determines that it has received a refund of any Taxes or Other Taxes as to which
it has been indemnified by the Borrower or with respect to which the Borrower
has paid additional amounts pursuant to this Section, it shall pay to the
Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses incurred by the Lender, and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of the Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Lender in
the event the Lender is required to repay such refund to such Governmental
Authority. This subsection shall not be construed to require the Lender to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Borrower or any other Person.
     3.02. Increased Costs. (a) Increased Costs Generally. If the Lender
assigns, in accordance with Section 9.07, all or any part of the Loan to a
commercial bank or any other entity that is subject to regulation by federal or
state banking authorities (a “Bank Assignee”), and if any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
the Bank Assignee;
     (ii) subject such Bank Assignee to any tax of any kind whatsoever with
respect to this Agreement, or change the basis of taxation of payments to such
Bank Assignee in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.01 and the imposition of, or any change in the rate of, any
Excluded Tax payable by or with respect to such Bank Assignee); or
     (iii) impose on such Bank Assignee any other condition, cost or expense
affecting this Agreement;
and the result of any of the foregoing shall be to reduce the amount of any sum
received or receivable by such Bank Assignee hereunder (whether of principal,
interest or any other amount) then, upon request of such Bank Assignee, the
Borrower will pay to such Bank Assignee such additional amount or amounts as
will compensate such Bank Assignee for such additional costs incurred or
reduction suffered.
     (b) Capital Requirements. If a Bank Assignee determines that any Change in
Law affecting such Bank Assignee or such Bank Assignee’s holding company, if
any, regarding capital requirements has or would have the effect of reducing the
rate of return on such Bank Assignee’s capital or on the capital of such Bank
Assignee’s holding company, if any, as a consequence of this Agreement or the
portion of the Loan assigned to such Bank Assignee, to a level below that which
such Bank Assignee or such Bank Assignee’s holding company could have achieved
but for such Change in Law (taking into consideration such Bank Assignee’s
policies and the policies of such Bank Assignee’s holding company with respect
to capital

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adequacy), then from time to time the Borrower will pay to such Bank Assignee,
such additional amount or amounts as will compensate such Bank Assignee or such
Bank Assignee’s holding company for any such reduction suffered.
     (c) Certificates for Reimbursement. A certificate of a Bank Assignee
setting forth the amount or amounts necessary to compensate such Bank Assignee
or its holding company, as specified in subsection (a) or (b) of this Section
and delivered to the Borrower shall be conclusive absent manifest error. The
Borrower shall pay such Bank Assignee the amount shown as due on any such
certificate within 10 days after receipt thereof.
     (d) Delay in Requests. Failure or delay on the part of a Bank Assignee to
demand compensation pursuant to the foregoing provisions of this Section shall
not constitute a waiver of such Bank Assignee’s right to demand such
compensation, provided that the Borrower shall not be required to compensate
such Bank Assignee pursuant to the foregoing provisions of this Section for any
increased costs incurred or reductions suffered more than nine months prior to
the date that such Bank Assignee notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Bank Assignee’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).
     3.03. Survival. All of the Borrower’s obligations under this Article III
shall survive repayment of all other Obligations hereunder.
ARTICLE IV.
CONDITIONS PRECEDENT TO THE LOAN
     4.01. Conditions of the Loan. The obligation of the Lender to make the Loan
hereunder is subject to satisfaction of the following conditions precedent:
     (a) The representations and warranties of the Borrower and each other Loan
Party contained in Article V or any other Loan Document, or which are contained
in any document furnished at any time under or in connection herewith or
therewith, shall be true and correct on and as of the date of the Loan.
     (b) No Default shall exist, or would result from the Loan or from the
application of the proceeds thereof.
     (c) The Lender’s receipt of the following, each of which shall be originals
or telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each dated
the Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to the Lender:
     (i) executed counterparts of this Agreement, the Guaranty and the Warrant
Purchase Agreement, sufficient in number for distribution to the Lender and the
Borrower;

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     (ii) a Note executed by the Borrower in favor of the Lender;
     (iii) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as the Lender may require evidencing the identity, authority and capacity
of each Responsible Officer thereof authorized to act as a Responsible Officer
in connection with this Agreement and the other Loan Documents to which such
Loan Party is a party or is to be a party;
     (iv) such documents and certifications as the Lender may reasonably require
to evidence that each Loan Party is duly organized or formed, and that each Loan
Party is validly existing, in good standing and qualified to engage in business
in each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification, except to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect;
     (v) a favorable opinion of Fulbright & Jaworski L.L.P., counsel to the Loan
Parties, addressed to the Lender and in form and substance satisfactory to the
Lender;
     (vi) a certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Party and
the validity against such Loan Party of the Loan Documents to which it is a
party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;
     (vii) a certificate signed by a Responsible Officer of the Borrower
certifying that the conditions specified in Sections 4.01(a) and (b) have been
satisfied; and
     (viii) such other assurances, certificates, documents or consents as the
Lender reasonably may require.
     (d) The Borrower shall have executed and issued Warrants to the Lender.
     (e) All fees required to be paid by the Borrower to the Lender on or before
the Closing Date shall have been paid.
     (f) Unless waived by the Lender, the Borrower shall have paid all fees,
charges and disbursements of counsel to the Lender (directly to such counsel if
requested by the Lender) to the extent invoiced prior to or on the Closing Date,
plus such additional amounts of such fees, charges and disbursements as shall
constitute its reasonable estimate of such fees, charges and disbursements
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts between
the Borrower and the Lender).
     (g) The Lender shall have received the results of a recent lien search with
respect to each of the Loan Parties on terms and conditions satisfactory to the
Lender.

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ARTICLE V.
REPRESENTATIONS AND WARRANTIES
     The Borrower represents and warrants to the Lender that:
     5.01. Existence, Qualification and Power. Each Loan Party and each of its
Subsidiaries (a) is duly organized or formed, validly existing and, as
applicable, in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to (i)
own or lease its assets and carry on its business and (ii) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, and
(c) is duly qualified and is licensed and, as applicable, in good standing under
the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license; except in each case referred to in clause (b)(i) or (c), to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect.
     5.02. Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is or
is to be a party have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, or require any
payment to be made under (i) any Contractual Obligation to which such Person is
a party or affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject;
or (c) violate any Law.
     5.03. Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required to be
obtained by the Borrower or any Subsidiary in connection with (a) the execution,
delivery or performance by, or enforcement against, any Loan Party of this
Agreement or any other Loan Document or (b) the exercise by the Lender of its
rights under the Loan Documents, except for the authorizations, approvals,
actions, notices and filings listed on Schedule 5.03, all of which have been
duly obtained, taken, given or made and are in full force and effect.
     5.04. Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, subject to the effects of any
Debtor Relief Laws.
     5.05. Financial Statements; No Material Adverse Effect. (a) The Audited
Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; (ii) fairly present the financial condition of the Borrower and
its Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied

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throughout the period covered thereby, except as otherwise expressly noted
therein; and (iii) show all material indebtedness and other liabilities, direct
or contingent, of the Borrower and its Subsidiaries as of the date thereof and
required by GAAP to be reflected thereon, including liabilities for taxes,
material commitments and Indebtedness.
     (b) The unaudited consolidated balance sheets of the Borrower and its
Subsidiaries dated June 30, 2010, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for the fiscal quarter
ended on that date (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present the financial condition of the Borrower
and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments.
     (c) Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect.
     5.06. Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or (b) except as specifically disclosed in
Schedule 5.06 (the “Disclosed Litigation”), either individually or in the
aggregate, if determined adversely, could reasonably be expected to have a
Material Adverse Effect.
     5.07. No Default. Neither any Loan Party nor any Subsidiary thereof is in
default under or with respect to, or a party to, any Contractual Obligation that
could, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. No Default has occurred and is continuing or would
result from the consummation of the transactions contemplated by this Agreement
or any other Loan Document.
     5.08. Ownership of Property; Liens; Investments.
     (a) Each Loan Party and each of its Subsidiaries has good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business, except for
such defects in title as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
     (b) Schedule 5.08(b) sets forth a complete and accurate list of all Liens
on the property or assets of each Loan Party and each of its Subsidiaries,
showing as of the date hereof the lienholder thereof, the principal amount of
the obligations secured thereby and the property or assets of such Loan Party or
such Subsidiary subject thereto. The property of each Loan Party and each of its
Subsidiaries is subject to no Liens, other than Liens set forth on Schedule
5.08(b), and as otherwise permitted by Section 7.01.

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     (c) Each Loan Party and each of its Subsidiaries has good, marketable and
insurable fee simple title to the real property owned by such Loan Party or such
Subsidiary, free and clear of all Liens, other than Liens created or permitted
by the Loan Documents.
     (d) Schedule 5.08(d) sets forth a complete and accurate list of all
Investments held by any Loan Party or any Subsidiary of a Loan Party on the date
hereof, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
     5.09. Environmental Compliance.
     (a) The Loan Parties and their respective Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental
Laws on the Loan Parties’ and their respective Subsidiaries’ business,
operations and properties and claims asserted against the Loan Parties and their
respective Subsidiaries alleging potential liability or responsibility for
violation of any Environmental Law, and as a result thereof the Borrower has
reasonably concluded that such Environmental Laws and such claims could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
     (b) Except as otherwise set forth in Schedule 5.09, none of the properties
currently or formerly owned or operated by any Loan Party or any of its
Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or
any analogous foreign, state or local list or, to the knowledge of the Loan
Parties, is adjacent to any such property; there are no and never have been any
underground or above-ground storage tanks other than in material compliance with
applicable Environmental Laws or any surface impoundments, septic tanks, pits,
sumps or lagoons in which Hazardous Materials are being or have been treated,
stored or disposed on any property currently owned or operated by any Loan Party
or any of its Subsidiaries or, to the knowledge of the Loan Parties, on any
property formerly owned or operated by any Loan Party or any of its
Subsidiaries; other than in material compliance with applicable Environmental
Laws, there is no asbestos or asbestos-containing material on any property
currently owned or operated by any Loan Party or any of its Subsidiaries; and
Hazardous Materials have not been Released, discharged or disposed of by any
Loan Party or any of its Subsidiaries or, to the knowledge of the Loan Parties,
any other Person on any property currently or formerly owned or operated by any
Loan Party or any of its Subsidiaries.
     (c) Except as otherwise set forth on Schedule 5.09, or as could not
reasonably be expected to have a Material Adverse Effect, neither any Loan Party
nor any of its Subsidiaries is undertaking, either individually or together with
other potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law; and to the knowledge of the Loan Parties,
all Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
any Loan Party or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result in material liability to any Loan Party or any of
its Subsidiaries.

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     5.10. Insurance. The properties of the Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Borrower, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or the applicable Subsidiary
operates.
     5.11. Taxes. The Borrower and its Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed, and have
paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise not yet delinquent, except (i) those which are being contested
in good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP or (ii) where
failure to do so has not and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries has
received any written notice from a Governmental Authority proposing a tax
assessment against the Borrower or any of its Subsidiaries that would, if
actually imposed, have a Material Adverse Effect. Neither any Loan Party nor any
Subsidiary thereof is party to any tax sharing agreement; provided, that the
allocation of taxes in connection with a business combination agreement does not
constitute a tax sharing agreement.
     5.12. ERISA Compliance.
     (a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan
that is intended to be a qualified plan under Section 401(a) of the Code has
received a favorable determination letter from the IRS to the effect that the
form of such Plan is qualified under Section 401(a) of the Code and the trust
related thereto has been determined by the IRS to be exempt from federal income
tax under Section 501(a) of the Code, or has an applicable remedial amendment
period that will not have ended before the Closing Date. To the knowledge of the
Borrower, nothing has occurred that would prevent or cause the loss of such
tax-qualified status.
     (b) There are no pending or, to the knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.
     (c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA
Affiliate is aware of any fact, event or circumstance that could reasonably be
expected to constitute or result in an ERISA Event with respect to any Pension
Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable
requirements under the Pension Funding Rules in respect of each Pension Plan,
and no waiver of the minimum funding standards under the Pension Funding Rules
has been applied for or obtained; (iii) as of the most recent valuation date for
any Pension Plan which is not a Multiemployer Plan, the funding target
attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or
higher and neither the Borrower nor any ERISA Affiliate knows of any facts or
circumstances that could reasonably be expected to cause the funding target
attainment percentage for any such plan to drop below 60% as of the most recent
valuation date; (iv) neither the Borrower nor any ERISA Affiliate has

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incurred any liability to the PBGC other than for the payment of premiums, and
there are no premium payments which have become due that are unpaid; (v) neither
the Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan
has been terminated by the plan administrator thereof nor by the PBGC, and no
event or circumstance has occurred or exists that could reasonably be expected
to cause the PBGC to institute proceedings under Title IV of ERISA to terminate
any Pension Plan.
     (d) Neither the Borrower or any ERISA Affiliate maintains or contributes
to, or has any unsatisfied obligation to contribute to, or liability under, any
active or terminated Pension Plan.
     5.13. Subsidiaries; Equity Interests; Loan Parties. As of the Closing Date,
no Loan Party has any Subsidiaries other than those specifically disclosed in
Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and non-assessable and are
owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free
and clear of all Liens. No Loan Party has any equity investments in any other
corporation or entity other than those specifically disclosed in Part (b) of
Schedule 5.13. Set forth on Part (d) of Schedule 5.13 is a complete and accurate
list of all Loan Parties, showing as of the Closing Date (as to each Loan Party)
the jurisdiction of its incorporation, the address of its principal place of
business and its U.S. taxpayer identification number or, in the case of any
non-U.S. Loan Party that does not have a U.S. taxpayer identification number,
its unique identification number issued to it by the jurisdiction of its
incorporation. The copy of the charter of each Loan Party and each amendment
thereto provided pursuant to Section 4.01(c)(iv) is a true and correct copy of
each such document, each of which is valid and in full force and effect.
     5.14. Margin Regulations; Investment Company Act. (a) The Borrower is not
engaged and will not engage, principally or as one of its important activities,
in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.
     (b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.
     5.15. Disclosure. The Borrower has disclosed to the Lender (or such
information is publicly available in documents filed with the SEC) all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any Loan
Party to the Lender in connection with the transactions contemplated hereby and
the negotiation of this Agreement or delivered hereunder or under any other Loan
Document (in each case as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial

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information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
     5.16. Compliance with Laws. Each Loan Party and each Subsidiary thereof is
in compliance in all material respects with the requirements of all applicable
Laws and all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
     5.17. Intellectual Property; Licenses, Etc. Each Loan Party and each of its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, “IP Rights”) that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the knowledge of the Borrower,
no slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed, by any Loan
Party or any of its Subsidiaries infringes upon any rights held by any other
Person. No claim or litigation regarding any of the foregoing is pending or, to
the knowledge of the Borrower, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
     5.18. Solvency. Each Loan Party is, individually and together with its
Subsidiaries on a consolidated basis, Solvent.
     5.19. Casualty, Etc. Neither the businesses nor the properties of any Loan
Party or any of its Subsidiaries have been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
     5.20. Labor Matters. There are no collective bargaining agreements or
Multiemployer Plans covering the employees of the Borrower or any of its
Subsidiaries as of the Closing Date and neither the Borrower nor any Subsidiary
has suffered any strikes, walkouts, work stoppages or other material labor
difficulty within the last five years.
     5.21. Foreign Assets Control Regulations, Etc.
     (a) Neither the Borrower nor any Affiliated Entity is (i) a Person whose
name appears on the list of Specially Designated Nationals and Blocked Persons
published by the Office of Foreign Assets Control, U.S. Department of Treasury
(“OFAC”) (an “OFAC Listed Person”) or (ii) a department, agency or
instrumentality of, or is otherwise controlled by or acting on behalf of,
directly or indirectly, (x) any OFAC Listed Person or (y) the government of a
country subject to comprehensive U.S. economic sanctions administered by OFAC,
currently Iran, Sudan, Cuba, Burma, Syria and North Korea (each OFAC Listed
Person and each other entity described in clause (ii), a “Blocked Person”).

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     (b) No part of the proceeds from the Loan hereunder constitutes or will
constitute funds obtained on behalf of any Blocked Person or will otherwise be
used, directly by the Borrower or indirectly through any Affiliated Entity, in
connection with any investment in, or any transactions or dealings with, any
Blocked Person.
     (c) To the Borrower’s actual knowledge, neither the Borrower nor any
Affiliated Entity (i) is under investigation by any Governmental Authority for,
or has been charged with, or convicted of, money laundering, drug trafficking,
terrorist-related activities or other money laundering predicate crimes under
any applicable law (collectively, “Anti-Money Laundering Laws”), (ii) has been
assessed civil penalties under any Anti-Money Laundering Laws or (iii) has had
any of its funds seized or forfeited in an action under any Anti-Money
Laundering Laws. The Borrower has taken reasonable measures appropriate to the
circumstances (in any event as required by applicable law), to ensure that the
Borrower and each Affiliated Entity is and will continue to be in compliance
with all applicable current and future Anti-Money Laundering Laws.
     (d) No part of the proceeds from the Loan hereunder will be used, directly
or indirectly, for any improper payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, official of any public international organization or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage. The Borrower has taken reasonable
measures appropriate to the circumstances (in any event as required by
applicable law), to ensure that the Borrower and each Affiliated Entity is and
will continue to be in compliance with all applicable current and future
anti-corruption laws and regulations.
ARTICLE VI.
AFFIRMATIVE COVENANTS
     So long as the Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, the Borrower shall, and shall (except in the case of the covenants
set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to:
     6.01. Financial Statements. Deliver to the Lender, in form and detail
satisfactory to the Lender:
     (a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower (commencing with the fiscal year ended
December 31, 2010), a consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income or operations, changes in shareholders’ equity, and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP, such consolidated statements to be audited and accompanied
by a report and opinion of an independent certified public accountant of
nationally recognized standing reasonably acceptable to the Lender, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit,
and such consolidated statements to be certified by the chief executive officer,
chief financial officer, treasurer or

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controller of the Borrower to the effect that such statements are fairly stated
in all material respects when considered in relation to the consolidated
financial statements of the Borrower and its Subsidiaries;
     (b) as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Borrower
(commencing with the fiscal quarter ended September 30, 2010), a consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
quarter, and the related consolidated statements of income or operations,
changes in shareholders’ equity, and cash flows for such fiscal quarter and for
the portion of the Borrower’s fiscal year then ended, setting forth in each case
in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail, such consolidated statements to be certified by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flows of the Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes;
     (c) by April 10th of each year, a report in form and substance reasonably
satisfactory to the Lender prepared by or under the supervision of a petroleum
engineer who may be an employee of the Borrower or its Subsidiaries, which shall
evaluate all net Proved Reserves owned by Subsidiaries which have Indebtedness
outstanding under Sections 7.02(i) or (j), such report to be as of the preceding
December 31st and which shall set forth the information necessary to determine
the Present Value of Proved Reserves as of such date, together with a review
report thereon in form and substance reasonably satisfactory to the Lender by
independent petroleum engineers of nationally recognized standing reasonably
acceptable to the Lender.
     The filing by the Borrower on the SEC’s EDGAR system, within the time
period set forth in Section 6.01(a) above, of the Borrower’s annual reports on
Form 10-K, with certifications required by SEC rules, shall be deemed to satisfy
the delivery and certification requirements of Section 6.01(a). The filing by
the Borrower on the SEC’s EDGAR system, within the time period set forth in
Section 6.01(b) above, of the Borrower’s quarterly reports on Form 10-Q, with
certifications required by SEC rules, shall be deemed to satisfy the delivery
and certification requirements of Section 6.01(b).
     6.02. Certificates; Other Information. Deliver to the Lender, in form and
detail reasonably satisfactory to the Lender:
     (a) promptly after the furnishing thereof, copies of any statement or
report furnished to any holder of debt securities of any Loan Party or of any of
its Subsidiaries pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Lender
pursuant to Section 6.01 or any other clause of this Section 6.02;
     (b) as soon as available, but in any event within 30 days after the end of
each fiscal year of the Borrower, a report summarizing the insurance coverage
(specifying type, amount and carrier) in effect for each Loan Party and its
Subsidiaries and containing such additional information as the Lender may
reasonably specify;

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     (c) promptly, and in any event within five Business Days after receipt
thereof by any Loan Party or any Subsidiary thereof, copies of each notice or
other correspondence received from the SEC (or comparable agency in any
applicable non-U.S. jurisdiction) concerning any investigation or possible
investigation or other inquiry by such agency regarding financial or other
operational results of any Loan Party or any Subsidiary thereof; provided
however, that no Loan Party or any Subsidiary thereof shall be required to
provide copies of any notice or other correspondence received from the SEC
regarding routine reviews by the SEC of periodic filings;
     (d) not later than five Business Days after receipt thereof by any Loan
Party or any Subsidiary thereof, copies of all notices, requests and other
documents (including amendments, waivers and other modifications) so received
under or pursuant to any instrument, indenture, loan or credit or similar
agreement and, from time to time upon request by the Lender, such information
and reports regarding such instruments, indentures and loan and credit and
similar agreements as the Lender may reasonably request (excluding information
sent in the ordinary course of administration under any such facility);
     (e) promptly after the assertion or occurrence thereof, notice of any
action or proceeding against or of any noncompliance by any Loan Party or any of
its Subsidiaries with any Environmental Law or Environmental Permit that could
(i) reasonably be expected to have a Material Adverse Effect or (ii) cause any
related property to be subject to any restrictions on ownership, occupancy, use
or transferability under any Environmental Law;
     (f) as soon as available, but in any event within 30 days after the end of
each fiscal year of the Borrower, a report supplementing Schedule 5.13
containing a description of all changes in the information included in such
Schedule as may be necessary for such Schedule to be accurate and complete, such
report to be signed by a Responsible Officer of the Borrower and to be in a form
reasonably satisfactory to the Lender; and
     (g) promptly, such additional information regarding the business,
financial, legal or corporate affairs of any Loan Party or any Subsidiary
thereof, or compliance with the terms of the Loan Documents, as the Lender may
from time to time reasonably request.
     The Borrower hereby acknowledges that the Lender may have personnel who do
not wish to receive material non-public information with respect to the Borrower
or its Affiliates, or the respective securities of any of the foregoing, and who
may be engaged in investment and other market-related activities with respect to
such Person’s securities. The Borrower hereby agrees that so long as the
Borrower is the issuer of any outstanding debt or equity securities that are
registered or issued pursuant to a private offering or is actively contemplating
issuing any such securities (w) all materials and/or information provided by the
Borrower hereunder (collectively, “Borrower Materials”) that are made available
to the Lender shall, to the extent applicable, be clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking Borrower Materials
“PUBLIC,” the Borrower shall be deemed to have authorized the Lender to treat
such Borrower Materials as not containing any material non-public information
with respect to the Borrower or its securities for purposes of United States
Federal and state securities laws; (y) all Borrower Materials marked “PUBLIC”
are permitted to be made available to any personnel of the Lender and
(z) Borrower Materials that are not marked “PUBLIC” may be made available to

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personnel who wish to receive material non-public information with respect to
the Borrower or its Affiliates, or the respective securities of any of the
foregoing, and who may be engaged in investment and other market-related
activities with respect to such Person’s securities.
     The Borrower acknowledges and agrees that the Lender may notify the
Borrower at any time and from time to time directing the Borrower (a) to
terminate providing any Borrower Materials to the Lender that contain any
material non-public information with respect to the Borrower or its securities
and/or (b) to notify the Lender prior to making available to the Lender any
Borrower Materials containing any material non-public information with respect
to the Borrower or its securities.
     6.03. Notices. Promptly notify the Lender:
     (a) of the occurrence of any Default;
     (b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of the Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;
     (c) of the occurrence of any ERISA Event;
     (d) of any material change in accounting policies or financial reporting
practices by any Loan Party or any Subsidiary thereof; and
     (e) of the (i) occurrence of any Disposition of property or assets for
which the Borrower is required to make a mandatory prepayment pursuant to
Section 2.02(b)(i), (ii) incurrence or issuance of any Indebtedness for which
the Borrower is required to make a mandatory prepayment pursuant to
Section 2.02(b)(ii), and (iii) receipt of any Extraordinary Receipt for which
the Borrower is required to make a mandatory prepayment pursuant to
Section 2.0(b)(iii).
     Each notice pursuant to Section 6.03 (other than Section 6.03(e)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken and proposes to take with respect thereto. Each notice
pursuant to Section 6.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.
     6.04. Payment of Obligations. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless (i) the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary or (ii) the
failure to do so would not have a Material Adverse Effect; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property; and (c) all
Indebtedness, as and when due and

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payable, but subject to any subordination provisions contained in any instrument
or agreement evidencing such Indebtedness.
     6.05. Preservation of Existence, Etc. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.
     6.06. Maintenance of Properties. (a) Maintain, preserve and protect all of
its material properties, leases and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities.
     6.07. Maintenance of Insurance. Maintain with financially sound and
reputable insurance companies not Affiliates of the Borrower, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days’
prior notice to the Lender of termination, lapse or cancellation of such
insurance.
     6.08. Compliance with Laws. Comply in all material respects with the
requirements of all applicable Laws and all orders, writs, injunctions and
decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of Law or order, writ, injunction or
decree is being contested in good faith by appropriate proceedings diligently
conducted; or (b) the failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect.
     6.09. Books and Records. (a) Maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower or such Subsidiary, as the case may be; and
(b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower or such Subsidiary, as the case may be.
     6.10. Inspection Rights. Permit representatives and independent contractors
of the Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, and independent public accountants, all at the expense of the Borrower
and at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
however, that when an Event of Default exists the Lender (or any of its
representatives or independent

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contractors) may do any of the foregoing at the expense of the Borrower at any
time during normal business hours and without advance notice.
     6.11. Use of Proceeds. Use the proceeds of Loan for working capital
purposes and general corporate purposes not in contravention of any Law or of
any Loan Document.
     6.12. Covenant to Guarantee Obligations. Upon the formation or acquisition
of any new direct or indirect Subsidiary (other than any CFC or a Subsidiary
that is held directly or indirectly by a CFC) by any Loan Party, then the
Borrower shall, at the Borrower’s expense:
     (a) within 10 days after such formation or acquisition, cause such
Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it
has not already done so), to duly execute and deliver to the Lender a guaranty
or guaranty supplement, in form and substance satisfactory to the Lender,
guaranteeing the other Loan Parties’ obligations under the Loan Documents, and
     (b) within 30 days after such formation or acquisition, deliver to the
Lender, upon the request of the Lender in its sole discretion, a signed copy of
a favorable opinion, addressed to the Lender, of counsel for the Loan Parties
acceptable to the Lender as to the matters contained in clause (a), and as to
such other matters as the Lender may reasonably request.
     6.13. Compliance with Environmental Laws. Comply, and, except with respect
to oil and gas properties that are not operated by the Borrower or any of its
Subsidiaries, cause all lessees and other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew all Environmental
Permits necessary for its operations and properties; and conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action required to remove and clean up all Hazardous Materials
from any of its properties, as required under, and in accordance with the
requirements of all Environmental Laws; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances in accordance
with GAAP.
     6.14. Further Assurances. Promptly upon request by the Lender, (a) correct
any material defect or error that may be discovered in any Loan Document or in
the execution, acknowledgment, filing or recordation thereof, and (b) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register any and all such further acts, deeds, certificates, assurances and
other instruments as the Lender may reasonably require from time to time in
order to carry out more effectively the purposes of the Loan Documents, and
cause each of its Subsidiaries to do so.
     6.15. Compliance with Terms of Leaseholds. Make all payments and otherwise
perform all obligations in respect of all leases of real property to which the
Borrower or any of its Subsidiaries is a party, keep such leases in full force
and effect and not allow such leases to lapse or be terminated or any rights to
renew such leases to be forfeited or cancelled, notify the Lender of any default
by any party with respect to such leases and cooperate with the Lender in

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all respects to cure any such default, and cause each of its Subsidiaries to do
so, except, in any case, where the failure to do so, either individually or in
the aggregate, could not be reasonably likely to have a Material Adverse Effect.
Notwithstanding the foregoing, with respect to leases of oil and gas properties,
the Borrower and its Subsidiaries may, in the ordinary course of business and in
their sole discretion, allow any such leases to lapse, terminate, be forfeited
or cancelled, provided that any such lapses, terminations, forfeitures or
cancellations, either individually or in the aggregate, could not be reasonably
likely to have a Material Adverse Effect, and the Borrower and its Subsidiaries
shall not be required to notify the Lender of any such lapses, terminations,
forfeitures or cancellations.
     6.16. Material Contracts. Perform and observe all the terms and provisions
of each Material Contract to be performed or observed by it, maintain each such
Material Contract in full force and effect and enforce in all material respects
each such Material Contract in accordance with its terms.
ARTICLE VII.
NEGATIVE COVENANTS
     So long as the Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, the Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly:
     7.01. Liens. Create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired, or
sign or file or suffer to exist under the Uniform Commercial Code of any
jurisdiction a financing statement that names the Borrower or any of its
Subsidiaries as debtor, or assign any accounts or other right to receive income,
other than the following:
     (a) Liens pursuant to any Loan Document;
     (b) Liens existing on the date hereof and listed on Schedule 5.08(b) and
any renewals or extensions thereof, provided that (i) the property covered
thereby is not changed, (ii) the amount secured or benefited thereby is not
increased except as contemplated by Section 7.02(e), (iii) the direct or any
contingent obligor with respect thereto is not changed, and (iv) any renewal or
extension of the obligations secured or benefited thereby is permitted by
Section 7.02(e);
     (c) Liens for taxes not yet delinquent or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;
     (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;
     (e) pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

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     (f) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
     (g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;
     (h) Liens securing judgments for the payment of money not constituting an
Event of Default under Section 8.01(h);
     (i) Liens securing Indebtedness permitted under Section 7.02(g); provided
that (i) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (ii) the Indebtedness secured thereby
does not exceed the cost or fair market value, whichever is lower, of the
property being acquired on the date of acquisition;
     (j) Liens on the assets (excluding any Equity Interests owned by Harvest
(US) Holdings) and the Equity Interests in Harvest (US) Holdings securing
Indebtedness of Harvest (US) Holdings permitted under Section 7.02(i);
     (k) Liens on the Equity Interests in a Subsidiary (other than Harvest
(US) Holdings and Harvest Holding LLC) which is not a CFC and the assets of such
Subsidiary (excluding any Equity Interests owned by such Subsidiary) securing
Indebtedness of such Subsidiary permitted under Section 7.02(j); and
     (l) Liens on the Specified Property (as defined in the definition of
Project Financing Indebtedness) of the special purpose Subsidiary incurring the
applicable Project Financing Indebtedness and/or Liens on the contract revenues
under a contract for the sale of products or services manufactured at and/or
derived from the Specified Property by such special purpose Subsidiary entered
into in the ordinary course of business to secure Project Financing Indebtedness
of such special purpose Subsidiary.
     7.02. Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:
     (a) obligations (contingent or otherwise) existing or arising under any
Swap Contract, provided that (i) such obligations are (or were) entered into by
such Person in the ordinary course of business (and not for speculative
purposes) to hedge or mitigate risks to which the Borrower or any Subsidiary
(other than Harvest Holding LLC) is exposed in the conduct of its business or
the management of its liabilities and (ii) such Swap Contract does not contain
any provision exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party; provided that the
aggregate Swap Termination Value thereof shall not exceed $15,000,000 at any
time outstanding;
     (b) Indebtedness of a Subsidiary of the Borrower (other than Harvest
Holding LLC) owing to a wholly-owned Subsidiary of the Borrower (which is not a
Loan Party or Harvest Holding LLC), which Indebtedness shall be permitted under
the provisions of Section 7.03;

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     (c) Indebtedness of a Subsidiary of the Borrower (other than Harvest
Holding LLC) owing to the Borrower or another Loan Party, which Indebtedness
shall (i) be subordinated to the Obligations on terms and conditions
satisfactory to the Lender and (ii) be otherwise permitted under the provisions
of Section 7.03;
     (d) Indebtedness under the Loan Documents;
     (e) Indebtedness outstanding on the date hereof and listed on Schedule 7.02
and any refinancings, refundings, renewals or extensions thereof; provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder and the direct or any
contingent obligor with respect thereto is not changed, as a result of or in
connection with such refinancing, refunding, renewal or extension; and provided,
still further, that the terms relating to principal amount, amortization,
maturity, collateral (if any) and subordination (if any), and other material
terms taken as a whole, of any such refinancing, refunding, renewing or
extending Indebtedness, and of any agreement entered into and of any instrument
issued in connection therewith, are no less favorable in any material respect to
the Loan Parties or the Lender than the terms of any agreement or instrument
governing the Indebtedness being refinanced, refunded, renewed or extended and
the interest rate applicable to any such refinancing, refunding, renewing or
extending Indebtedness does not exceed the then applicable market interest rate;
     (f) Guarantees of the Borrower or any Guarantor in respect of Indebtedness
of the Borrower or any other Guarantor otherwise permitted under clauses (a),
(b), (c), (d) or (g) of this Section 7.02;
     (g) Indebtedness in respect of Capitalized Leases, Synthetic Lease
Obligations and purchase money obligations for fixed or capital assets within
the limitations set forth in Section 7.01(i); provided, however, that (x) the
aggregate amount of all such Indebtedness at any one time outstanding shall not
exceed $10,000,000 and (y) Harvest Holding LLC shall not be permitted to create,
incur, assume or suffer to exist any of such Indebtedness;
     (h) Indebtedness of the Borrower under the Senior Convertible Notes;
     (i) Indebtedness of Harvest (US) Holdings under a Facility and Indebtedness
in the form of a Guarantee by Borrower of the obligations of Harvest
(US) Holdings under such Facility so long as (x) the Guarantee by Borrower is
subordinated to the Obligations on terms and conditions reasonably satisfactory
to the Lender and (y) prior to incurring such Indebtedness Harvest (US) Holdings
shall have transferred the Equity Interests of all of its Subsidiaries to a
newly formed Subsidiary (“NewCo”) of the Borrower (which Subsidiary is not a
CFC) and the requirements of Section 6.12 shall have been satisfied; provided
that such Indebtedness under such Facility shall only be Indebtedness permitted
under this clause (i) (1) if within six months after initially incurring such
Indebtedness Harvest (US) Holdings shall have assigned the West Bay Leases to
NewCo and (2) on any date if the Asset Coverage Ratio on such date is not less
than 1.5 to 1.0;

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     (j) Indebtedness of a Subsidiary (other than Harvest (US) Holdings or
Harvest Holding LLC) which is not a CFC under a Facility; provided that such
Indebtedness under such Facility shall only be Indebtedness permitted under this
clause (j) on any date if the Asset Coverage Ratio of such Subsidiary on such
date is not less than 1.5 to 1.0;
     (k) Unsecured Indebtedness of Subsidiaries (other than Harvest Holding LLC)
which is subordinated to the Obligations on terms and conditions satisfactory to
the Lender in an aggregate principal amount outstanding not to exceed
$20,000,000 at any time;
     (l) Unsecured Indebtedness of the Borrower incurred in connection with a
Strategic Transaction, the proceeds of which shall be placed in escrow
arrangements reasonably satisfactory to the Lender and the Borrower;
     (m) Unsecured Indebtedness of the Borrower incurred under clause (g) of the
definition of Indebtedness in the form of an agreement to distribute certain
Equity Interests of Second NewCo to the holders of the Equity Interests in the
Borrower in connection with a Strategic Transaction, so long as such agreement
at all times provides for the repayment at the closing of such Strategic
Transaction of the Obligations in full in cash; provided that no such Strategic
Transaction shall be consummated unless and until the Obligations have been paid
in full in cash; and
     (n) Project Financing Indebtedness of any Subsidiary (other than Harvest
Holding LLC) of the Borrower;
     provided that, notwithstanding anything contained in this Section 7.02, the
Borrower shall not permit any Subsidiary to have outstanding any obligation (by
Guarantee or otherwise) in favor of any holder of the Senior Convertible Note
unless the Lender has a Guarantee of the Loan from such Subsidiary which is
fully enforceable and pari passu with the claims of holder against such
Subsidiary under the Senior Convertible Note.
     7.03. Investments. Make or hold any Investments, except:
     (a) Investments held by the Borrower and its Subsidiaries in the form of
Cash Equivalents in an aggregate principal amount for all such Investments not
to exceed $200,000,000 at any time outstanding;
     (b) advances to officers, directors and employees of the Borrower and
Subsidiaries in an aggregate amount not to exceed $750,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;
     (c) (i) Investments by the Borrower and its Subsidiaries in their
respective Subsidiaries outstanding on the date hereof, (ii) additional
Investments by the Borrower and its Subsidiaries in Loan Parties,
(iii) additional Investments by Subsidiaries of the Borrower that are not Loan
Parties in other Subsidiaries (other than Harvest Holding LLC) that are not Loan
Parties, (iv) so long as no Default has occurred and is continuing or would
result from such Investment, additional Investments by the Loan Parties in
wholly-owned Subsidiaries (other than Harvest Holding LLC) that are not Loan
Parties; provided that, the aggregate amount of Investments made pursuant to
this clause (iv) shall not exceed $700,000,000 in the aggregate and

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(v) so long as no Default has occurred and is continuing or would result from
such Investment, an Investment by a Loan Party in a newly formed wholly-owned
Subsidiary which is not a Loan Party (“Second NewCo”) in connection with a
Strategic Transaction, the proceeds of which Investment shall be placed in
escrow arrangements reasonably satisfactory to the Lender and the Borrower;
     (d) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;
     (e) Guarantees permitted by Section 7.02;
     (f) Investments existing on the date hereof (other than those referred to
in Section 7.03(c)(i)) and set forth on Schedule 5.08(d);
     (g) the purchase or other acquisition of all of the Equity Interests in, or
all or substantially all of the property of, any Person that, upon the
consummation thereof, will be wholly-owned directly by the Borrower or one or
more of its wholly-owned Subsidiaries (other than Harvest Holding LLC)
(including as a result of a merger or consolidation); provided that, with
respect to each purchase or other acquisition made pursuant to this
Section 7.03(g):
     (i) any such newly-created or acquired Subsidiary shall comply with any
applicable requirements of Section 6.12;
     (ii) the lines of business of the Person to be (or the property of which is
to be) so purchased or otherwise acquired shall be substantially the same lines
of business as one or more of the principal businesses of the Borrower and its
Subsidiaries in the ordinary course;
     (iii) such purchase or other acquisition shall not include or result in any
contingent liabilities that could reasonably be expected to be material to the
business, financial condition, operations or prospects of the Borrower and its
Subsidiaries, taken as a whole (as determined in good faith by the board of
directors (or the persons performing similar functions) of the Borrower or such
Subsidiary if the board of directors is otherwise approving such transaction
and, in each other case, by a Responsible Officer);
     (iv) the total cash and noncash consideration (including the fair market
value of all Equity Interests issued or transferred to the sellers thereof, all
indemnities, earnouts and other contingent payment obligations to, and the
aggregate amounts paid or to be paid under noncompete, consulting and other
affiliated agreements with, the sellers thereof, all write-downs of property and
reserves for liabilities with respect thereto and all assumptions of debt,
liabilities and other obligations in connection therewith) paid by or on behalf
of the Borrower and its Subsidiaries for any such purchase or other acquisition,
when aggregated with the total cash and noncash consideration paid by or on
behalf of the Borrower and its Subsidiaries for all other purchases and other
acquisitions made by the Borrower and its Subsidiaries pursuant to this
Section 7.03(g) shall not exceed $200,000,000 in the aggregate; and

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     (v) immediately before and immediately after giving pro forma effect to any
such purchase or other acquisition, no Default shall have occurred and be
continuing;
     (h) Investments by the Borrower and its Subsidiaries (other than Harvest
Holding LLC) not otherwise permitted under this Section 7.03; provided that, the
aggregate amount of Investments made pursuant to this clause (h) shall not
exceed $100,000,000 in the aggregate; further provided that, with respect to
each Investment made pursuant to this Section 7.03(h):
     (i) such Investment shall not include or result in any contingent
liabilities that could reasonably be expected to be material to the business,
financial condition, operations or prospects of the Borrower and its
Subsidiaries, taken as a whole (as determined in good faith by the board of
directors (or persons performing similar functions) of the Borrower or such
Subsidiary if the board of directors is otherwise approving such transaction
and, in each other case, by a Responsible Officer);
     (ii) such Investment shall be in property that is part of, or in lines of
business that are, substantially the same lines of business as one or more of
the principal businesses of the Borrower and its Subsidiaries in the ordinary
course;
     (iii) any determination of the amount of such Investment shall include all
cash and noncash consideration (including the fair market value of all Equity
Interests issued or transferred to the sellers thereof, all indemnities,
earnouts and other contingent payment obligations to, and the aggregate amounts
paid or to be paid under noncompete, consulting and other affiliated agreements
with, the sellers thereof, all write-downs of property and reserves for
liabilities with respect thereto and all assumptions of debt, liabilities and
other obligations in connection therewith) paid by or on behalf of the Borrower
and its Subsidiaries in connection with such Investment; and
     (iv) immediately before and immediately after giving pro forma effect to
any such purchase or other acquisition, no Default shall have occurred and be
continuing; and
     (i) other Investments (other than in Harvest Holding LLC) not exceeding
$5,000,000 in the aggregate.
     7.04. Fundamental Changes. Merge, dissolve, liquidate, consolidate with or
into another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:
     (a) any Subsidiary may merge with (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries (other than Harvest Holding LLC), provided that when any Loan
Party is merging with another Subsidiary, such Loan Party shall be the
continuing or surviving Person;
     (b) any Loan Party may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or to another Loan
Party (other than a Subsidiary which is obligated in respect of a Facility); and

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     (c) any Subsidiary that is not a Loan Party may dispose of all or
substantially all its assets (including any Disposition that is in the nature of
a liquidation) to (i) another Subsidiary (other than Harvest Holding LLC) that
is not a Loan Party or (ii) to a Loan Party.
     7.05. Dispositions. Make any Disposition or enter into any agreement to
make any Disposition, except:
     (a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;
     (b) Dispositions or sales of hydrocarbons in the ordinary course of
business;
     (c) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are promptly
applied to the purchase price of such replacement property;
     (d) Dispositions of property by the Borrower or any Subsidiary to the
Borrower or to a wholly-owned Subsidiary (excluding (x) a Subsidiary which is
obligated in respect of a Facility and (y) Harvest Holding LLC); provided that
if the transferor of such property is a Guarantor, the transferee thereof must
either be the Borrower or a Guarantor;
     (e) Dispositions of assets related to the Monument Butte Extension area in
Utah for cash and possible payment of past costs;
     (f) Farmouts of a percentage of Subsidiaries’ working interest in the Gabon
Project for cash and possible payment of past costs;
     (g) Farmouts of a percentage of Subsidiaries’ working interest for cash and
possible payment of past costs in the Oman Project;
     (h) Farmouts of a percentage of Subsidiaries’ working interest, payment of
past costs or receipt of a carried interest in future exploration and
development costs in the West Bay Project;
     (i) Farmouts of a percentage of the Subsidiaries’ working interest, payment
of past costs or receipt of a carried interest in future exploration and
development costs in the Budong Budong, Indonesia Project;
     (j) Disposition of all or part of the Borrower’s or its Subsidiaries’
Equity Interest in Fusion LLC;
     (k) Disposition of all or part of Subsidiaries’ interest in the WAB-21
Block Project;
     (l) Execution of an agreement to enter into a Strategic Transaction, so
long as such agreement at all times provides for the repayment at the closing of
such Strategic Transaction of the Obligations in full in cash; provided that no
such Strategic Transaction shall be consummated

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and no Disposition shall occur pursuant to such agreement unless and until the
Obligations have been paid in full in cash;
     (m) Entering into of any West Bay Leases;
     (n) Entering into any assignments of leasehold interests to form AMIs
(Areas of Mutual Interest) with third parties in the ordinary course of business
and on customary terms and conditions;
     (o) Dispositions permitted by Section 7.04;
     (p) Subject to Section 7.14, Dispositions by the Borrower and its
Subsidiaries of property pursuant to sale-leaseback transactions, provided that
the book value of all property so Disposed of shall not exceed $5,000,000 in any
fiscal year;
     (q) Dispositions by the Borrower and its Subsidiaries not otherwise
permitted under this Section 7.05; provided that (i) at the time of such
Disposition, no Default or Event of Default shall exist or would result from
such Disposition, (ii) the aggregate book value of all property Disposed of in
reliance on this clause (q) in any fiscal year shall not exceed $5,000,000 and
(iii) the purchase price for such asset shall be paid to the Borrower or such
Subsidiary solely in cash;
     (r) Dispositions of oil and gas properties in the ordinary course of
business not exceeding $20,000,000 in the aggregate and not otherwise permitted
under this Section 7.05;
     (s) A Disposition in the form of the execution of an agreement to make a
Restricted Payment as permitted by Section 7.02(m), so long as such agreement at
all times provides for the repayment at the closing of such Strategic
Transaction of the Obligations in full in cash; provided that no such
Disposition and Strategic Transaction shall be consummated unless and until the
Obligations have been paid in full in cash; and
     (t) A Disposition in the form of cash as permitted by Section 7.03(c)(v).
provided, however, that any Disposition pursuant to Section 7.05(a) through
Section 7.05(s) shall be for fair market value.
     7.06. Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
or issue or sell any Equity Interests or accept any capital contributions,
except that, so long as no Default shall have occurred and be continuing at the
time of any action described below or would result therefrom:
     (a) each Subsidiary may make Restricted Payments to (i) the Borrower,
(ii) any Subsidiaries of the Borrower that are Guarantors and (iii) any other
Person that owns a direct Equity Interest in such Subsidiary (to the extent such
Subsidiary is making a contemporaneous Restricted Payment to the Borrower or
Guarantor which also holds an Equity Interest in such Subsidiary), in each case
ratably according to their respective holdings of the type of Equity Interest in
respect of which such Restricted Payment is being made;

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     (b) the Borrower and each Subsidiary may declare and make dividend payments
or other distributions payable solely in the common stock or other common Equity
Interests of such Person;
     (c) capital contributions permitted by Sections 7.03(c)(ii)and (v) and
Section 7.05(d); and
     (d) the execution of an agreement to make a Restricted Payment as permitted
by Section 7.02(m), so long as such agreement at all times provides for the
repayment at the closing of such Strategic Transaction of the Obligations in
full in cash; provided that no such Restricted Payment shall be made and no such
Strategic Transaction shall be consummated unless and until the Obligations have
been paid in full in cash.
     7.07. Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrower
and its Subsidiaries on the date hereof or any business substantially related or
incidental thereto.
     7.08. Transactions with Affiliates. Enter into any transaction of any kind
with any Affiliate of the Borrower, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to
the Borrower or such Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate; provided, however, that nothing herein shall prohibit
(a) intercompany loans to fund expenditures of a Subsidiary in the ordinary
course of business and permitted under Sections 7.02 and 7.03 or (b) the
transfer of the Equity Interests of Harvest (US) Holdings’s Subsidiaries to
NewCo or the assignment of the West Bay Leases by Harvest (US) Holdings to NewCo
permitted by Section 7.02(i).
     7.09. Burdensome Agreements. Enter into or permit to exist any Contractual
Obligation (other than this Agreement or any other Loan Document) that
(a) limits the ability (i) of any Subsidiary to make Restricted Payments to the
Borrower or any Guarantor or to otherwise transfer property to or invest in the
Borrower or any Guarantor, except for any agreement in effect (A) on the date
hereof and set forth on Schedule 7.09 or (B) at the time any Subsidiary becomes
a Subsidiary of the Borrower, so long as such agreement was not entered into
solely in contemplation of such Person becoming a Subsidiary of the Borrower,
(ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of
the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens
on property of such Person; provided, however, that this clause (iii) shall not
prohibit any negative pledge incurred or provided in favor of any holder of
Indebtedness permitted under Section 7.02(g) solely to the extent any such
negative pledge relates to the property financed by or the subject of such
Indebtedness; or (b) requires the grant of a Lien to secure an obligation of
such Person if a Lien is granted to secure another obligation of such Person.
     7.10. Use of Proceeds. Use the proceeds of the Loan, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.

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     7.11. Amendments of Organization Documents. Amend any of its Organization
Documents in any way that would have an adverse effect on the ability of the
Loan Parties to repay the Loan.
     7.12. Accounting Changes. Make any change in (a) accounting policies or
reporting practices, except as required by GAAP, or (b) fiscal year.
     7.13. Prepayments, Etc. of Indebtedness. Prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Indebtedness,
except (a) the prepayment of the Loan in accordance with the terms of this
Agreement, (b) regularly scheduled or required repayments or redemptions of
Indebtedness set forth in Schedule 7.02 and (c) conversions into common stock of
the Borrower under the Senior Convertible Notes or mandatory repurchases of any
Senior Convertible Notes, in each case in accordance with the terms thereof.
     7.14. Terrorism Sanctions Regulations. The Borrower will not and will not
permit any Affiliated Entity to (a) become an OFAC Listed Person or (b) have any
investments in, or engage in any dealings or transactions with, any Blocked
Person.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
     8.01. Events of Default. Any of the following shall constitute an Event of
Default:
     (a) Non-Payment. The Borrower or any other Loan Party fails to (i) pay when
and as required to be paid herein, any amount of principal of the Loan, or
(ii) pay within three days after the same becomes due, any interest on the Loan,
or any fee due hereunder, or (iii) pay within five days after the same becomes
due, any other amount payable hereunder or under any other Loan Document; or
     (b) Specific Covenants. (i) the Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05,
6.10, 6.11, 6.12, or Article VII, or (ii) any of the Guarantors fails to perform
or observe any term, covenant or agreement contained in the Guaranty; or
     (c) Other Defaults. Any Loan Party fails to perform or observe in any
material respect any other covenant or agreement (not specified in
Section 8.01(a) or (b) above) contained in any Loan Document on its part to be
performed or observed and such failure continues for 30 days; or
     (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be materially incorrect or
misleading when made; or
     (e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails
to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness

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hereunder and Indebtedness under Swap Contracts) having an aggregate principal
amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than the Threshold Amount, or (B) fails to observe or perform any other
agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or
(ii) there occurs under any Swap Contract an Early Termination Date (as defined
in such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting
Party (as defined in such Swap Contract) or (B) any Termination Event (as so
defined) under such Swap Contract as to which a Loan Party or any Subsidiary
thereof is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by such Loan Party or such Subsidiary as a result thereof
is greater than the Threshold Amount; or
     (f) Insolvency Proceedings, Etc. Any Loan Party or any Significant
Subsidiary thereof institutes or consents to the institution of any proceeding
under any Debtor Relief Law, or makes an assignment for the benefit of
creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment
continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or
     (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any
Significant Subsidiary thereof becomes unable or admits in writing its inability
or fails generally to pay its debts as they become due, or (ii) any writ or
warrant of attachment or execution or similar process is issued or levied
against all or any material part of the property of any such Person and is not
released, vacated or fully bonded within 30 days after its issue or levy; or
     (h) Judgments. There is entered against any Loan Party or any Significant
Subsidiary thereof (i) one or more final judgments or orders for the payment of
money in an aggregate amount (as to all such judgments and orders) exceeding the
Threshold Amount (to the extent not covered by independent third-party insurance
as to which the insurer is rated at least “A” by A.M. Best Company, has been
notified of the potential claim and does not dispute coverage), or (ii) any one
or more non-monetary final judgments that have, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of 10 consecutive days during which
a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or

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     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
     (j) Invalidity of Loan Documents. Any material provision of any Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder or satisfaction in full of
all the Obligations, ceases to be in full force and effect to the same extent as
on the Closing Date; or any Loan Party or any other Person contests in any
manner the validity or enforceability of any provision of any Loan Document; or
any Loan Party denies that it has any or further liability or obligation under
any provision of any Loan Document, or purports to revoke, terminate or rescind
any provision of any Loan Document; or
     (k) Change of Control. There occurs any Change of Control.
     8.02. Remedies upon Event of Default. If any Event of Default occurs and is
continuing, the Lender may take any or all of the following actions:
     (a) declare the unpaid principal amount of the outstanding Loan, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
     (b) exercise all rights and remedies available to it under the Loan
Documents;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the unpaid principal amount of the outstanding Loan and all
interest and other amounts as aforesaid shall automatically become due and
payable.
     8.03. Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loan has automatically become immediately due and
payable), any amounts received on account of the Obligations shall be applied by
the Lender in the following order:
     First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Lender and amounts payable under Article III)
payable to the Lender;
     Second, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loan and other Obligations arising under the Loan
Documents;
     Third, to payment of that portion of the Obligations constituting unpaid
principal of the Loan; and

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     Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.
ARTICLE IX.
MISCELLANENOUS
     9.01. Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Lender and the Borrower or the applicable Loan Party, as the case
may be, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
     9.02. Notices; Effectiveness.
     (a) Notices Generally. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier to the
address or telecopier number specified for the Borrower or the Lender, as
applicable, on Schedule 9.02.
     Notices and other communications sent by hand or overnight courier service,
or mailed by certified or registered mail, shall be deemed to have been given
when received; notices and other communications sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient).
     (b) Change of Address, Etc. Each of the Borrower and the Lender may change
its address or telecopier number for notices and other communications hereunder
by notice to the other parties hereto.
     9.03. No Waiver; Cumulative Remedies; Enforcement. No failure by the
Lender, to exercise, and no delay by the Lender in exercising, any right,
remedy, power or privilege hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
     9.04. Expenses; Indemnity; Damage Waiver. (a) Expenses. The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Lender and its
Affiliates (including the reasonable fees, charges and disbursements of counsel
for the Lender), in connection with the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or any
assignment, syndication, or grant of participation of the Lender’s rights and
obligations hereunder (whether or not the transactions contemplated hereby or
thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by
the Lender (including the reasonable fees, charges and disbursements of any
counsel for the Lender, in connection with the

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enforcement or protection of its rights (A) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (B) in
connection with Loan made hereunder, including all such out-of-pocket expenses
incurred during any workout, litigation, restructuring or negotiations in
respect of the Loan.
     (b) Indemnification by the Borrower. The Borrower shall indemnify the
Lender and each Related Party of any of the foregoing Persons (each such Person
being called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses (including
the fees, charges and disbursements of any counsel for any Indemnitee), and
shall indemnify and hold harmless each Indemnitee from all fees and time charges
and disbursements for attorneys who may be employees of any Indemnitee, incurred
by any Indemnitee or asserted against any Indemnitee by any third party or by
the Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) the Loan or the use or proposed use of the proceeds therefrom,
(iii) any actual or alleged presence or Release of Hazardous Materials on or
from any property owned or operated by the Borrower or any of its Subsidiaries,
or any Environmental Liability related to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory, whether brought by a third party or by the Borrower or any
other Loan Party or any of the Borrower’s or such Loan Party’s directors,
shareholders or creditors, and regardless of whether any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by the
Borrower or any other Loan Party against an Indemnitee for breach in bad faith
of such Indemnitee’s obligations hereunder or under any other Loan Document, if
the Borrower or such Loan Party has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.
     (c) Waiver of Consequential Damages, Etc. To the fullest extent permitted
by applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee referred to in subsection (b) above
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed to such unintended recipients by
such Indemnitee through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby other than for
direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

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     (d) Payments. All amounts due under this Section shall be payable not later
than ten Business Days after demand therefor.
     (e) Survival. The agreements in this Section shall survive the replacement
of the Lender and the repayment, satisfaction or discharge of all the other
Obligations.
     9.05. Payments Set Aside. To the extent that any payment by or on behalf of
the Borrower is made to the Lender, or the Lender exercises its right of setoff,
and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the Lender in
its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred.
     9.06. Tax Matters. The Borrower and the Lender agree and acknowledge that
the Warrants and the Note are being issued together as an “investment unit”
within the meaning of Section 1273(c)(2) of the Code. For the purposes of
allocating the issue price to the Warrants and the Note as required by
Section 1273(c)(2) of the Code and the Treasury regulations promulgated
thereunder, the Borrower and the Lender agree that the fair market value of the
Warrants on the date of issue is as set forth in the Warrant Purchase Agreement
(the “Warrant Fair Market Value”), and the fair market value of the Note on the
date of issue is the result of $60,000,000 minus the Warrant Fair Market Value.
Except as otherwise required by applicable Law, the Borrower and the Lender
agree that they will use such allocation to prepare and file all tax returns and
other reports consistent with such allocation. The Borrower and the Lender
acknowledge that this Section 9.06 is intended to establish the allocation of
the issue price of the “investment unit” in accordance with Treasury regulations
section 1.1273-2(h)(1) and Section 1273(c)(2) of the Code, which allocation is
binding on the Borrower and the Lender pursuant to Treasury regulations section
1.1273-2(h)(2).
     9.07. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of the Lender (and any other attempted assignment or
transfer by the Borrower shall be null and void). Prior to the occurrence of an
Event of Default, the Lender may assign, grant participations in or otherwise
transfer any of its rights or obligations hereunder and under the other Loan
Documents (a) to an Affiliate, but only to an Affiliate, of the Lender without
the consent of the Borrower and (b) to a non-affiliate of the Lender with the
consent of the Borrower, which consent shall not be unreasonably withheld or
delayed. After the occurrence of an Event of Default, the Lender may assign,
grant participations in or otherwise transfer any of its rights or obligations
hereunder and under the other Loan Documents to one or more third parties
without the consent of the Borrower. As a condition to any permitted assignment
by the Lender hereunder, the assignee shall be required to execute and deliver
to the Borrower a confidentiality agreement in form and substance reasonably
acceptable to the Borrower (it being agreed and understood that a
confidentiality agreement in substantially the same form as previously entered
into by the Borrower with an

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Affiliate of the Lender is acceptable to the Borrower). The Borrower agrees to
promptly execute and deliver to the Lender any and all amendments, agreements,
notes and/or documents in connection with any such permitted assignment,
participation or other transfer as requested by the Lender, including, without
limitation, amended and restated loan documents to reflect a syndicated credit
facility. Any transferee or assignee permitted hereunder shall deliver to the
Borrower the documents and certifications required to be provided by a Lender
under Section 3.01(e). Notwithstanding anything herein to the contrary, no
transferee or assignee shall be entitled to any greater increased payments under
Section 3.01 than that which the transferor Lender was otherwise entitled.
     9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Lender and its Affiliates is hereby authorized at any time and
from time to time, to the fullest extent permitted by applicable law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by the Lender or any such Affiliate to or
for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or
any other Loan Document to the Lender, irrespective of whether or not the Lender
shall have made any demand under this Agreement or any other Loan Document and
although such obligations of the Borrower may be contingent or unmatured or are
owed to a branch or office of the Lender different from the branch or office
holding such deposit or obligated on such indebtedness. The rights of the Lender
and its Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that the Lender or its Affiliates
may have. The Lender agrees to notify the Borrower promptly after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.
     9.09. Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Loan or, if it exceeds such unpaid principal,
refunded to the Borrower. In determining whether the interest contracted for,
charged, or received by the Lender exceeds the Maximum Rate, such Person may, to
the extent permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.
     9.10. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Delivery
of an executed counterpart of a signature page of this Agreement by telecopy or
other electronic imaging means shall be effective as delivery of a manually
executed counterpart of this Agreement.

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     9.11. Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Lender,
regardless of any investigation made by the Lender or on its behalf and
notwithstanding that the Lender may have had notice or knowledge of any Default
at the time of the Loan, and shall continue in full force and effect, as of the
time made, as long as the Loan or any other Obligation hereunder shall remain
unpaid or unsatisfied.
     9.12. Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
     9.13. Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
     (b) SUBMISSION TO JURISDICTION. THE BORROWER IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM
ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE
BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
     (c) WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY

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COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW
     9.14. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     9.15. Electronic Execution of Assignments and Certain Other Documents. The
words “execution,” “signed,” “signature,” and words of like import in any
amendment or other modification hereof (including waivers and consents) shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
     9.16. USA PATRIOT Act. The Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), may be required to obtain,
verify and record information that identifies each Loan Party, which information
includes the name and address of each Loan Party and other information that will
allow the Lender to identify each Loan Party in accordance with the Act. The
Borrower shall, promptly following a request by the Lender, provide all
documentation and other information that the Lender requests in order to comply
with its ongoing obligations under applicable “know your customer” and
anti-money laundering rules and regulations, including the Act.
     9.17. Time of the Essence. Time is of the essence of the Loan Documents.

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     9.18. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

            HARVEST NATURAL RESOURCES, INC.
      By:   /s/ James A. Edmiston         Name:   James A. Edmiston       
Title:   President and Chief Executive Officer        MSD ENERGY INVESTMENTS
PRIVATE II, LLC
      By:   /s/ Marcello Liguori         Name:   Marcello Liguori       
Title:   Vice President   

 

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EXHIBIT A
FORM OF TERM NOTE

$60,000,000   October 28, 2010

     FOR VALUE RECEIVED, the undersigned HARVEST NATURAL RESOURCES, INC., a
Delaware corporation (the “Borrower”), hereby promises to pay to the order of
MSD ENERGY INVESTMENTS PRIVATE II, LLC (the “Lender”) at the Lender’s office at
645 Fifth Avenue, 21st Floor, New York, New York 10022:
     (a) prior to or on the Maturity Date the principal amount of Sixty Million
and 00/100 Dollars ($60,000,000), evidencing the Loan made by the Lender to the
Borrower pursuant to the Credit Agreement dated of even date herewith (as
amended and in effect from time to time, the “Credit Agreement”), between the
Borrower and the Lender;
     (b) the principal outstanding hereunder from time to time at the times
provided in the Credit Agreement; and
     (c) interest from the date hereof on the principal amount from time to time
outstanding to and including the maturity hereof at the rates and terms and in
all cases in accordance with the terms of the Credit Agreement.
     This Term Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Lender and
any holder hereof is entitled to the benefits of the Credit Agreement and the
other Loan Documents, and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All capitalized terms used in this Term Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
     The Borrower irrevocably authorizes the Lender to make or cause to be made,
at the time of receipt of any payment of principal of this Term Note, an
appropriate notation on the grid attached to this Term Note, or the continuation
of such grid, or any other similar record, including computer records,
reflecting the receipt of such payment. The outstanding amount of the Loan set
forth on the grid attached to this Term Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by the
Lender with respect to the Loan shall be, absent manifest error, prima facie
evidence of the principal amount of the Loan owing and unpaid to the Lender, but
the failure to record, or any error in so recording, any such amount on any such
grid, continuation or other record shall not limit or otherwise affect the
obligation of the Borrower hereunder or under the Credit Agreement to make
payments of principal of and interest on this Term Note when due.
     The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Term Note on the terms and conditions specified in the Credit Agreement.

Exhibit A - 1

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     If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Term Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
     No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any future occasion.
     The Borrower and every endorser and guarantor of this Term Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Term Note, and assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
     THIS TERM NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK. THE BORROWER AGREES THAT, AS MORE FULLY SET FORTH IN § 9.12(b) OF
THE CREDIT AGREEMENT, ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OF THIS TERM
NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER
BY MAIL AT THE ADDRESS SPECIFIED IN SCHEDULE 9.02 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING OR ANY SUCH COURT OR THAT
SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT AS MORE FULLY SET FORTH IN §
9.12(c) OF THE CREDIT AGREEMENT.
     THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS TERM NOTE OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). THE BORROWER (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER OR ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER OR SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS TERM NOTE AND THE
OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN
THIS PARAGRAPH.

Exhibit A - 2

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     IN WITNESS WHEREOF, the undersigned has caused this Term Note to be signed
by its duly authorized officer as of the day and year first above written.

            HARVEST NATURAL RESOURCES, INC.
      By:           Name:           Title:      

Exhibit A - 3

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                  Amount of   Balance of         Principal Paid   Principal  
Notation Date   or Prepaid   Unpaid   Made By:                                  
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                   

Exhibit A - 4

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EXHIBIT B
FORM OF GUARANTY
     GUARANTY, dated as of October 28, 2010 (this “Guaranty”), by Harvest US
Holdings, Inc., a Delaware corporation (“Harvest US Holdings”), Harvest Natural
Resources, Inc. (UK), a Delaware corporation (“HNR UK”), and Harvest Offshore
China Company, a Colorado corporation (“Harvest Offshore”, and together with
Harvest US Holdings and HNR UK, each individually, a “Guarantor”, and
collectively, the “Guarantors”), in favor of MSD Energy Investments Private II,
LLC, a Delaware limited liability company (the “Lender”).
     WHEREAS, Harvest Natural Resources, Inc., a Delaware corporation (the
“Borrower”), has entered into that certain Credit Agreement dated as of the date
hereof (as amended and in effect from time to time, the “Credit Agreement”),
with the Lender, pursuant to which the Lender, subject to the terms and
conditions contained therein, is to provide the Borrower with the term loan
facility as provided for therein;
     WHEREAS, the Borrower and the Guarantors are members of a group of related
entities, the success of any one of which is dependent in part on the success of
the other members of such group;
     WHEREAS, the Guarantors expect to receive substantial direct and indirect
benefits from the extensions of credit to the Borrower by the Lender pursuant to
the Credit Agreement (which benefits are hereby acknowledged);
     WHEREAS, it is a condition precedent to the Lender’s making any loan or
otherwise extending credit to the Borrower under the Credit Agreement that the
Guarantors execute and deliver to the Lender a guaranty substantially in the
form hereof; and
     WHEREAS, the Guarantors wish to guaranty the Borrower’s obligations to the
Lender under or in respect of the Credit Agreement as provided herein.
     NOW, THEREFORE, each Guarantor hereby agrees with the Lender as follows:
     1. Definitions. The term “Obligations” and all other capitalized terms used
herein without definition shall have the respective meanings provided therefor
in the Credit Agreement.
     2. Guaranty of Payment and Performance. Each Guarantor hereby jointly and
severally guarantees to the Lender the full and punctual payment when due
(whether at stated maturity, by required pre-payment, by acceleration or
otherwise), as well as the performance, of all of the Obligations including all
such Obligations which would become due but for the operation of the automatic
stay pursuant to §362(a) of the Federal Bankruptcy Code and the operation of
§§502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an
absolute, unconditional and continuing guaranty of the full and punctual payment
and performance of all of the Obligations and not of their collectibility only
and is in no way conditioned upon any requirement that the Lender first attempt
to collect any of the Obligations from the Borrower or

Exhibit B - 1

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any other guarantor or resort to any collateral security, guarantee of the
Obligations or other means of obtaining payment. Should the Borrower default in
the payment or performance of any of the Obligations, the obligations of each
Guarantor hereunder with respect to such Obligations in default shall become
immediately due and payable to the Lender, without demand or notice of any
nature, all of which are expressly waived by each Guarantor. Payments by the
Guarantors hereunder may be required by the Lender on any number of occasions.
All payments by the Guarantors hereunder shall be made to the Lender, in the
manner and at the place of payment specified therefor in the Credit Agreement.
     3. Guarantors’ Agreement to Pay Enforcement Costs, etc. Each Guarantor
further agrees, as the principal obligor and not as a guarantor only, to pay to
the Lender, on demand, all costs and expenses (including court costs, legal
expenses and costs and expenses incurred during any workout, litigation,
restructuring or negotiations in respect of the Obligations) incurred or
expended by the Lender and its Affiliates (including the reasonable fees,
charges and disbursements of counsel for the Lender) in connection with the
Obligations, this Guaranty and the enforcement thereof, together with interest
on amounts recoverable under this §3 from the time when such amounts become due
until payment, whether before or after judgment, at the rate of interest for
overdue principal set forth in the Credit Agreement, provided that if such
interest exceeds the maximum amount permitted to be paid under applicable law,
then such interest shall be reduced to such maximum permitted amount.
     4. Waivers by Guarantor; Lender’s Freedom to Act. Each Guarantor agrees
that the Obligations will be paid and performed strictly in accordance with
their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Lender with respect thereto. Each Guarantor waives promptness,
diligence, presentment, demand, protest, notice of acceptance, notice of any
Obligations incurred and all other notices of any kind, all defenses which may
be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Borrower or any other entity or other person primarily or secondarily
liable with respect to any of the Obligations, and all suretyship defenses
generally. Without limiting the generality of the foregoing, each Guarantor
agrees to the provisions of any instrument evidencing, securing or otherwise
executed in connection with any Obligation and agrees that the obligations of
such Guarantor hereunder shall not be released or discharged, in whole or in
part, or otherwise affected by (i) the failure of the Lender to assert any claim
or demand or to enforce any right or remedy against the Borrower or any other
entity or other person primarily or secondarily liable with respect to any of
the Obligations; (ii) any extensions, compromise, refinancing, consolidation or
renewals of any Obligation; (iii) any change in the time, place or manner of
payment of any of the Obligations or any rescissions, waivers, compromise,
refinancing, consolidation, amendments or modifications of any of the terms or
provisions of the Credit Agreement, the Notes, the other Loan Documents or any
other agreement evidencing, securing or otherwise executed in connection with
any of the Obligations; (iv) the addition, substitution or release of any entity
or other person primarily or secondarily liable for any Obligation, (v) the
adequacy of any rights which the Lender may have against any collateral security
or other means of obtaining repayment of any of the Obligations; (vi) the
impairment of any collateral securing any of the Obligations, including without
limitation the failure to perfect or preserve any rights which the Lender might
have in such collateral security or the substitution, exchange, surrender,
release, loss or destruction of any such collateral

Exhibit B - 2

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security; or (vii) any other act or omission which might in any manner or to any
extent vary the risk of any Guarantor or otherwise operate as a release or
discharge of such Guarantor, all of which may be done without notice to the
Guarantors. To the fullest extent permitted by law, each Guarantor hereby
expressly waives any and all rights or defenses arising by reason of (A) any
“one action” or “anti-deficiency” law which would otherwise prevent the Lender
from bringing any action, including any claim for a deficiency, or exercising
any other right or remedy (including any right of set-off), against such
Guarantor before or after the Lender’s commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (B) any other law which in any other way would otherwise require
any election of remedies by the Lender. To the extent that it lawfully may, each
Guarantor hereby agrees that it will not invoke any law (other than the
applicable statute of limitations) which might cause delay in or impede the
enforcement of the rights and remedies of the Lender under this Guaranty, and to
the fullest extent it lawfully may, such Guarantor hereby irrevocably waives the
benefits of all such laws. In addition, and notwithstanding anything to the
contrary contained herein, the Lender shall have the right, at any time, to name
any Guarantor as a party defendant in any foreclosure action(s) it or its
assignee may commence to foreclose upon any and all collateral of the Borrower
or any other guarantor which secures the Obligations.
     5. Unenforceability of Obligations Against Borrower or Other Guarantors. If
for any reason the Borrower or any other guarantor has no legal existence or is
under no legal obligation to discharge any of the Obligations, or if any of the
Obligations have become irrecoverable from the Borrower or any other guarantor
by reason of the Borrower’s or such other guarantor’s insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each Guarantor, to the same extent as
if such Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any of
the Obligations is stayed upon the insolvency, bankruptcy or reorganization of
the Borrower, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, the Notes, the other Loan
Documents or any other agreement evidencing, securing or otherwise executed in
connection with any Obligation shall be immediately due and payable by the
Guarantor.
     6. Subrogation; Subordination.
     6.1. Waiver of Rights Against Borrower. Until the final payment and
performance in full of all of the Obligations and any and all other obligations
of the Borrower to the Lender or any affiliate of the Lender, no Guarantor shall
exercise any rights against the Borrower or any other guarantor of the
Obligations arising as a result of payment by any Guarantor hereunder (or any
other guarantor), by way of subrogation, reimbursement, restitution,
contribution or otherwise, and no Guarantor will prove any claim in competition
with the Lender or such affiliate in respect of any payment hereunder in any
bankruptcy, insolvency or reorganization case or proceedings of any nature; no
Guarantor will claim any setoff, recoupment or counterclaim against the Borrower
in respect of any liability of any Guarantor to the Borrower; and each Guarantor
waives any benefit of and any right to participate in any collateral security
which may be held by the Lender or such affiliate.

Exhibit B - 3

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     6.2. Subordination to Lender. The payment of any amounts due with respect
to any indebtedness of the Borrower or any other guarantor of the Obligations
now or hereafter owed to the Guarantor is hereby subordinated to the prior
payment in full of all of the Obligations and any and all other obligations of
the Borrower or any other guarantor of the Obligations to the Lender or any
affiliate of the Lender. Each Guarantor agrees that, after the occurrence of any
default in the payment or performance of any of the Obligations, such Guarantor
will not demand, sue for or otherwise attempt to collect any such indebtedness
of the Borrower or any other guarantor of the Obligations to such Guarantor
until all of the Obligations shall have been paid in full. If, notwithstanding
the foregoing sentence, the Guarantor shall collect, enforce or receive any
amounts in respect of such indebtedness, such amounts shall be collected,
enforced and received by such Guarantor as trustee for the Lender and be paid
over to the Lender on account of the Obligations without affecting in any manner
the liability of such Guarantor under the other provisions of this Guaranty.
     6.3. Subordination of Obligations. Each Guarantor covenants and agrees, and
the Lender, by its acceptance of this Guaranty likewise covenants and agrees,
that payment of the Obligations by any of the Guarantors arising under this
Guaranty shall be subordinated to the Indebtedness of Subsidiaries permitted
under Section 7.02(j) and Section 7.02(n) of the Credit Agreement, such
subordination arrangements to be on terms and conditions reasonably satisfactory
to the Lender.
     6.4. Provisions Supplemental. The provisions of this §6 shall be
supplemental to and not in derogation of any rights and remedies of the Lender
or any affiliate of the Lender under any separate subordination agreement which
the Lender or such affiliate may at any time and from time to time enter into
with any Guarantor.
     7. Security; Setoff. Each Guarantor grants to the Lender, as security for
the full and punctual payment and performance of all of such Guarantor’s
obligations hereunder, a continuing lien on and security interest in all
securities or other property belonging to such Guarantor now or hereafter held
by the Lender and in all deposits (general or special, time or demand,
provisional or final) and other sums credited by or due from the Lender to such
Guarantor or subject to withdrawal by such Guarantor. Regardless of the adequacy
of any collateral security or other means of obtaining payment of any of the
Obligations, the Lender is hereby authorized at any time and from time to time,
without notice to such Guarantor (any such notice being expressly waived by such
Guarantor) and to the fullest extent permitted by law, to set off and apply such
deposits and other sums against the obligations of such Guarantor under this
Guaranty, whether or not the Lender shall have made any demand under this
Guaranty and although such obligations may be contingent or unmatured.
     8. Further Assurances. Each Guarantor agrees that it will from time to
time, at the request of the Lender, provide to the Lender such Guarantor’s most
recent audited and unaudited balance sheets and related statements of income and
changes in financial condition and such other information relating to the
business and affairs of such Guarantor as the Lender may reasonably request.
Each Guarantor also agrees to do all such things and execute all such documents
as the Lender may consider necessary or desirable to give full effect to this
Guaranty and to perfect and preserve the rights and powers of the Lender
hereunder. Each Guarantor

Exhibit B - 4

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acknowledges and confirms that such Guarantor itself has established its own
adequate means of obtaining from the Borrower on a continuing basis all
information desired by such Guarantor concerning the financial condition of the
Borrower and that such Guarantor will look to the Borrower and not to the Lender
in order for such Guarantor to keep adequately informed of changes in the
Borrower’s financial condition.
     9. Termination; Reinstatement. Upon final payment and performance in full
in cash of the Obligations (other than inchoate indemnification liabilities
arising under the Loan Documents) and termination of all lending and other
credit commitments of the Lender and its affiliates in respect thereof, this
Guaranty shall terminate. Such termination shall not affect any rights of the
Lender or of any affiliate of the Lender hereunder (including without limitation
the rights set forth in §§4 and 6) with respect to any Obligations incurred or
accrued prior to the receipt of such notice or any Obligations incurred or
accrued pursuant to any contract or commitment in existence prior to such
receipt. Notwithstanding the foregoing, this Guaranty shall continue to be
effective or be reinstated if at any time any payment made or value received
with respect to any Obligation is rescinded or must otherwise be returned by the
Lender upon the insolvency, bankruptcy or reorganization of the Borrower, or
otherwise, all as though such payment had not been made or value received.
     10. Successors and Assigns. This Guaranty shall be binding upon each
Guarantor, its successors and assigns, and shall inure to the benefit of and be
enforceable by the Lender and its successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, the Lender may assign or
otherwise transfer the Credit Agreement, the Notes, the other Loan Documents or
any other agreement or note held by it evidencing, securing or otherwise
executed in connection with the Obligations, or sell participations in any
interest therein, to any other entity or other person, and such other entity or
other person shall thereupon become vested, to the extent set forth in the
agreement evidencing such assignment, transfer or participation, with all the
rights in respect thereof granted to the Lender herein. No Guarantor may assign
its rights hereunder.
     11. Amendments and Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by any Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Lender. No
failure on the part of the Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
     12. Notices.
     12.1. Notices Generally. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier as
follows: if to any Guarantor, at the address or telecopier number set forth
beneath its signature hereto, and if to the Lender, at the address for notices
to the Lender set forth in Schedule 9.02 of the Credit Agreement.

Exhibit B - 5

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     Notices and other communications sent by hand or overnight courier service,
or mailed by certified or registered mail, shall be deemed to have been given
when received; notices and other communications sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient).
     12.2. Change of Address. Each Guarantor and the Lender may change its
address or telecopier number for notices and other communications hereunder by
notice to the other parties hereto.
     12.3. Reliance by Lender. The Lender shall be entitled to rely and act upon
any notices purportedly given by or on behalf of any Guarantor even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. Each Guarantor shall indemnify the Lender and the Related Parties (as
defined in the Credit Agreement) of each of them from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of such Guarantor.
     13. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
     14. Submission to Jurisdiction. EACH GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM
ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ANY OTHER LOAN
PARTY (AS DEFINED IN THE CREDIT AGREEMENT) OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.
     15. Waiver of Venue. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO

Exhibit B - 6

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THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN §14. EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.
     16. Service of Process. EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN §12. NOTHING IN THIS GUARANTY WILL
AFFECT THE RIGHT OF THE LENDER OR ANY GUARANTOR TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY APPLICABLE LAW.
     17. Waiver of Jury Trial. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EXCEPT
AS PROHIBITED BY LAW, EACH GUARANTOR HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE
TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH GUARANTOR (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE LENDER OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE LENDER OR SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS §17.
     18. Joint and Several Nature of Guaranty. Notwithstanding any term
contained herein to the contrary, each of the obligations and liabilities of
each of the Guarantors hereunder are expressly agreed to be joint and several.
     19. Contribution. To the extent any Guarantor makes a payment hereunder in
excess of the aggregate amount of the benefit received by such Guarantor in
respect of the extensions of credit under the Credit Agreement (the “Benefit
Amount”), then such Guarantor, after the payment in full, in cash, of all of the
Obligations, shall be entitled to recover from each other guarantor of the
Obligations such excess payment, pro rata, in accordance with the ratio of the
Benefit Amount received by each such other guarantor to the total Benefit Amount
received by all guarantors of the Obligations, and the right to such recovery
shall be deemed to be an asset and property of such Guarantor so funding;
provided, that all such rights to recovery shall be subordinated and junior in
right of payment to the final and undefeasible payment in full in cash of all of
the Obligations.

Exhibit B - 7

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     20. Miscellaneous. This Guaranty constitutes the entire agreement of each
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other agreement, and this Guaranty shall be in addition to any other
guaranty of or collateral security for any of the Obligations. The invalidity or
unenforceability of any one or more sections of this Guaranty shall not affect
the validity or enforceability of its remaining provisions. Captions are for the
ease of reference only and shall not affect the meaning of the relevant
provisions. The meanings of all defined terms used in this Guaranty shall be
equally applicable to the singular and plural forms of the terms defined.
[Remainder of page intentionally left blank.]

Exhibit B - 8

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     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.

            HARVEST (US) HOLDINGS, INC.
      By:           Name:   Stephen C. Haynes        Title:   Vice President and
Chief Financial Officer           Address:  1177 Enclave Parkway, Suite 300
 Houston, TX 77077        HARVEST NATURAL RESOURCES, INC. (UK)
      By:           Name:   Stephen C. Haynes        Title:   Vice President and
Chief Financial Officer           Address:   First Floor, Talbot House
17 Church Street
Rickmansworth
Hertfordshire WD3 1DE
United Kingdom        HARVEST OFFSHORE CHINA COMPANY
      By:           Name:   Stephen C. Haynes        Title:   Vice President and
Chief Financial Officer         Address:   1177 Enclave Parkway, Suite 300
Houston, TX 77077   

Exhibit B - 9

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SCHEDULE 5.03
CERTAIN AUTHORIZATIONS
None.
Schedule 5.03

 

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SCHEDULE 5.06
LITIGATION
None.
Schedule 5.06

 

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SCHEDULE 5.08(b)
EXISTING LIENS

•   Joint Exploration and Development Agreement dated October 24, 2007, by and
between Branta Exploration & Production, L.P. (“Branta”) and Harvest
(US) Holdings, Inc. (“Harvest US”) on the Antelope Prospect. The Agreement and
four related Joint Operating Agreements between the parties each contains mutual
rights of first offer with respect to the sale of either party’s rights or
interests.

•   Pursuant to each Joint Operating Agreement between Harvest US and Branta,
each party has granted to the other a lien and security interest to secure
payment of the grantor’s share of costs when due.

•   Petroleum Contract dated May 8, 1992 by and between China National Offshore
Oil Corporation (“CNOOC”) and Harvest Offshore China Corporation (formerly
Crestone Energy Corporation) (“Harvest China”) for the Contract Area WAB-21 in
the South China Sea of China. Assignment of the Contract by Harvest China
requires CNOOC’s consent.

•   Exploration and Production Sharing Agreement dated April 11, 2009, by and
between the Government of the Sultanate of Oman (“Government”) and Harvest Oman,
B.V. (“Harvest”) and Oman Oil Company. Assignment of the Agreement requires
Government approval.

•   Joint Operating Agreement for the Dussafu Block, Offshore Gabon. The
Agreement contains consent requirements and mutual rights of first offer with
respect to the sale of either party’s interest.

•   Production Sharing Contract and Joint Operating Agreement with respect to
Budong-Budong Block, West Sulawesi Area. Transfers of interest require the
consent of each party and BPMIGAS.

•   Contract for Conversion to a Mixed Company between Corporation Venezolana
Del Petroleo, S.A., Harvest-Vinccler, S.C.A. and HNR Finance B.V. (“HNR
Finance”) signed on

Schedule 5.08(b)-1

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    September 11, 2007. The transfer of Petrodelta shares by HNR Finance is
subject to a right of first refusal.

•   Participation Agreement dated March 28, 2008, by and between Harvest
(US) Holdings, Inc. and Legends II LLC for West Bay. A transfer of interest
requires the consent of the non-transferring party.

•   Operating Agreement dated September 18, 2009, by and between Newfield
Production Company, as Operator, and Harvest (US) Holdings, Inc. and Branta
Exploration & Production LLC, as Non-Operator. Each party has granted to the
others a lien and security interest to secure payment of the grantor’s share of
costs when due.

•   The assignment of certain oil and gas leases held by Harvest (US) Holdings,
Inc. requires the consent of the lessor.

Schedule 5.08(b)-2

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SCHEDULE 5.08(d)
EXISTING INVESTMENTS

•   Fusion Geophysical, L.L.C. — Harvest (US) Holdings, Inc. owns a 49% interest
in Fusion Geophysical, L.L.C.

•   Petrodelta, S.A. — Harvest Natural Resources, Inc. indirectly owns an
80 percent interest in HNR Finance BV. HNR Finance BV has a 40 percent ownership
interest in Petrodelta, S.A. Harvest Natural Resources, Inc. indirectly owns a
net 32 percent interest in Petrodelta, S.A.

•   On April 9, 2009, Harvest Natural Resources, Inc. entered into a service
agreement with Fusion Petroleum Technologies Inc. whereby Harvest prepaid
$1.5 million for certain services. As of September 30, 2010, the balance under
the service agreement was approximately $500,000.

Schedule 5.08(d)

 

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SCHEDULE 5.09
ENVIRONMENTAL MATTERS
None.
Schedule 5.09

 

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SCHEDULE 5.13
Part (a)
SUBSIDIARIES

      Subsidiaries of Borrower   Percent owned
HNR Energia B.V. (Netherlands Antilles)
  100%
HNR Sukuk Partner B.V. (Netherlands)
  100%
Harvest Holding LLC (Delaware)
  100%
Harvest Natural Resources Malta Limited (Malta)
  100%
Harvest Cayman Holding Ltd. (Cayman Islands, BWI)
  100%
Harvest Natural Resources Finance Malta Limited (Malta)
  100%
Harvest Natural Resources Holding Malta Limited (Malta)
  100%
Harvest-Vinccler Dutch Holding B.V. (Netherlands)
  80%
HNR Finance B.V. (Netherlands)
  80%
Harvest Vinccler Ltd. (Cayman)
  80%
Harvest Vinccler, S.C.A. (Venezuela)
  80%
HNR Global Holding B.V. (Netherlands)
  100%
HNR International B.V. (Netherlands)
  100%
Harvest Senami Behar B.V. (Netherlands)
  100%
Harvest Budong-Budong B.V. (Netherlands)
  100%
Harvest Oman B.V. (Netherlands)
  100%
Harvest Far East Pte. Ltd. (Singapore)
  100%
Harvest Dussafu B.V. (Netherlands)
  100%
Harvest Natural Resources, Inc. (UK) (Delaware)
  100%
Harvest (US) Holdings, Inc. (Delaware)
  100%
Benton Oil and Gas Company of Venezuela (BVI)
  100%
Harvest Offshore China Company (Colorado)
  100%
 
   
Subsidiaries of Harvest (US) Holdings, Inc.
   
 
   
Harvest Offshore China Company (Colorado)
  100%
 
   
Subsidiaries of Harvest Natural Resources, Inc. (UK)
   
 
   
None
   
 
   
Subsidiaries of Harvest Offshore China Company
   
 
   
None
   

Schedule 5.13 — Part (a)

 

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SCHEDULE 5.13
Part (b)
SUBSIDIARIES AND OTHER EQUITY INVESTMENTS; LOAN PARTIES

•   Fusion Geophysical, L.L.C. — Harvest (US) Holdings, Inc. owns a 49% interest
in Fusion Geophysical, L.L.C.

•   Petrodelta, S.A. — Harvest Natural Resources, Inc. indirectly owns an
80 percent interest in HNR Finance BV. HNR Finance BV has a 40 percent ownership
interest in Petrodelta, S.A. Harvest Natural Resources, Inc. indirectly owns a
net 32 percent interest in Petrodelta, S.A.

Schedule 5.13 — Part (b)

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SCHEDULE 5.13
Part (d)
SUBSIDIARIES AND OTHER EQUITY INVESTMENTS; LOAN PARTIES
Harvest Natural Resources, Inc., a Delaware corporation
1177 Enclave Parkway, Suite 300
Houston, TX 77077
U.S. TAX ID#: 77-0196707
Harvest (US) Holdings, Inc., a Delaware corporation
1177 Enclave Parkway, Suite 300
Houston, TX 77077
U.S. TAX ID#: 77-0451721
Harvest Offshore China Company, a Colorado corporation
1177 Enclave Parkway, Suite 300
Houston, TX 77077
U.S. TAX ID#: 84-0847015
Harvest Natural Resources, Inc. (UK), a Delaware corporation
Regus Rickmansworth Cardinal Point
Park Road
Rickmansworth, Herts
United Kingdom WD3 1RE
U.S. TAX ID#: 03-0589773
Schedule 5.13 — Part (d)

 

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SCHEDULE 6.12
GUARANTORS

•   Harvest Natural Resources, Inc. (UK), a Delaware corporation

•   Harvest Offshore China Company, a Colorado corporation

•   Harvest (US) Holdings, Inc., a Delaware corporation

Schedule 6.12

 

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SCHEDULE 7.02
EXISTING INDEBTEDNESS
Guarantee dated December 27, by Harvest Natural Resources Inc. guaranteeing
farm-in obligations of Harvest Budong-Budong B.V. (“Harvest Budong”) under the
Farmout Agreement dated December 22, 2007 between Tately Budong-Budong N.V. and
Harvest Budong.
Letter of Credit dated February 24, 2010 issued by JPMorgan Chase Bank, N.A. for
the account of Harvest Far East Pte. Ltd. in the face amount of $1,000,000 in
connection with a joint study for Binjai, North Sumatra.
Schedule 7.02

 

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SCHEDULE 7.09
BURDENSOME AGREEMENTS
See Schedule 5.08(b).
Schedule 7.09

 

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SCHEDULE 9.02
LENDER’S OFFICE, CERTAIN ADDRESSES FOR NOTICES
Borrower:
Harvest Natural Resources, Inc.
1177 Enclave Parkway, Suite 300
Houston, TX 77077
Attention: General Counsel
Ph: 281-899-5700
Fax: 281-899-5702
With a copy to:
Fulbright & Jaworski LLP
2200 Sul Ross Avenue, Suite 2800
Dallas, TX 75201
Attention: Harva Dockery
Ph: 214-855-8369
Fax: 214-855-8200
Lender:
MSD Energy Investments Private II, LLC
645 Fifth Avenue, 21st Floor
New York, NY 10022
Attention: General Counsel
Ph: 212-303-1650
Fax: 212-303-1772
Schedule 9.02