EXHIBIT 10.15

 

CONFORMED COPY

 

 

INVESTMENT NUMBER 24346

 

Loan Agreement

 

between

 

BPZ EXPLORACIÓN & PRODUCCIÓN S.R.L.

 

BPZ MARINE PERU S.R.L

 

and

 

INTERNATIONAL FINANCE CORPORATION

 

Dated as of August 15, 2008

 

 

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TABLE OF CONTENTS

 

Article/
Section

 

Item

 

Page No.

 

 

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

1

Section 1.01.

Definitions

1

Section 1.02.

Interpretation

5

Section 1.03.

Business Day Adjustment

5

Section 1.04.

Common Terms Agreement

5

 

 

 

ARTICLE II

THE IFC FACILITY

5

Section 2.01.

The IFC Facility

5

Section 2.02.

Disbursement Procedure

6

Section 2.03.

Interest

6

Section 2.04.

Default Rate Interest

7

Section 2.05.

Repayment

8

Section 2.06.

Prepayment

8

Section 2.07.

Fees

9

Section 2.08.

Currency and Place of Payments

10

Section 2.09.

Allocation of Partial Payments

10

Section 2.10.

Increased Costs

10

Section 2.11.

Unwinding Costs

10

Section 2.12.

Suspension or Cancellation by IFC

11

Section 2.13.

Cancellation by the Borrower

12

Section 2.14.

Taxes

12

Section 2.15.

Expenses

12

Section 2.16.

Illegality of Participation

13

Section 2.17

Mitigation

14

 

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ARTICLE III

CONDITIONS OF DISBURSEMENT

14

Section 3.01.

Conditions of Disbursement

14

Section 3.02.

Borrower’s Certification

14

Section 3.03.

Conditions for IFC Benefit

15

 

 

 

ARTICLE IV

MISCELLANEOUS

15

Section 4.01.

Saving of Rights

15

Section 4.02.

Notices

15

Section 4.03.

English Language

17

Section 4.04.

Term of Agreement

17

Section 4.05.

Disclosure of Information

17

Section 4.06.

Successors and Assignees

17

Section 4.07.

Amendments, Waivers and Consents

18

Section 4.08.

Governing Law

18

Section 4.09.

Dispute Resolution

18

Section 4.10.

Counterparts

18

 

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LOAN AGREEMENT

 

LOAN AGREEMENT (the “Agreement”) dated as of August 15, 2008 between BPZ
EXPLORACIÓN & PRODUCCIÓN S.R.L. (“BPZ Exploración” and a “Borrower”),
incorporated as a limited liability company registered in Peru, BPZ MARINE PERU
S.R.L. (“BPZ Marine” and a “Borrower” and, together with BPZ Exploración, the
“Borrowers”) and INTERNATIONAL FINANCE CORPORATION, an international
organization established by Articles of Agreement among its member countries,
including Peru (“IFC”).

 

RECITALS

 

IFC, the Borrowers and the Additional Secured Facility Lenders (upon accession
thereto) have entered or will enter into a Common Terms Agreement dated as of
the date hereof (the “Common Terms Agreement”) which sets out, inter alia,
certain terms and conditions under which the Lenders shall provide revolving
credit facilities to the Borrowers; and

 

This Agreement sets out the additional terms and conditions under which IFC
shall provide the IFC Facility to the Borrowers.

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

SECTION 1.01.                             DEFINITIONS.  WHEREVER USED IN THIS
AGREEMENT, TERMS DEFINED IN THE COMMON TERMS AGREEMENT (AS DEFINED BELOW) SHALL
HAVE THE SAME MEANINGS HEREIN UNLESS OTHERWISE DEFINED HEREIN.  IN ADDITION, THE
FOLLOWING TERMS HAVE THE MEANINGS OPPOSITE THEM:

 

“Available
Amount”                                                                                 
as of the date of calculation, the lesser of (i) the Maximum Facility Amount (as
cancelled or reduced from time to time) less the principal amount of Loans
outstanding as of the date of calculation, and (ii) the Maximum Available Amount
as of the date of calculation;

 

“Business
Day”                                                                                                         
a day when banks are open for business in New York, New York and Lima, Peru or,
solely for the purpose of determining the Interest Rate other than pursuant to
Section 2.03(d)(ii), London, England;

 

“Disbursement”                                                                                                         
any disbursement of the Loans;

 

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“IFC Fee
Letter”                                                                                                        
the letter agreement dated as of the date hereof between IFC and the Borrowers;

 

“Increased
Costs”                                                                                             
the amount certified in an Increased Costs Certificate to be the net incremental
costs of, or reduction in return to, IFC or any participant who has acquired a
participation in the Loans in connection with the making or maintaining of the
Loans that result from:

 

(i)                                     any change in any applicable law or
regulation or directive (whether or not having the force of law) or in its
interpretation or application by any Authority charged with its administration;
or

 

(ii)                                  compliance with any request from, or
requirement of, any central bank or other monetary or other Authority;

 

which, in either case, after the date of this Agreement (or, in the case of a
participant that has acquired a participation in the Loans, the date of its
participation agreement):

 

(A)                              imposes, modifies or makes applicable any
reserve, special deposit or similar requirements against assets held by, or
deposits with or for the account of, or loans made by, IFC or such participant;

 

(B)                                imposes a cost on IFC or such participant as
a result of IFC or such participant having made the Loans (or acquired such
participation) or reduces the rate of return on the overall capital of IFC or
such participant that it would have achieved, had IFC or such participant not
made the Loans (or acquired such participation);

 

(C)                                changes the basis of taxation on payments
received by IFC or such participant in respect of the Loans or

 

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such participation (otherwise than by a change in taxation of the overall net
income of IFC or such participant imposed by the jurisdiction of its
incorporation or in which it books such participation or in any political
subdivision of any such jurisdiction; or

 

(D)                               imposes on IFC or such participant any other
condition regarding the making or maintaining of the Loans or such
participation;

 

but excluding any incremental costs of making or maintaining a participation in
the Loans that are a direct result of the relevant participant having its
principal office in Peru or having or maintaining a permanent office or
establishment in Peru, if and to the extent that permanent office or
establishment acquires that participation.

 

“Increased Costs

Certificate”                                                                                                                                   
a certificate provided from time to time by IFC (based, if appropriate, on a
certificate to IFC from any participant who has acquired a participation in the
Loans, if Increased Costs affect its participation) certifying:

 

(i)                                     the circumstances giving rise to the
Increased Costs;

 

(ii)                                  that the costs of IFC or, as the case may
be, that participant, have increased or the rate of return of either of them has
been reduced;

 

(iii)                               that either IFC or such participant has, in
IFC’s opinion, exercised reasonable efforts to minimize or eliminate the
relevant increase or reduction, as the case may be; and

 

(iv)                              the amount of Increased Costs;

 

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“Interest Determination

Date”                                                                                                                                                                
except as otherwise provided in Section 2.03 (d) (ii) (Interest), the second
Business Day before the beginning of each Interest Period;

 

“Interest Payment
Date”                                                              June 30 and
December 31 in each year;

 

“Interest
Period”                                                                                                     
each period of six (6) months, except in the case of any Loan that is made on a
date other than an Interest Payment Date, when it means the period beginning on
the date on which that Loan is made and ending on the day immediately before the
next following Interest Payment Date;

 

“Interest
Rate”                                                                                                               
for any Interest Period, the rate at which interest is payable on the Loan
during that Interest Period, determined in accordance with Section 2.03
(Interest);

 

“LIBOR”                                                                                                                                               
the British Bankers’ Association (“BBA”) interbank offered rates for deposits in
Dollars which appear on the relevant page of the Reuters Service (currently
page LIBOR01) or, if not available, on the relevant pages of any other service
(such as Bloomberg Financial Markets Service) that displays such BBA rates;
provided that if BBA for any reason ceases (whether permanently or temporarily)
to publish interbank offered rates for deposits in Dollars, “LIBOR” shall mean
the rate determined pursuant to Section 2.03 (d) (Interest);

 

“Loan”                                                                                                                                                        
the principal amount of each borrowing under the IFC Facility or, as the context
requires, the principal amount from time to time outstanding of such borrowing;
provided that, for the avoidance of doubt, and subject to Section 3.3 (Rollover
Loans) of the Common Terms Agreement, on each Interest Payment Date all Loans
(including Rollover Loans) outstanding on such Interest Payment Date shall (to
the extent not repaid) be consolidated into a single Loan on such Interest
Payment Date;

 

“Relevant
Change”                                                                                        
has the meaning specified in Section 2.16 (Illegality of Participation);

 

“Relevant
Spread”                                                                                            
2.75% per annum;

 

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“Revenue
Account”                                                                                  
the bank account entitled “BPZ Exploración—Revenue Account” (or as it is
otherwise entitled in the agreement creating the Flow Trust) established with
the Security Trustee in the name of the trust created under the Flow Trust; and

 

“Taxes”                                                                                                                                                    
any present or future taxes, withholding obligations, duties and other charges
of whatever nature levied by any Authority.

 

SECTION 1.02.                             INTERPRETATION.  THIS AGREEMENT SHALL
BE INTERPRETED IN ACCORDANCE WITH SECTION 1.3 (INTERPRETATION) OF THE COMMON
TERMS AGREEMENT.

 

SECTION 1.03.                             BUSINESS DAY ADJUSTMENT.  (A) WHEN AN
INTEREST PAYMENT DATE IS NOT A BUSINESS DAY, THEN SUCH INTEREST PAYMENT DATE
SHALL BE AUTOMATICALLY CHANGED TO THE NEXT BUSINESS DAY IN THAT CALENDAR MONTH
(IF THERE IS ONE) OR THE PRECEDING BUSINESS DAY (IF THERE IS NOT).

 

(b)                                 When the day on or by which a payment (other
than a payment of principal or interest) is due to be made is not a Business
Day, that payment shall be made on or by the next Business Day in that calendar
month (if there is one) or the preceding Business Day (if there is not).

 

SECTION 1.04.                             COMMON TERMS AGREEMENT.  THIS
AGREEMENT CONSTITUTES THE IFC LOAN AGREEMENT REFERRED TO IN THE COMMON TERMS
AGREEMENT AND THE PROVISIONS OF THE COMMON TERMS AGREEMENT ARE HEREBY
INCORPORATED HEREIN BY THIS REFERENCE.  IN THE EVENT OF ANY CONFLICT BETWEEN THE
PROVISIONS OF THIS AGREEMENT AND THE COMMON TERMS AGREEMENT, THE PROVISIONS OF
THIS AGREEMENT SHALL PREVAIL.

 

ARTICLE II

 

THE IFC FACILITY

 

SECTION 2.01.                             THE IFC FACILITY.  (A) SUBJECT TO THE
PROVISIONS OF THIS AGREEMENT AND THE COMMON TERMS AGREEMENT, IFC AGREES TO MAKE
AVAILABLE TO THE BORROWERS A REVOLVING LOAN FACILITY OF UP TO FIFTEEN MILLION
DOLLARS ($15,000,000) (THE “IFC FACILITY”).

 

(b)                                 Each Loan under the IFC Facility may be
utilized only for the purposes set forth in Section 2.1 (The Project) of the
Common Terms Agreement.

 

(c)                                  The Borrowers’ obligations under this
Agreement and the other Finance Documents are joint and several.

 

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SECTION 2.02.                             DISBURSEMENT PROCEDURE.

 

(a)                                  The Borrowers may request Disbursements
during the Availability Period by delivering to IFC, at least ten (10) Business
Days prior to the proposed date of disbursement, a Disbursement Application
substantially in the form of Schedule 1.

 

(b)                                 Each Disbursement shall be made by IFC at a
bank in New York, New York for further credit to the Revenue Account or such
other bank account in Peru acceptable to IFC, all as specified by the Borrowers
in the relevant Disbursement request.

 

(c)                                  Each Disbursement shall be made in an
amount of (i) not less than five million Dollars ($5,000,000) or (ii) if less,
the Available Amount.

 

(d)                                 The Borrowers shall deliver to IFC a
receipt, substantially in the form of Schedule 2, within five (5) Business Days
following each Disbursement.

 

(e)                                  On each Interest Payment Date on which
there are any Loans outstanding, the Borrowers shall be conclusively deemed to
have delivered to IFC a Rollover Request in accordance with Section 3.3
(Rollover Loans) of the Common Terms Agreement.

 

SECTION 2.03.                             INTEREST.  SUBJECT TO THE PROVISIONS
OF SECTION 2.04 (DEFAULT RATE INTEREST), THE BORROWER SHALL PAY INTEREST ON EACH
LOAN IN ACCORDANCE WITH THIS SECTION 2.03:

 

(a)                                  During each Interest Period, each Loan
shall bear interest at the applicable Interest Rate for that Interest Period.

 

(b)                                 Interest on each Loan shall accrue from day
to day, be prorated on the basis of a 360-day year for the actual number of days
in the relevant Interest Period and be payable in arrears on the Interest
Payment Date immediately following the end of that Interest Period.

 

(c)                                  The Interest Rate for any Interest Period
shall be the rate which is the sum of:

 

(i)                                     the Relevant Spread; and

 

(ii)                                  LIBOR on the Interest Determination Date
for that Interest Period for six (6) months (or, in the case of any Loan that is
made on a date other than an Interest Payment Date, for one (1) month, two
(2) months, three (3) months or six (6) months, whichever period is closest to
the duration of the relevant Interest Period (or, if two periods are equally
close,

 

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the longer one)) rounded upward to the nearest three decimal places.

 

(d)                                 If, for any Interest Period, IFC cannot
determine LIBOR by reference to the Reuters Service or any other service that
displays BBA rates, IFC shall notify the relevant Borrower and shall instead
determine LIBOR:

 

(i)                                     on the second Business Day before the
beginning of the relevant Interest Period by calculating the arithmetic mean
(rounded upward to the nearest three decimal places) of the offered rates
advised to IFC on or around 11:00 a.m., London time, for deposits in Dollars and
otherwise in accordance with Section 2.03 (c) (ii), by any four (4) major banks
active in Dollars in the London interbank market, selected by IFC; provided that
if less than four quotations are received, IFC may rely on the quotations so
received if not less than two (2); or

 

(ii)                                  if less than two (2) quotations are
received from the banks in London in accordance with subsection (i) above, on
the first day of the relevant Interest Period, by calculating the arithmetic
mean (rounded upward to the nearest three decimal places) of the offered rates
advised to IFC on or around 11:00 a.m., New York time, for loans in Dollars and
otherwise in accordance with Section 2.03 (c) (ii), by a major bank or banks in
New York, New York selected by IFC.

 

(e)                                  On each Interest Determination Date for any
Interest Period, IFC shall determine the Interest Rate applicable to that
Interest Period and promptly notify the Borrowers of those rates.

 

(f)                                    The determination by IFC, from time to
time, of the applicable Interest Rate shall be final and conclusive and bind the
Borrowers (unless the Borrowers show to IFC’s satisfaction that the
determination involves manifest error).

 

SECTION 2.04.                             DEFAULT RATE INTEREST.  (A) WITHOUT
LIMITING THE REMEDIES AVAILABLE TO IFC UNDER THIS AGREEMENT OR OTHERWISE (AND TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW), IF ANY BORROWER FAILS TO MAKE
ANY PAYMENT OF PRINCIPAL OR INTEREST (INCLUDING INTEREST PAYABLE PURSUANT TO
THIS SECTION) OR ANY OTHER PAYMENT PROVIDED FOR IN SECTION 2.07 (FEES) WHEN DUE
AS SPECIFIED IN THIS AGREEMENT (WHETHER AT STATED MATURITY OR UPON
ACCELERATION), THE BORROWERS SHALL PAY INTEREST ON THE AMOUNT OF THAT PAYMENT
DUE AND UNPAID AT THE RATE WHICH SHALL BE THE SUM OF TWO PER CENT (2%) PER ANNUM
AND THE INTEREST RATE IN EFFECT FROM TIME TO TIME.

 

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(b)                                 Interest at the rate referred to in
Section 2.04 (a) shall accrue from the date on which payment of the relevant
overdue amount became due until the date of actual payment of that amount (as
well after as before judgment), and shall be payable on demand or, if not
demanded, on each Interest Payment Date falling after any such overdue amount
became due.

 

SECTION 2.05.                             REPAYMENT.  (A) SUBJECT TO
SECTION 1.03 (BUSINESS DAY ADJUSTMENT) AND SECTION 2.02(E) (DISBUSEMENT
PROCEDURE), THE BORROWERS SHALL REPAY EACH LOAN IN FULL ON THE INTEREST PAYMENT
DATE IMMEDIATELY FOLLOWING THE DATE OF DISBURSEMENT OF SUCH LOAN.

 

(b)                                 Subject to the terms of this Agreement and
the Common Terms Agreement, the principal amount of any Loan repaid under this
Agreement may be re-borrowed.

 

SECTION 2.06.                             PREPAYMENT.  WITHOUT PREJUDICE TO
SECTION 2.16 (ILLEGALITY OF PARTICIPATION):

 

(a)                                  subject to the requirements of Section 3.8
(General Prepayment Terms) of the Common Terms Agreement, the Borrower may
prepay on any Interest Payment Date all or any part of any Loan, on not less
than fifteen (15) days prior notice to IFC, but only if:

 

(i)                                     the Borrower simultaneously pays all
accrued interest and Increased Costs (if any) on the amount of the Loans to be
prepaid, together with all other amounts then due and payable under this
Agreement, including the amount payable under Section 2.11 (Unwinding Costs), if
the prepayment is not made on an Interest Payment Date;

 

(ii)                                  for a partial prepayment, that prepayment
is an amount not less than three hundred seventy-five thousand Dollars
($375,000); and

 

(iii)                               if requested by IFC, the Borrowers deliver
to IFC, prior to the date of prepayment, evidence reasonably satisfactory to IFC
that all necessary Authorizations with respect to the prepayment have been
obtained.

 

(b)                                 The Borrowers shall make the prepayment in
accordance with the terms of any notice delivered in accordance with
Section 2.06(a).

 

(c)                                  The Borrowers shall also make the
prepayments required under Section 3 (Loans) of the Common Terms Agreement.

 

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SECTION 2.07.                             FEES.  (A) THE BORROWERS SHALL PAY TO
IFC A COMMITMENT FEE:

 

(i)                                     at the rate of one per cent (1%) per
annum on an amount equal to that part of the Maximum Available Amount of the IFC
Facility that from time to time has not been disbursed or canceled, beginning to
accrue on the date of this Agreement;

 

(ii)                                  at the rate of ten percent (10%) of the
Relevant Spread per annum on an amount equal to (x) the Maximum Facility Amount
less (y) the Maximum Available Amount from time to time of the IFC Facility,
beginning to accrue on the date of this Agreement;

 

(iii)                               pro rated on the basis of a 360-day year for
the actual number of days elapsed; and

 

(iv)                              payable semi-annually, in arrears, on each
Interest Payment Date, the first such payment to be due on December 31, 2008.

 

(b)                                 The Borrowers shall also pay to IFC:

 

(i)                                     a front-end fee of one and one-half
percent (1½%) of the amount of the IFC Facility, to be paid on the earlier of
(x) the date which is thirty (30) days after the date of this Agreement and
(y) the date immediately preceding the date of the first Disbursement;

 

(ii)                                  the fees set forth in the IFC Fee Letter;
and

 

(iii)                               if the Borrowers and IFC agree to
restructure all or part of the Loans, the Borrowers and IFC shall negotiate in
good faith an appropriate amount to compensate IFC for the additional work of
IFC staff required in connection with such restructuring.

 

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SECTION 2.08.                             CURRENCY AND PLACE OF PAYMENTS. 
(A) THE BORROWERS SHALL MAKE ALL PAYMENTS OF PRINCIPAL, INTEREST, FEES, AND ANY
OTHER AMOUNT DUE TO IFC UNDER THIS AGREEMENT IN DOLLARS, IN SAME DAY FUNDS, TO
THE ACCOUNT OF IFC AT CITIBANK N.A., 111 WALL STREET, NEW YORK, NEW YORK,
U.S.A., ABA #021000089, FOR CREDIT TO IFC’S ACCOUNT NUMBER 36085579, OR AT SUCH
OTHER BANK OR ACCOUNT AS IFC FROM TIME TO TIME DESIGNATES, QUOTING INVESTMENT
NO. 24346.  PAYMENTS MUST BE RECEIVED IN IFC’S DESIGNATED ACCOUNT NO LATER THAN
1:00 P.M. NEW YORK TIME.

 

(b)                                 The tender or payment of any amount payable
under this Agreement (whether or not by recovery under a judgment) in any
currency other than Dollars shall not novate, discharge or satisfy the
obligation of the Borrowers to pay in Dollars all amounts payable under this
Agreement except to the extent that (and as of the date when) IFC actually
receives funds in Dollars in the account specified in, or pursuant to,
Section 2.08 (a).

 

(c)                                  The Borrowers shall indemnify IFC against
any losses resulting from a payment being received or an order or judgment being
given under this Agreement in any currency other than Dollars or any place other
than the account specified in, or pursuant to, Section 2.08 (a). The Borrowers
shall, as a separate obligation, pay such additional amount as is necessary to
enable IFC to receive, after conversion to Dollars at a market rate and transfer
to that account, the full amount due to IFC under this Agreement in Dollars and
in the account specified in, or pursuant to, Section 2.08 (a).

 

(d)                                 Notwithstanding the provisions of
Section 2.08 (a) and Section 2.08 (b), IFC may require the Borrowers to pay (or
reimburse IFC) for any Taxes, fees, costs, expenses and other amounts payable
under Section 2.14 (a) (Taxes) and Section 2.15 (Expenses) in the currency in
which they are payable, if other than Dollars.

 

SECTION 2.09.                             ALLOCATION OF PARTIAL PAYMENTS.  IF AT
ANY TIME IFC RECEIVES LESS THAN THE FULL AMOUNT THEN DUE AND PAYABLE TO IT UNDER
THIS AGREEMENT, IFC MAY ALLOCATE AND APPLY THE AMOUNT RECEIVED IN ANY WAY OR
MANNER AND FOR SUCH PURPOSE OR PURPOSES UNDER THIS AGREEMENT AS IFC IN ITS SOLE
DISCRETION DETERMINES, NOTWITHSTANDING ANY INSTRUCTION THAT THE BORROWERS MAY
GIVE TO THE CONTRARY.

 

SECTION 2.10.                             INCREASED COSTS.  ON EACH INTEREST
PAYMENT DATE, THE BORROWERS SHALL PAY, IN ADDITION TO PRINCIPAL AND INTEREST,
THE AMOUNT WHICH IFC FROM TIME TO TIME NOTIFIES TO THE BORROWERS IN AN INCREASED
COSTS CERTIFICATE AS BEING THE AGGREGATE INCREASED COSTS ACCRUED AND UNPAID
PRIOR TO THAT INTEREST PAYMENT DATE.

 

SECTION 2.11.                             UNWINDING COSTS.  (A) IF IFC INCURS
ANY COST, EXPENSE OR LOSS (OTHER THAN LOSS OF THE RELEVANT SPREAD) AS A RESULT
OF THE BORROWERS:

 

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(i)                                     failing to borrow in accordance with a
request for Disbursement made pursuant to Section 2.02 (Disbursement Procedure);

 

(ii)                                  failing to prepay in accordance with a
notice of prepayment;

 

(iii)                               prepaying all or any portion of the Loans;
or

 

(iv)                              after acceleration of the Loans, paying all or
a portion of the Loans on a date other than an Interest Payment Date;

 

then the Borrowers shall promptly pay to IFC the amount that IFC from time to
time notifies to the Borrowers as being the amount of those costs, expenses and
losses incurred.

 

(b)                                 For the purposes of this Section, “costs,
expenses or losses” include any premium, penalty or expense incurred to
liquidate or obtain third party deposits, borrowings, hedges or swaps in order
to make, maintain, fund or hedge all or any part of any Loan or prepayment of
any Loan, or any payment of all or part of the Loans upon acceleration.

 

SECTION 2.12.                             SUSPENSION OR CANCELLATION BY IFC. 
(A) IFC MAY, BY NOTICE TO THE BORROWERS, SUSPEND OR CANCEL THE RIGHT OF THE
BORROWERS TO THE UNDISBURSED PORTION OF THE IFC FACILITY IN WHOLE OR IN PART:

 

(i)                                     if the first Disbursement of a Loan has
not been made by October 31, 2008, or such other date as the parties agree;

 

(ii)                                  if any Event of Default has occurred and
is continuing or if the Event of Default specified in Section 8.1(d) of the
Common Terms Agreement is, in the reasonable opinion of IFC, imminent; or

 

(iii)                               any event or condition has occurred which
has or can be reasonably expected to have a Material Adverse Effect.

 

(b)                                 Upon the giving of any such notice, the
right of the Borrowers to any further Disbursement of the undisbursed portion of
the IFC Facility shall be suspended or canceled, as the case may be.  The
exercise by IFC of its right of suspension shall not preclude IFC from
exercising its right of cancellation, either for the same or any other reason
specified in Section 2.12(a) and shall not limit any other provision of this
Agreement.  Upon any cancellation the Borrowers shall, subject to paragraph
(c) of this Section 2.12, pay to IFC all fees and other amounts accrued (whether
or not then due and payable) under this Agreement up to the date of that
cancellation.

 

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(c)                                  In the case of partial cancellation of the
undisbursed portion of the IFC Facility pursuant to paragraph (a) of this
Section 2.12, or Section 2.13(a), interest on the amount then outstanding of the
Loans remains payable as provided in Section 2.03 (Interest).

 

SECTION 2.13.                             CANCELLATION BY THE BORROWERS. 
(A) SUBJECT TO THE REQUIREMENTS OF SECTION 3.9 (CANCELLATION BY THE BORROWERS)
OF THE COMMON TERMS AGREEMENT, THE BORROWERS MAY, BY NOTICE TO IFC, IRREVOCABLY
REQUEST IFC TO CANCEL, IN WHOLE OR IN PART, THE UNDISBURSED PORTION OF THE IFC
FACILITY ON THE DATE SPECIFIED IN THAT NOTICE (WHICH SHALL BE A DATE NOT EARLIER
THAN FIFTEEN (15) DAYS AFTER THE DATE OF THAT NOTICE); PROVIDED THAT THE
BORROWERS MAY REQUEST ANY SUCH CANCELLATION ONLY ONCE IN ANY FINANCIAL YEAR.

 

(b)                                 IFC shall, by notice to the Borrowers,
cancel such undisbursed portion of the IFC Facility effective as of that
specified date if, subject to Section 2.12(c), IFC has received all fees and
other amounts accrued (whether or not then due and payable) under this Agreement
up to such specified date.

 

(c)                                  Any portion of the Facility that is
cancelled under this Section 2.13 may not be reinstated or disbursed.

 

SECTION 2.14.                             TAXES.  (A) THE BORROWERS SHALL PAY OR
CAUSE TO BE PAID ALL TAXES (OTHER THAN TAXES, IF ANY, PAYABLE ON THE OVERALL
INCOME OF IFC) ON OR IN CONNECTION WITH THE PAYMENT OF ANY AND ALL AMOUNTS DUE
UNDER THIS AGREEMENT THAT ARE NOW OR IN THE FUTURE LEVIED OR IMPOSED BY ANY
AUTHORITY OF THE REPUBLIC OF PERU OR BY ANY ORGANIZATION OF WHICH THE REPUBLIC
OF PERU IS A MEMBER OR ANY JURISDICTION THROUGH OR OUT OF WHICH A PAYMENT IS
MADE.

 

(b)                                 All payments of principal, interest, fees
and other amounts due under this Agreement shall be made without deduction for
or on account of any Taxes.

 

(c)                                  If the Borrowers are prevented by operation
of law or otherwise from making or causing to be made those payments without
deduction, the principal or (as the case may be) interest, fees or other amounts
due under this Agreement shall be increased to such amount as may be necessary
so that IFC receives the full amount it would have received (taking into account
any Taxes payable on amounts payable by the Borrowers under this subsection) had
those payments been made without that deduction.

 

(d)                                 If Section 2.14 (c) applies and IFC so
requests, the Borrowers shall deliver to IFC official tax receipts evidencing
payment (or certified copies of them) within thirty (30) days of the date of
that request.

 

SECTION 2.15.                             EXPENSES.  (A) THE BORROWERS SHALL PAY
OR, AS THE CASE MAY BE, REIMBURSE IFC OR ITS ASSIGNEES ANY AMOUNT PAID BY THEM
ON ACCOUNT OF, ALL

 

12

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taxes (including stamp taxes), duties, fees or other charges payable on or in
connection with the execution, issue, delivery, registration or notarization of
the Transaction Documents and any other documents related to this Agreement or
any other Transaction Document.

 

(b)                                 The Borrowers shall pay to IFC or as IFC may
direct:

 

(i)                                     the fees and expenses set forth in
Section 6.14 (Costs and Expenses) of the Common Terms Agreement; and

 

(ii)                                  the documented fees and expenses of IFC’s
counsel, being White & Case LLP, and Estudio Aurelio García Sayán Abogados,
Peruvian counsel, incurred in connection with:

 

(A)                              Project-related due diligence conducted and the
preparation of the investment by IFC provided for under this Agreement and any
other Transaction Document; and

 

(B)                                the administration by IFC of the investment
provided for in this Agreement.

 

SECTION 2.16.                             ILLEGALITY OF PARTICIPATION.  IF IFC
HAS SOLD A PARTICIPATION IN THE LOANS AND AFTER THE DATE OF THIS AGREEMENT, ANY
CHANGE MADE IN ANY APPLICABLE LAW OR REGULATION OR OFFICIAL DIRECTIVE (OR ITS
INTERPRETATION OR APPLICATION BY ANY AUTHORITY CHARGED WITH ITS ADMINISTRATION)
(HEREIN THE “RELEVANT CHANGE”) MAKES IT UNLAWFUL FOR THE PARTICIPANT ACQUIRING
THAT PARTICIPATION TO CONTINUE TO MAINTAIN OR TO FUND ITS PARTICIPATION:

 

(a)                                  the Borrowers shall, upon request by IFC
(but subject to any applicable Authorization having been obtained), on the
earlier of (x) the next Interest Payment Date and (y) the date that IFC advises
the Borrowers is the latest day permitted by the Relevant Change, prepay in full
that part of the Loans that IFC advises corresponds to that participation;

 

(b)                                 concurrently with the prepayment of the part
of the Loans corresponding to the participation affected by the Relevant Change,
the Borrowers shall pay all accrued interest, Increased Costs (if any) on that
part of the Loans (and, if that prepayment is not made on an Interest Payment
Date, any amount payable in respect of the prepayment under Section 2.11
(Unwinding Costs)); and

 

(c)                                  the Borrowers agree to take all reasonable
steps to obtain, as quickly as possible after receipt of IFC’s request for
prepayment, the Authorization referred to in Section 2.16 (a) if any such
Authorization is then required.

 

13

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SECTION 2.17.                             MITIGATION.  IF THE BORROWERS BECOME
OBLIGATED TO MAKE PAYMENTS OR PREPAY LOANS UNDER SECTION 2.10 (INCREASED COSTS)
OR 2.16 (ILLEGALITY OF PARTICIPATION), IFC SHALL REQUEST THE RELEVANT
PARTICIPANT TO TAKE SUCH STEPS (TO THE EXTENT IT CAN LAWFULLY DO SO AND WITHOUT
PREJUDICE TO ITS OWN POSITION) AS ARE REASONABLY AVAILABLE TO IT WITH A VIEW TO
MITIGATING THE CIRCUMSTANCES GIVING RISE TO SUCH PAYMENT OBLIGATIONS.

 

ARTICLE III

 

CONDITIONS OF DISBURSEMENT

 

SECTION 3.01.                             CONDITIONS OF DISBURSEMENT.  (A)  THE
OBLIGATION OF IFC TO MAKE ANY DISBURSEMENT IS SUBJECT TO THE FULFILLMENT PRIOR
TO OR CONCURRENTLY WITH THE MAKING OF SUCH DISBURSEMENT OF THE CONDITIONS SET
FORTH IN SECTION 4.1 (FIRST DISBURSEMENT UNDER EACH FACILITY), SECTION 4.2
(SPECIAL CONDITIONS FOR FIRST DISBURSEMENT UNDER IFC FACILITY) AND SECTION 4.4
(ALL DISBURSEMENTS UNDER THE FACILITIES) OF THE COMMON TERMS AGREEMENT; AND

 

(b)           the obligation of IFC to make any Disbursement is further subject
to the fulfillment prior to or concurrently with the making of such Disbursement
of the condition that, upon the request of IFC, IFC shall have received a legal
opinion or opinions in form and substance satisfactory to IFC of Lenders’
counsel in Peru or in any other relevant jurisdiction with respect to matters
relating to any changes in applicable Law.

 

SECTION 3.02.                             BORROWER’S CERTIFICATION.  (A)  THE
BORROWERS SHALL DELIVER TO IFC WITH RESPECT TO EACH REQUEST FOR DISBURSEMENT:

 

(i)                                     certifications, in the form included in
Schedule 1, relating to the conditions referred to in Section 3.01 (Conditions
of Disbursement) expressed to be effective as of the date of that Disbursement,
and in the case of Section 4.2 (j)(i) of the Common Terms Agreement, also
certified by the Auditors if IFC so requires; and

 

(ii)                                  such evidence as IFC may reasonably
request of the proposed utilization of the proceeds of that Disbursement or the
utilization of the proceeds of any prior Disbursement.

 

(b)                                 With respect to Rollover Loans, the
Borrowers shall be deemed to have provided the certifications set forth in
Schedule 1 as of the Interest Payment Date upon which such Rollover Loan is
made.

 

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SECTION 3.03.                             CONDITIONS FOR IFC BENEFIT.  THE
CONDITIONS IN SECTION 4 (CONDITIONS PRECEDENT) OF THE COMMON TERMS AGREEMENT AND
IN THIS ARTICLE III ARE FOR THE BENEFIT OF IFC AND MAY BE WAIVED ONLY BY IFC IN
ITS SOLE DISCRETION.

 

ARTICLE IV

MISCELLANEOUS

 

SECTION 4.01.                             SAVING OF RIGHTS.  (A) THE RIGHTS AND
REMEDIES OF IFC IN RELATION TO ANY MISREPRESENTATION OR BREACH OF WARRANTY ON
THE PART OF THE BORROWERS SHALL NOT BE PREJUDICED BY ANY INVESTIGATION BY OR ON
BEHALF OF IFC INTO THE AFFAIRS OF THE BORROWERS, BY THE EXECUTION OR THE
PERFORMANCE OF THIS AGREEMENT, OR BY ANY OTHER ACT OR THING WHICH MAY BE DONE BY
OR ON BEHALF OF IFC IN CONNECTION WITH THIS AGREEMENT AND WHICH MIGHT, APART
FROM THIS SECTION, PREJUDICE SUCH RIGHTS OR REMEDIES.

 

(b)                                 No course of dealing or waiver by IFC in
connection with any condition of Disbursement of any Loan under this Agreement
shall impair any right, power or remedy of IFC with respect to any other
condition of Disbursement, or be construed to be a waiver thereof; nor shall the
action of IFC with respect to any Disbursement affect or impair any right, power
or remedy of IFC with respect to any other Disbursement.

 

(c)                                  Unless otherwise notified to the Borrowers
by IFC and without prejudice to the generality of Section 4.01(b), the right of
IFC to require compliance with any condition under this Agreement that may be
waived by IFC with respect to any Disbursement is expressly preserved for the
purposes of any subsequent Disbursement.

 

(d)                                 No course of dealing and no failure or delay
by IFC in exercising, in whole or in part, any power, remedy, discretion,
authority or other right under this Agreement or any other agreement shall waive
or impair, or be construed to be a waiver of, such or any other power, remedy,
discretion, authority or right under this Agreement, or in any manner preclude
its additional or future exercise; nor shall the action of IFC with respect to
any default, or any acquiescence by it therein, affect or impair any right,
power or remedy of IFC with respect to any other default.

 

SECTION 4.02.                             NOTICES.  ANY NOTICE, REQUEST OR OTHER
COMMUNICATION TO BE GIVEN OR MADE UNDER THIS AGREEMENT SHALL BE IN WRITING. 
SUBJECT TO SECTIONS 6.17(J) AND (K) (FURNISHING OF INFORMATION BY THE BORROWER)
OF THE COMMON TERMS AGREEMENT AND SECTION 9.7 (JURISDICTION AND ENFORCEMENT) OF
THE COMMON TERMS AGREEMENT, ANY SUCH COMMUNICATION MAY BE DELIVERED BY HAND,
AIRMAIL, FACSIMILE OR ESTABLISHED COURIER SERVICE TO THE PARTY’S ADDRESS
SPECIFIED BELOW OR AT SUCH OTHER ADDRESS AS SUCH PARTY NOTIFIES TO THE OTHER
PARTY FROM TIME TO TIME, AND WILL BE EFFECTIVE UPON RECEIPT.

 

15

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For the Borrowers:

 

BPZ Exploración & Producción S.R.L.

BPZ Marine Peru S.R.L.

Attention:  General Manager

Manual de Falla #297

San Borja, Lima

Peru

 

Facsimile:  (011-511) 225-3289

 

and

 

BPZ Resources Inc.

Attention:  Chief Financial Officer or General Counsel

Two Westlake

580 Westlake Park Blvd., Suite 525

Houston, Texas 77079

 

Facsimile: (281) 556-6377

 

For IFC:

 

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

United States of America

 

Attention:                                         Director, Oil, Gas, Mining
and Chemicals Department

 

Facsimile:                                            (202) 974-4768

 

With a copy (in the case of communications relating to payments) sent to the
attention of the Director, Department of Financial Operations, at:

 

Facsimile:                                            (202) 522-7419.

 

16

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SECTION 4.03.                             ENGLISH LANGUAGE.  (A) ALL DOCUMENTS
TO BE PROVIDED OR COMMUNICATIONS TO BE GIVEN OR MADE UNDER THIS AGREEMENT SHALL
BE IN THE ENGLISH LANGUAGE.

 

(b)                                 To the extent that the original version of
any document to be provided, or communication to be given or made, to IFC under
this Agreement or any other Transaction Document is in a language other than
English, that document or communication shall be accompanied by an English
translation certified by an Authorized Representative to be a true and correct
translation of the original.  IFC may, if it so requires, obtain an English
translation of any document or communication received in a language other than
English at the cost and expense of the Borrowers.  IFC may deem any such English
translation to be the governing version between the Borrowers and IFC.

 

SECTION 4.04.                             TERM OF AGREEMENT.  THIS AGREEMENT
SHALL CONTINUE IN FORCE UNTIL ALL MONIES PAYABLE UNDER IT HAVE BEEN FULLY PAID
IN ACCORDANCE WITH ITS PROVISIONS.

 

SECTION 4.05.                             DISCLOSURE OF INFORMATION.  (A) IFC
MAY DISCLOSE ANY DOCUMENTS OR RECORDS OF, OR INFORMATION ABOUT, THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT, OR THE ASSETS, BUSINESS OR AFFAIRS OF THE
BORROWERS TO:

 

(i)                                     its outside counsel, auditors and rating
agencies,

 

(ii)                                  any Person who intends to purchase a
participation in a portion of any Loan or any participant in a Loan, and

 

(iii)                               any other Person as IFC may deem appropriate
in connection with any proposed sale, transfer, assignment or other disposition
of IFC’s rights under this Agreement or any Transaction Document or otherwise
for the purpose of exercising any power, remedy, right, authority, or discretion
relevant to this Agreement or any other Transaction Document.

 

(b)                                 The Borrowers acknowledge and agree that,
notwithstanding the terms of any other agreement between the Borrowers and IFC,
a disclosure of information by IFC in the circumstances contemplated by
Section 4.05(a) does not violate any duty owed to the Borrowers under this
Agreement or under any such other agreement.

 

SECTION 4.06.                             SUCCESSORS AND ASSIGNEES.  THIS
AGREEMENT BINDS AND BENEFITS THE RESPECTIVE SUCCESSORS AND ASSIGNEES OF THE
PARTIES.  HOWEVER, THE BORROWERS MAY NOT ASSIGN OR DELEGATE ANY OF THEIR RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT WITHOUT THE PRIOR CONSENT OF IFC.  IFC MAY
ASSIGN OR DELEGATE ANY OF

 

17

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its rights and obligations under the other Finance Documents in connection with
any assignment or delegation of rights and obligations under this Agreement.

 

SECTION 4.07.                             AMENDMENTS, WAIVERS AND CONSENTS.  ANY
AMENDMENT OR WAIVER OF, OR ANY CONSENT GIVEN UNDER, ANY PROVISION OF THIS
AGREEMENT SHALL BE IN WRITING AND, IN THE CASE OF AN AMENDMENT, SIGNED BY THE
PARTIES.

 

SECTION 4.08.                             GOVERNING LAW.  THIS AGREEMENT IS
GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, UNITED STATES OF AMERICA.

 

SECTION 4.09.                             DISPUTE RESOLUTION.  THE PROVISIONS OF
SECTIONS 9.7 (JURISDICTION AND ENFORCEMENT) AND 9.8 (PRIVILEGES AND IMMUNITIES)
OF THE COMMON TERMS AGREEMENT SHALL BE APPLICABLE TO THIS AGREEMENT AS IF SET
FORTH IN FULL HEREIN.

 

SECTION 4.10.                             COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN SEVERAL COUNTERPARTS, EACH OF WHICH IS AN ORIGINAL, BUT ALL OF WHICH
TOGETHER CONSTITUTE ONE AND THE SAME AGREEMENT.

 

18

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed in their
respective names as of the date first above written.

 

 

 

BPZ EXPLORACIÓN & PRODUCCIÓN S.R.L.

 

 

 

 

 

 

 

By:

/s/

Manuel Pablo Zúñiga-Pflücker

 

 

Name:

Manuel Pablo Zúñiga-Pflücker

 

 

Title:

President and CEO

 

 

 

 

 

 

 

BPZ MARINE PERU S.R.L.

 

 

 

 

 

 

By:

/s/

Manuel Pablo Zúñiga-Pflücker

 

 

Name:

Manuel Pablo Zúñiga-Pflücker

 

 

Title:

President and CEO

 

--------------------------------------------------------------------------------

 

 

INTERNATIONAL FINANCE CORPORATION

 

 

 

 

 

 

By:

/s/

William Bullmer

 

 

Name:

William Bullmer

 

 

Title:

Associate Director

 

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SCHEDULE 1

 

FORM OF REQUEST FOR DISBURSEMENT

 

(See Section 2.02 and Section 3.03 of the Loan Agreement)

 

[BPZ Exploración/BPZ Marine’s Letterhead]

 

[Date]

 

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America

Attention:                                         Director, Oil, Gas, Mining
and Chemicals Department

 

Ladies and Gentlemen:

 

Investment No. 24346
Request for Loan Disbursement No. [·]*

 

1.                                       Please refer to the Loan Agreement (the
“Loan Agreement”) dated as of August 15, 2008, between BPZ Exploración &
Producción S.R.L. (“BPZ Exploración”), BPZ Marine Peru S.R.L. (“BPZ Marine”) and
International Finance Corporation (“IFC”) and the Common Terms Agreement
referred to therein. Terms defined in the Loan Agreement have their defined
meanings whenever used in this request.

 

2.                                       [BPZ Exploración/ BPZ Marine]
irrevocably requests the disbursement on                         ,          (or
as soon as practicable thereafter) of the amount of                         
(                        ) under the IFC Facility (the “Disbursement”) in
accordance with the provisions of Section 2.02 of the Loan Agreement. You are
requested to pay such amount to the account in [New York] of [BPZ Exploración &
Producción S.R.L./BPZ Marine Peru S.R.L.] [Name of correspondent Bank], Account
No.                          at [Name and Address of Bank] [for further credit
to Account No.                          at [Name and address of Security
Trustee] in Lima, Peru.

 

3.                                       For the purpose of Article III of the
Loan Agreement, the Borrower certifies as follows:

 

(a)                                  no Event of Default and no Potential Event
of Default has occurred and is continuing;

 

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*                                         Each to be numbered in series.

 

1

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SCHEDULE 1

 

(b)                                 the proceeds of the Disbursement are at the
date of this request needed by the Borrowers for the purpose of (i) the Project,
or will be needed for such purpose within three (3) months of such date,
(ii) the Permitted Nueva Esperanza Credit Support or (iii) establishing cash
collateral in full for BPZ Exploración’s obligations secured under the Import
Duty Contract pursuant to Section 6.1(b) (Use of Proceeds) of the Common Terms
Agreement;

 

(c)                                  since the date of the Loan Agreement
nothing has occurred which has or could reasonably be expected to have a
Material Adverse Effect;

 

(d)                                 the representations and warranties made in
Section 5 of the Common Terms Agreement (other than in Sections 5.1(f) and
5.1(h)) are true on the date of this request and will be true on the date of
Disbursement with the same effect as if such representations and warranties had
been made on and as of each such date, except that in the event any such
representation or warranty has been expressly made only as of an earlier date,
such representation and warranty is true and correct in all material respects as
of such earlier date;

 

(e)                                  the proceeds of the Disbursement are not in
reimbursement of, or to be used for, expenditures in the territories of any
country that is not a member of the World Bank or for goods produced in or
services supplied from any such country; and

 

(f)                                    no Lender has suspended or cancelled its
commitment to make Loans in accordance with the terms of its Facility Agreement
to the extent permitted to do so pursuant to the express terms thereof.

 

The above certifications are effective as of the date of this Request for
Disbursement and shall continue to be effective as of the date of the
Disbursement.  If any of these certifications is no longer valid as of or prior
to the date of the requested Disbursement, the Borrower undertakes to
immediately notify IFC.

 

 

Yours truly,

 

 

 

BPZ EXPLORACIÓN & PRODUCCIÓN
S.R.L./BPZ MARINE PERU S.R.L.

 

 

 

 

 

By:

 

 

 

Authorized Representative

 

Copy to:

Director, Department of Financial Operations International Finance Corporation

 

2

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SCHEDULE 2

 

FORM OF DISBURSEMENT RECEIPT

 

(See Section 2.02 of the Loan Agreement)

 

[Borrower’s Letterhead]

 

International Finance Corporation

2121 Pennsylvania Avenue, N.W.

Washington, D.C. 20433

United States of America

Attention:                                         Director, Department of
Financial Operations

 

Ladies and Gentlemen:

 

Investment No. 24346

 

Disbursement Receipt No. [·]*

 

We, [BPZ Exploración & Producción S.R.L./BPZ Marine Peru S.R.L.] hereby
acknowledge receipt on the date hereof, of the sum of                       
(      ) disbursed to us by International Finance Corporation (“IFC”) under the
IFC Facility of fifteen million Dollars (US$15,000,000) provided for in the Loan
Agreement dated as of August 15, 2008 between our company and IFC.

 

 

Yours truly,

 

 

 

BPZ EXPLORACIÓN & PRODUCCIÓN
S.R.L./BPZ MARINE PERU S.R.L.

 

 

 

 

 

By:

 

 

 

Authorized Representative**

 

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*                                         To correspond with number of the
Disbursement request.  See Schedule 1.

**                                  As named in the Borrower’s Certificate of
Incumbency and Authority.

 

1

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