Exhibit 10.1
EXECUTION VERSION
 
 
$50,000,000
REVOLVING CREDIT FACILITY
 
GRAN TIERRA ENERGY COLOMBIA, LTD.
(formerly ARGOSY ENERGY INTERNATIONAL) and
ARGOSY ENERGY CORP.,
as Original Guarantors
GRAN TIERRA ENERGY INC.,
as Borrower
THE LENDERS PARTY HERETO FROM TIME TO TIME,
as Banks
 
CREDIT AGREEMENT
Dated as of February 22, 2007
 
STANDARD BANK PLC,
as Arranger, Administrative Agent
and Issuing Bank
 

 

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TABLE OF CONTENTS

                      Page  
Section 1.
  DEFINITIONS AND ACCOUNTING MATTERS     1  
 
           
1.01
  Certain Defined Terms     1  
1.02
  Accounting Terms and Determinations     24  
1.03
  Borrowing Base     25  
1.04
  Designation of Subsidiaries as Restricted or Unrestricted Subsidiaries     28
 
 
           
Section 2.
  COMMITMENTS, LOANS, NOTES AND PREPAYMENTS     29  
 
           
2.01
  Loans     29  
2.02
  Borrowings     29  
2.03
  Letters of Credit     30  
2.04
  Changes of Commitments     34  
2.05
  Commitment Fee     34  
2.06
  Lending Offices     34  
2.07
  Several Obligations; Remedies Independent     34  
2.08
  Notes     35  
2.09
  Optional Prepayments of Loans     35  
2.10
  Mandatory Prepayments and Reductions of Commitments     35  
 
           
Section 3.
  PAYMENTS OF PRINCIPAL AND INTEREST     38  
 
           
3.01
  Repayment of Loans     38  
3.02
  [Intentionally Omitted]     38  
3.03
  Interest     38  
3.04
  Solvency     39  
 
           
Section 4.
  PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC     39  
 
           
4.01
  Payments     39  
4.02
  Pro Rata Treatment     40  
4.03
  Computations     40  
4.04
  Minimum Amounts     41  
4.05
  Certain Notices     41  
4.06
  [Intentionally Omitted]     41  
4.07
  Non-Receipt of Funds by the Administrative Agent     41  
4.08
  Sharing of Payments, etc     43  
4.09
  Maximum Rate Permitted by Law     44  
 
           
Section 5.
  YIELD PROTECTION, ETC     44  
 
           
5.01
  Additional Costs     44  
5.02
  Limitation on Types of Loans     47  
5.03
  Illegality     48  
5.04
  Compensation     48  
5.05
  Additional Costs in Respect of Letters of Credit     49  
 
            -i-

 

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TABLE OF CONTENTS
(continued)

                      Page  
5.06
  Taxes; Loans and Reimbursement Obligations     50  
5.07
  Replacement of Banks     52  
 
           
Section 6.
  GUARANTEE     53  
 
           
6.01
  Guarantee     53  
6.02
  Obligations Unconditional     53  
6.03
  Reinstatement     54  
6.04
  Subrogation     54  
6.05
  Remedies     55  
6.06
  Continuing Guarantee     55  
6.07
  Instrument for the Payment of Money     55  
6.08
  Rights of Contribution     55  
6.09
  General Limitation on Guarantee Obligations     56  
 
           
Section 7.
  CONDITIONS PRECEDENT     56  
 
           
7.01
  Conditions to Effectiveness     56  
7.02
  Effectiveness and Subsequent Extensions of Credit     58  
 
           
Section 8.
  REPRESENTATIONS AND WARRANTIES     59  
 
           
8.01
  Corporate Existence     59  
8.02
  Financial Condition     60  
8.03
  Litigation     60  
8.04
  No Breach     60  
8.05
  Action     60  
8.06
  Approvals     61  
8.07
  Use of Credit     61  
8.08
  Taxes     61  
8.09
  Compliance with Laws and Agreements     61  
8.10
  Environmental Matters     62  
8.11
  Subsidiaries, etc     64  
8.12
  True and Complete Disclosure     65  
8.13
  Title to Properties     65  
8.14
  Capitalization     65  
8.15
  Insurance     65  
8.16
  ERISA     66  
 
           
Section 9.
  COVENANTS OF THE OBLIGORS     66  
 
           
9.01
  Financial Statements, Etc     66  
9.02
  Litigation     68  
9.03
  Existence, Etc     68  
9.04
  Insurance     70  
9.05
  Prohibition of Fundamental Changes; Disposition of Assets     70  
 
            -ii-

 

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TABLE OF CONTENTS
(continued)

                      Page  
9.06
  Limitation on Liens     72  
9.07
  Indebtedness     74  
9.08
  Investments     75  
9.09
  Dividend Payments     76  
9.10
  Financial Covenants     76  
9.11
  Collection Account     77  
9.12
  Lines of Business     77  
9.13
  Transactions with Affiliates     77  
9.14
  Use of Proceeds     78  
9.15
  Certain Obligations Respecting Subsidiaries     78  
9.16
  Additional Subsidiary Guarantors     79  
9.17
  Unrestricted Subsidiaries     79  
9.18
  Limitations on Sale and Leaseback Transactions     80  
9.19
  Environmental Matters     80  
9.20
  No Action to Affect Security Documents     80  
9.21
  Visits to Hydrocarbon Properties     81  
9.22
  Title Defects     81  
9.23
  Offtake Agreements     81  
9.24
  Designated Hedging Agreements     82  
9.25
  Further Assurances     82  
 
           
Section 10.
  EVENTS OF DEFAULT     82  
 
           
Section 11.
  THE ADMINISTRATIVE AGENT     87  
 
           
11.01
  Appointment, Powers and Immunities     87  
11.02
  Reliance by Administrative Agent     88  
11.03
  Defaults     88  
11.04
  Rights as a Bank     88  
11.05
  Indemnification     88  
11.06
  Non-Reliance on Agent and Other Banks     89  
11.07
  Failure to Act     89  
11.08
  Resignation or Removal of Agent     89  
11.09
  Consents under Other Loan Documents     90  
11.10
  Collateral Sub-Agents     90  
11.11
  Dealings With the Administrative Agent     90  
 
           
Section 12.
  MISCELLANEOUS     91  
 
           
12.01
  Waiver     91  
12.02
  Notices     91  
12.03
  Expenses     92  
12.04
  Amendments, Etc     92  
12.05
  Successors and Assigns     94  
12.06
  Assignments and Participations     94  
 
            -iii-

 

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TABLE OF CONTENTS
(continued)

                      Page  
     12.07
  Indemnification     96  
     12.08
  Survival     97  
     12.09
  Captions     98  
     12.10
  Counterparts     98  
     12.11
  Governing Law; Submission to Jurisdiction; Waiver of Immunity     98  
     12.12
  Waiver of Jury Trial     98  
     12.13
  Treatment of Certain Information     98  
     12.14
  Judgment Currency     99  
     12.15
  Agent for Service of Process     100  
     12.16
  Entire Agreement     100  
     12.17
  USA PATRIOT Act Notice     100  
     12.18
  English Language     101  
 
           

Annex I   Annex I-1       Annex II   Annex II-1       Schedule I   Schedule I-1
      Schedule II   Schedule II-1       Schedule III   Schedule III-1      
Schedule IV   Schedule IV-1       Schedule V   Schedule V-1       Schedule VI  
Schedule VI-1       Schedule VII   Schedule VII-1       Schedule VIII  
Schedule VIII-1       Schedule IX   Schedule IX-1       Schedule X  
Schedule X-1

 -iv-

 

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     CREDIT AGREEMENT dated as of February 22, 2007 (this “Agreement”), among
GRAN TIERRA ENERGY COLOMBIA, LTD. (formerly ARGOSY ENERGY INTERNATIONAL), a
limited partnership organized under the laws of the State of Utah (Registered
No. 2110646-0180) and having its principal office at 300, 611 10th Avenue SW,
Calgary, Alberta, Canada T2R OB2 (the “Partnership”) and ARGOSY ENERGY CORP., a
corporation organized under the laws of the State of Delaware (Registered
No. 3234977) (the “GP”) (the Partnership and the GP, collectively, the “Original
Guarantors”, and individually, an “Original Guarantor”), GRAN TIERRA ENERGY
INC., a corporation organized under the laws of the State of Nevada (Registered
No. E0666052005-8) and having its principal office at 300, 611 10th Avenue SW,
Calgary, Alberta, Canada T2R OB2 (the “Borrower”), each Subsidiary, if any, of
the Borrower that becomes a Guarantor pursuant to Section 9.16 hereof
(individually, a “Subsidiary Guarantor” and, collectively, the “Subsidiary
Guarantors” and, together with the Borrower and the Original Guarantors, the
“Obligors” and individually, an “Obligor”); each of the lenders that is a
signatory hereto identified under the caption “BANKS” on the signature pages
hereto or which, pursuant to Section 12.06(b) hereof, shall become a “Bank”
hereunder (individually, a “Bank” and, collectively, the “Banks”); STANDARD BANK
PLC as the letter of credit issuing bank (the “Issuing Bank”), as arranger (the
“Arranger”) and as administrative agent for the Banks (in such capacity,
together with its successors in such capacity, the “Administrative Agent”).
SECTION 1.
DEFINITIONS AND ACCOUNTING MATTERS.
     1.01 Certain Defined Terms. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
     “Additional Costs” shall have the meaning given to such term in
Section 5.01(a) hereof.
     “Administrative Questionnaire” shall mean an administrative questionnaire
in a form supplied by the Administrative Agent.
     “Advance Date” shall have the meaning given to such term in Section 4.07
hereof.
     “Affiliate” shall mean, with respect to a specified Person, another Person
that directly or indirectly controls, or is under common control with, or is
controlled by, the Person specified. As used in this definition, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person that owns directly or
indirectly securities having 10% or more of the voting power for

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the election of directors or other governing body of a corporation or 10% or
more of the partnership or other ownership interests of any other Person (other
than as a limited partner of such other Person) shall be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (a) no individual
shall be an Affiliate solely by reason of his or her being a director, officer
or employee of the Borrower or any of its Subsidiaries and (b) none of the
Restricted Subsidiaries of the Borrower shall be, for purposes of this
definition, Affiliates of the Borrower, nor shall the Borrower be, for purposes
of this definition, an Affiliate of any of its Restricted Subsidiaries.
     “Applicable Commitment Fee Rate” shall mean 1.00% per annum.
     “Applicable Lending Office” shall mean, for each Bank, the “Lending Office”
of such Bank (or of an Affiliate of such Bank) designated in the Administrative
Questionnaire of such Bank or such other office of such Bank (or of an Affiliate
of such Bank) as such Bank may from time to time specify to the Administrative
Agent and the Borrower as the office from which its Loans are to be made and
maintained.
     “Argentine Subsidiary” shall mean any Subsidiary of the Borrower set forth
in Schedule VIII. For purposes of this Agreement, an Argentine Subsidiary shall
neither be a Restricted Subsidiary or an Unrestricted Subsidiary.
     “Applicable Margin” shall mean with respect to any Loan, 4.00% per annum.
     “Borrowing Base” shall mean the lower of (a) $50,000,000 and (b) the
Present Value of Reserves, as the same may be redetermined from time to time in
accordance with Section 1.03(b), and subject to adjustments, redeterminations
and the principles set forth in Sections 1.03(c), 1.03(d), 1.03(e), 2.10 and
9.22 hereof; provided that, as of the Closing Date, the Borrowing Base shall be
$7,000,000.
     “Borrowing Base Deficiency” shall have the meaning given to such term in
Section 2.10(a) hereof.
     “Business Day” shall mean any day (other than a Saturday or Sunday) (i) on
which commercial banks are open for general business in New York, London and
Calgary, and (ii) on which dealings in Dollar deposits are carried out between
banks in the London interbank market.
     “Canadian Pledge Agreement” shall mean a pledge agreement governed by the
laws of Alberta, Canada, dated on or about the date hereof (as the same may be
amended, restated, substituted or supplemented from time to time), in form and
substance satisfactory to the Administrative Agent, granting in favor of the
Administrative Agent for the ratable benefit of the

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Secured Parties a first-priority security interest in 65% of the equity
interests in 1203647 Alberta, Inc.
     “Capital Expenditures” shall mean, for any period, expenditures (including,
without limitation, the aggregate amount of Capital Lease Obligations payable
during such period) made by the Borrower or any of its Restricted Subsidiaries
in connection with the acquisition and exploitation of, or the exploration for
or development or production of, Hydrocarbon reserves or to acquire or construct
fixed assets, plant and equipment (including renewals, improvements and
replacements, but excluding repairs) during such period computed in accordance
with GAAP.
     “Capital Lease Obligations” shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
     “Capital Stock” shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or membership or partnership interests and any and all warrants, options
and rights with respect thereto (whether or not currently exercisable),
including each class of common stock and preferred stock of such Person.
     “Casualty Event” shall mean, with respect to any Property of any Person,
any loss of or damage to, or any condemnation or other taking of, such Property
for which such Person or any of its Subsidiaries receives insurance proceeds, or
proceeds of a condemnation award or other compensation.
     “Closing Date” shall mean the date upon which all of the conditions of
Section 7.01 hereof are either satisfied or waived.
     “Collection Account” shall mean account number 103353265 in the name of the
Partnership, maintained with JPMorgan Chase Bank, N.A. in New York, New York,
and each other deposit account that may be maintained by the Partnership (or any
other Obligor) from time to time in substitution thereof with the Administrative
Agent’s prior written consent.
     “Collection Account Pledge Agreement” shall mean an account pledge
agreement governed by the laws of the State of New York dated on or about the
date hereof (as the same may be amended, restated, substituted or supplemented
from time to time), in form and substance satisfactory to the Administrative
Agent, granting in favor of the Administrative Agent

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for the ratable benefit of the Secured Parties a first-priority security
interest in the Collection Account and all amounts standing to the credit
thereof from time to time.
     “Colombia” shall mean The Republic of Colombia.
     “Colombian Branch” shall mean Gran Tierra Energy Colombia, Ltd., the
Colombian branch office of the Partnership.
     “Colombian Hydrocarbon Properties” shall mean (a) as of the date of this
Agreement, the following Hydrocarbon Properties located in the Putumayo Basin in
Colombia: (i) the Guayuyaco Block, and (ii) the Santana Block; and (b) from time
to time and at any time hereafter, all Hydrocarbon Properties in Colombia in
which the Borrower or any of its Restricted Subsidiaries shall have an interest
and that have been included in the Borrowing Base pursuant to Section 1.03.
     “Colombian Security Documents” shall mean each of the following documents:
          (a) a receivables pledge agreement governed by the laws of Colombia
dated on or about the date hereof (as the same may be amended, restated,
substituted or supplemented from time to time), in form and substance
satisfactory to the Administrative Agent, granting in favor of the
Administrative Agent for the ratable benefit of the Secured Parties a
first-priority security interest in substantially all of the present and future
right, title and interest of the Colombian Branch to receivables payable from
time to time by each Offtaker;
          (b) each receivables payment instruction letter governed by the laws
of Colombia, instructing the Offtaker named therein to make payments due to the
Colombian Branch under the applicable Offtake Agreement to the relevant
Collection Account; and
          (c) any other document reasonably required by the Administrative Agent
to be executed in connection with the creation, attachment and/or perfection
under the laws of Colombia of the security interests to be granted pursuant to
the aforementioned security document.
     “Commitment” shall mean, with respect to each Bank, the obligation of such
Bank to make Loans or to participate in Letters of Credit in an aggregate
principal or face amount at any one time outstanding up to but not exceeding
(a) with respect to each Bank that is a party to this Agreement as of the date
of this Agreement, the amount set opposite the name of such Bank on Annex I
hereto under the caption “Amount of Commitment” or (b) in the case of any other
Bank, the aggregate amount of the Commitments of other Banks acquired by it
pursuant to Section 12.06(b) of this Agreement (in each of clause (a) and
(b) above, as the same may be increased or reduced from time to time pursuant to
the terms of this Agreement). In the case of any increase

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or decrease in the Borrowing Base, the Commitment of each Bank shall be
increased or decreased pro rata in accordance with its Commitment Percentage
existing at the time of such increase or decrease in the Borrowing Base.
     “Commitment Percentage” shall mean, at any time, with respect to any Bank,
the ratio of (a) the amount of its Commitment at such time to (b) the aggregate
amount of the Commitments of all the Banks at such time.
     “Commitment Period” shall mean the period from and including the Closing
Date to the Commitment Termination Date.
     “Commitment Termination Date” shall mean the earliest of
          (a) the Maturity Date;
          (b) the date on which the Commitments are terminated in full or
reduced to zero pursuant to the terms of this Agreement; and
          (c) the date on which any Commitment Termination Event occurs.
     Upon the occurrence of any event described above, all of the Commitments
shall terminate automatically and without any further action.
     “Commitment Termination Event” shall mean any of the following:
          (a) the occurrence of any Event of Default described in Section 10(f)
or 10(g); or
          (b) the occurrence of any other Event of Default and either (i) all or
any portion of the Loans shall have been declared to be due and payable pursuant
to SECTION 10 or (ii) the Administrative Agent shall have given notice to the
Borrower that the Commitments have been terminated.
     “Commodity Hedging Agreement” shall mean, for any Person, (a) any swap,
forward, cap, floor, collar or other similar transaction between such Person and
one or more financial institutions or other entities relating to the price of
any category of Hydrocarbons or any index calculated based on the price of one
or more categories of Hydrocarbons, (b) any option with respect to any of the
foregoing transactions, (c) physical forward contracts for set prices provided
that payment is not made prior to delivery and (d) any combination of the
foregoing transactions.
     “Consolidated Current Assets” shall mean, at any time, the aggregate of the
Borrower’s and its consolidated Subsidiaries’ unrestricted aggregate cash on
hand, marketable securities,

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other receivables and oil inventory expected to be sold and the proceeds of such
sale expected to be realized within twelve months but excluding all receivables
more than ninety days past due, all determined without duplication in accordance
with GAAP; provided that, for the purposes of determining the ratio of
Consolidated Current Assets to Consolidated Current Liabilities under
Section 9.10(c), the aggregate unused and uncancelled amount of the Borrowing
Base (if any) at such time shall be added to, and constitute part of, the
Consolidated Current Assets.
     “Consolidated Current Liabilities” shall mean, at any time, the aggregate
of the Borrower’s and its consolidated Subsidiaries’ aggregate liabilities
falling due within twelve months (including the portion of long term debt
falling due within twelve months), including amounts payable, taxes, and
payments in lieu of taxes and required dividends, all determined without
duplication in accordance with GAAP.
     “Currency Exchange Agreement” shall mean, for any Person, an agreement or
arrangement between such Person and one or more financial institutions or other
entities providing for the transfer or mitigation of risks of fluctuations in
the exchange rate between currencies either generally or under specific
contingencies.
     “Debt Coverage Ratio” shall mean, as of the end of each fiscal quarter of
the Borrower during the Commitment Period, the ratio of (a) the aggregate
Indebtedness of the Borrower and its consolidated Subsidiaries then existing, to
(b) EBITDA of the Borrower and its consolidated Subsidiaries determined in each
case without duplication in accordance with GAAP for the immediately preceding
four consecutive fiscal quarters of the Borrower; provided that in the case of
the first, second and third fiscal quarters ending after the Closing Date,
EBITDA for the purposes of this clause (b) shall instead be calculated as twice
the amount of actual EBITDA of the Borrower and its consolidated Subsidiaries
determined in each case without duplication in accordance with GAAP for the
immediately preceding two consecutive fiscal quarters of the Borrower ending on
the first, second or third fiscal quarter after the Closing Date (as the case
may be). If any acquisition or investment has been made by the Borrower or any
of its Subsidiaries but has not been given effect to in the calculation of
EBITDA, the Majority Banks may, in their absolute discretion, agree to give pro
forma effect to such acquisition or investment in the calculation of EBITDA by
including the value thereof as if such acquisition or investment had taken place
at the start of the immediately preceding two fiscal quarters, or four fiscal
quarters, as the case may be.
     “Default” shall mean an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default; provided that a
Borrowing Base Deficiency shall not of itself be considered a Default during the
applicable Deficiency Cure Period.
     “Deficiency Cure Period” shall have the meaning given to such term in
Section 2.10(a).

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     “Deficiency Notice” shall have the meaning given to such term in
Section 2.10(a) hereof.
     “Designated Hedging Agreement” shall mean each Hedging Agreement (based on
the form of an ISDA Master Agreement) entered into by the Borrower under which
the counterparty is (or at the time such Hedging Agreement was entered into,
was) a Designated Hedging Counterparty.
     “Designated Hedging Counterparty” shall mean a Bank or an Affiliate of a
Bank that is the counterparty under a Designated Hedging Agreement.
     “Designated Hedging Obligations” shall mean all amounts, indemnities and
reimbursement obligations, contingent or absolute, of every type or description,
and at any time existing, owed by the Borrower to a Designated Hedging
Counterparty pursuant to the terms of a Designated Hedging Agreement.
     “Determination Date” shall mean the date which is 25 days after the date
that the Reserve Evaluation Report and/or such other information as is required
to be delivered to the Administrative Agent for the purposes of any
redetermination of the Borrowing Base shall be delivered to the Administrative
Agent.
     “Determination Period” shall mean (i) initially, the period commencing on
the date of this Agreement and ending on the first Determination Date thereafter
and (ii) each period commencing on a Determination Date and ending on the day
immediately preceding the next succeeding Determination Date.
     “Development Costs” shall mean Capital Expenditures attributable to the
interest of the Borrower or any of its Restricted Subsidiaries in Hydrocarbon
Properties required to develop any of the Hydrocarbon Properties and produce
Hydrocarbons therefrom included in the most recent Reserve Evaluation Report.
     “Disposition” shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Borrower or any of its Restricted Subsidiaries to any Person (other than by any
such Restricted Subsidiary to the Borrower or any other Restricted Subsidiary,
or by the Borrower to a Restricted Subsidiary), excluding any sale, assignment,
transfer or other disposition of (i) any Property sold or disposed of in the
ordinary course of business and on ordinary business terms, (ii) any
Unrestricted Properties or (iii) any stock of an Unrestricted Subsidiary.
     “Dividend Payment” shall mean dividends (in cash, Property or obligations)
on, or other payments or distributions on account of, or the setting apart of
money for a sinking or other analogous fund for, or the purchase, redemption,
retirement or other acquisition of, any shares of

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any class of stock of the Borrower or any of its Restricted Subsidiaries or of
any warrants, options or other rights to acquire the same (or to make any
payments to any Person, such as “phantom stock” payments, where the amount
thereof is calculated with reference to the fair market or equity value of the
Borrower or any of its Restricted Subsidiaries), but excluding any stock option
plan of the Borrower or any of its Restricted Subsidiaries, dividends payable
solely in shares of common stock of the Borrower or a Restricted Subsidiary, and
any such dividend (other than phantom stock payments made to employees of a
Restricted Subsidiary in connection with the compensation arrangements for such
employees, subject to the restrictions contained in Section 9.09) that is paid
either to the Borrower or another Wholly Owned Restricted Subsidiary.
     “EBITDA” shall mean, for any period, the revenues of the Borrower and its
consolidated Subsidiaries for such period from continuing operations, minus
associated costs (generally excluding Interest Expense, income taxes,
depreciation and amortization and provision for future site restoration costs,
but including actual expenditures for site restoration), determined in each case
without duplication in accordance with GAAP.
     “EDC” shall mean Export Development Canada, a Crown corporation of Canada
providing financing and export credit agency services in connection with the
export of goods or services.
     “Eligible Buyers” shall mean (a) each of the Persons listed on Schedule I
hereof, (b) in the case of Hydrocarbon Properties operated by the Borrower or
any of its Restricted Subsidiaries, any specific buyer required by applicable
law or, in the event only limited commercially reasonable alternatives exist,
any buyer not specifically excluded by the Majority Banks, (c) in the case of
Hydrocarbon Properties not operated by the Borrower or any of its Restricted
Subsidiaries, any buyer approved by the operator thereof, and (d) any additional
Persons that have been approved in writing by the Majority Banks, acting
reasonably, at the time of the purchase of crude oil or other Hydrocarbons by
such Person from the Borrower or any of its Restricted Subsidiaries; provided
that any such Person shall cease to be an Eligible Buyer if:
          (i) the Borrower has received any written notice or otherwise has
knowledge that such Person is the subject of any bankruptcy, insolvency,
reorganization, liquidation, dissolution or winding-up proceeding or action
(whether voluntary or involuntary), or
          (ii) at the time any such determination is made, more than 10% of the
aggregate amount of accounts due from such Person in respect of its purchase of
crude oil or other Hydrocarbons from the Borrower has at such time remained
unpaid for more than 45 days (measured from the due date specified in the
original invoice therefor).

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Schedule I includes, among other entities, all the Persons to whom the Borrower
and any of its Restricted Subsidiaries currently sells crude oil and other
Hydrocarbon products.
     “Environmental Claim” shall mean, with respect to any Person, any written
or oral notice, claim, demand or other communication (collectively, a “claim”)
by any other Person alleging or asserting such Person’s liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term “Environmental Claim”
shall include, without limitation, any claim by any Governmental Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
     “Environmental Laws” shall mean any and all present and future federal,
state, municipal, provincial, local and foreign laws, rules or regulations, and
any orders or decrees, in each case as now or hereafter in effect and having the
force of law, relating to the regulation or protection of human health, safety
or the environment or to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals or toxic or hazardous substances or
wastes into the indoor or outdoor environment, including, without limitation,
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes.
     “Equity Issuance” shall mean (a) any issuance or sale by the Borrower or
any of its Restricted Subsidiaries after the date of this Agreement of (i) any
of its Capital Stock, (ii) any warrants or options exercisable in respect of its
Capital Stock or (iii) any other security or instrument representing an equity
interest (or the right to obtain any equity interest) in the Borrower or any of
its Restricted Subsidiaries or (b) the receipt by the Borrower or any of its
Restricted Subsidiaries after the date of this Agreement of any capital
contribution (whether or not evidenced by any equity security issued by the
recipient of such contribution); provided that Equity Issuance shall not include
(x) any such issuance or sale by any Restricted Subsidiary of the Borrower to
the Borrower or any other Wholly Owned Subsidiary of the Borrower which is a
Restricted Subsidiary, (y) any such issuance or sale in connection with any
capital contribution by the Borrower or any Restricted Subsidiary to any other
Restricted Subsidiary of the Borrower or (z) any warrants or options issued to
directors, officers or employees of the Borrower and its

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Restricted Subsidiaries pursuant to any employee benefit plans, incentive plans
or similar programs established in the ordinary course of business.
     “Equity Rights” shall mean, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders’ or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of Capital Stock of any class, or
partnership or other ownership interests of any type in, such Person.
     “Eurodollar Rate” shall mean, for any Interest Period, (a) the rate per
annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by the
Administrative Agent to be the offered rate which appears on the Reuters page
which displays an average British Bankers Association Interest Settlement Rate
(such page currently being page LIBOR01) for deposits with a term equivalent to
such Interest Period in US Dollars (for delivery on the first day of such
Interest Period), determined as of approximately 11:00 a.m. (London, England
time) on the date three Business Days prior to the first day of such Interest
Period, or (b) in the event the rate referenced in the preceding clause (a) does
not appear on such page or service or if such page or service shall cease to be
available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the
rate determined by the Administrative Agent to be the offered rate on such other
page or other service which displays an average British Bankers Association
Interest Settlement Rate for deposits (for delivery on the first day of such
period) with a term equivalent to such Interest Period in US Dollars, determined
as of approximately 11:00 a.m. (London, England time) on the date three Business
Days prior to the first day of such Interest Period, or (c) in the event the
rates referenced in the preceding clauses (a) and (b) are not available, the
rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered
quotation rate to first class banks in the London interbank market by Standard
Bank Plc for deposits (for delivery on the first day of the relevant Interest
Period) in US Dollars of amounts in same day funds comparable to the principal
amount of the applicable Loan of the Administrative Agent, in its capacity as a
Bank, for which the Eurodollar Rate is then being determined with maturities
comparable to such period as of approximately 11:00 a.m. (London, England time)
on the date three (3) Business Days prior to the first day of such Interest
Period.
     “Event of Default” shall have the meaning given to such term in SECTION 10
hereof.
     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Bank, the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of any Obligor under any Loan Document, (a) taxes
imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income 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 any
Bank,

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in which its Applicable Lending Office is located, (b) any branch profits taxes
imposed by the United States of America or any similar tax imposed 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 any Bank, in which its Applicable Lending Office is located, and (c) in
the case of a Foreign Lender, other than a Foreign Lender that is a party to
this Agreement on the Closing Date (each an “Original Lender”), or any Person
which becomes a Bank hereunder and is assigned a Commitment which was obtained
by way of assignment directly from an Original Lender or indirectly from an
Original Lender through one or more prior assignments, any withholding tax that
is imposed on any amount payable or accruing to such Foreign Lender at and from
the time such Foreign Lender becomes a party to this Agreement (or designates a
new Applicable Lending Office) except to the extent that such Foreign Lender (or
the Original Lender, if applicable) was entitled, at the time of the designation
of a new Applicable Lending Office (or at the time of the assignment of the
relevant Commitment, if applicable), to receive additional amounts from the
Borrower or any other Obligor with respect to such withholding tax pursuant to
SECTION 5.
     “Fee Letter” shall mean the letter agreement dated as of February 22, 2007,
between the Borrower and the Administrative Agent.
     “Foreign Assets” shall have the meaning set forth in Section 1.03(b).
     “Foreign Lender” shall mean any Bank that is organized under the laws of a
jurisdiction other than (a) that in which any Obligor is located and (b) Canada,
or any province or territory thereof.
     “GAAP” shall mean generally accepted accounting principles in the United
States of America 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, applied on a basis consistent
with those which, in accordance with the last sentence of Section 1.02(a)
hereof, are to be used in making the calculations for purposes of determining
compliance with this Agreement.
     “GP Pledge Agreement” shall mean a pledge agreement governed by the laws of
the State of New York, dated on or about the date hereof (as the same may be
amended, restated, substituted or supplemented from time to time), in form and
substance satisfactory to the Administrative Agent, granting in favor of the
Administrative Agent for the ratable benefit of the Secured Parties a
first-priority security interest in all of the equity interests in the GP.

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     “Governmental Authority” shall mean any federal, state, municipal,
provincial, local, territorial, or other governmental subdivision, department,
commission, board, bureau, agency, regulatory authority, instrumentality,
judicial or administrative body, domestic or foreign, having jurisdiction where
the Borrower or any Subsidiary conducts any business or has Property and the
actions of which could reasonably be expected to result in a Material Adverse
Effect.
     “Guarantee” shall mean a guarantee, an endorsement, a contingent agreement
to purchase or to furnish funds for the payment or maintenance of, or otherwise
to be or become contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any Person or any
production or revenues generated by (or any capital or other expenditures
incurred in connection with the acquisition and exploitation of, exploration
for, development of or production from) any Hydrocarbon reserves, or a guarantee
of the payment of dividends or other distributions upon the stock or equity
interests of any Person, or an agreement to purchase, sell or lease (as lessee
or lessor) Property, products, materials, supplies or services primarily for the
purpose of enabling a debtor to make payment of such debtor’s obligations or an
agreement to assure a creditor against loss, and including, without limitation,
causing a bank, surety company or other financial institution or similar entity
to issue a letter of credit, surety bond or other similar instrument for the
benefit of another Person, but excluding endorsements for collection or deposit
in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used
as a verb shall have a correlative meaning.
     “Guaranteed Obligations” shall have the meaning given to such term in
Section 6.01 hereof.
     “Guarantors” shall have the meaning given to such term in Section 6.01
hereof.
     “Hazardous Material” shall mean, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB’s), (b) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”,
“extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”,
“toxic pollutants”, “contaminants”, “pollutants” or words of similar import
under any Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
     “Hedging Agreement” means any Commodity Hedging Agreement, Currency
Exchange Agreement or Interest Rate Protection Agreement.

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     “Hydrocarbons” shall mean oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
     “Hydrocarbon Properties” shall mean interests which the Borrower and any of
its Restricted Subsidiaries may have from time to time in Hydrocarbon reserves
from which Hydrocarbons may or may potentially be severed or extracted in
commercially feasible quantities.
     “Indebtedness” shall mean, for any Person and without duplication:
(a) obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement, contingent
or otherwise, to purchase or repurchase the same or similar Property from such
Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) obligations of others secured by a Lien on the
Property of such Person, whether or not the respective obligations so secured
has been assumed by such Person, provided that (i) the amount to be included as
“Indebtedness” shall be the amount reasonably estimated by the Borrower and
indicated on each certificate delivered pursuant to Section 9.01(a) (or prior to
the date of the delivery of the first such certificate pursuant to
Section 9.01(a), the amount indicated by the Borrower to the Administrative
Agent on the Closing Date) and (ii) if no such estimate is provided, the amount
included as Indebtedness shall be the entire amount of such obligations;
(d) obligations of such Person in respect of letters of credit, surety bonds or
similar instruments issued or accepted by banks, surety companies and other
financial institutions for the account of such Person; (e) Capital Lease
Obligations of such Person; (f) obligations of such Person in respect of
obligations of the types specified in other clauses of this definition as a
general partner or joint venturer of any partnership or joint venture (other
than in respect of obligations incurred in the ordinary course of business);
(g) the unearned balance of any advance payment received by such Person under
any contract to be performed in excess of $1,000,000 (or its equivalent amount
in another currency) in the aggregate resulting from transactions in the
ordinary course of such Person’s business; (h) obligations of such Person under
any Hedging Agreement or other derivative contract, valued as at any date of
determination at an amount equal to: (i) if documented pursuant to the Master
Agreement (Multicurrency-Cross Border) published by the International Swap and
Derivatives Association, Inc. (the “Master Agreement”), the amount, if any, that
would be payable by any Obligor to its counterparty under such Hedging Agreement
or derivative contract, as if (A) such Hedging Agreement or derivative contract
was being terminated early on such date of determination and

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(B) such Obligor was the sole “Affected Party” (as defined in the Master
Agreement); (ii) in the case of a Hedging Agreement or derivative contract
traded on an exchange, its mark-to-market value, which will be the unrealized
loss on such Hedging Agreement or derivative contract to the Obligor party to
the same based on the settlement price of such Hedging Agreement or derivative
contract on such date of determination; or (iii) in all other cases, the
mark-to-market value of such Hedging Agreement or derivative contract, which
will be the unrealized loss on such Hedging Agreement or derivative contract to
the Obligor party to the same determined as the amount, if any, by which (A) the
present value of the future cash flows to be paid by such Obligor exceeds
(B) the present value of the future cash flows to be received by such Obligor
pursuant to such Hedging Agreement or derivative contract; and (i) Indebtedness
of others Guaranteed by such Person.
     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
     “Independent Petroleum Engineer” shall mean (a) Gaffney, Cline & Associates
or (b) such other firm of independent petroleum engineers expert in the matters
required to be performed in connection with the preparation and delivery of a
Reserve Evaluation Report and proposed by the Borrower from time to time and
reasonably satisfactory to the Administrative Agent and the Majority Banks.
     “Insurance Date” shall have the meaning given to that term in
Section 2.10(b).
     “Interest Expense” shall mean, for any period, interest expense for the
Borrower and its consolidated Subsidiaries for such period (determined in each
case without duplication in accordance with GAAP) including, without limitation,
the following: all interest in respect of Indebtedness accrued or capitalized
during such period (whether or not actually paid during such period) (other than
interest paid in common stock of the Borrower) and the net amounts payable (or
minus the net amounts receivable) under Interest Rate Protection Agreements of
such Persons accrued during such period (whether or not actually paid or
received during such period). References in this definition (whether in the
singular or the plural) to consolidated Subsidiaries shall, for purposes of
calculating Interest Expense for a period or part of a period ending prior to
the date of this Agreement, be deemed to refer to corporations or other entities
that would have been consolidated Subsidiaries had this Agreement been in effect
on the first day of such period.
     “Interest Period” shall mean, with respect to any Loan, each period
commencing on the date such Loan is made or the last day of the next preceding
Interest Period for such Loan and ending on the numerically corresponding day in
the first or third calendar month thereafter, as the Borrower may select as
provided in Section 4.05 hereof, except that each Interest Period that commences
on the last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar month)
shall end on the

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last Business Day of the appropriate subsequent calendar month. Notwithstanding
the foregoing, if any Interest Period in respect of a Loan would otherwise end
after the applicable Commitment Termination Date, such Interest Period shall end
on the Commitment Termination Date.
     “Interest Rate Protection Agreement” shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions or other entities providing for
the transfer or mitigation of interest risks, either generally or under specific
contingencies.
     “Investment” shall mean, for any Person: (a) the acquisition (whether for
cash, Property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person or any agreement to make any such acquisition (including,
without limitation, any “short sale” or any sale of any securities at a time
when such securities are not owned by the Person entering into such short sale);
(b) the making of any deposit with, or advance, loan or other extension of
credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person, but excluding any such deposit, advance,
loan or extension of credit having a term not exceeding 90 days representing the
purchase price of inventory or supplies sold by such Person in the ordinary
course of business); (c) the entering into of any Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person (excluding any performance or similar guarantee not
otherwise constituting Indebtedness and customarily granted in connection with
the exploration and development of Hydrocarbon Properties); or (d) the entering
into of any Interest Rate Protection Agreement or Commodity Hedging Agreement.
The definition of “Investment” shall not include any expenditure incurred in
acquiring interests in joint ventures, unit interests, royalty interests,
working interests and similar interests in each case, relating to Hydrocarbon
Properties and plants, facilities, pipelines and equipment reasonably related
thereto.
     “Issuing Bank” shall mean Standard Bank Plc as the issuer of Letters of
Credit under Section 2.03(b) hereof, together with its successors and assigns in
such capacity.
     “Letter of Credit” shall have the meaning given to such term in
Section 2.03(a) hereof.
     “Letter of Credit Documents” shall mean, with respect to any Letter of
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.

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     “Letter of Credit Interest” in connection with any Letter of Credit, shall
mean, for each Bank and the Issuing Bank, each such Bank’s participation
interest (or, in the case of the Issuing Bank, the Issuing Bank’s retained
interest, if any, after giving effect to the participation interest of each such
Bank) in the Issuing Bank’s liability under Letters of Credit and each such
Bank’s rights and interests in Reimbursement Obligations and fees, interest and
other amounts payable in connection with Letters of Credit and Reimbursement
Obligations.
     “Letter of Credit Liability” shall mean, without duplication, at any time
and in respect of any Letter of Credit, (a) the sum of (i) the undrawn and
uncancelled face amount of such Letter of Credit plus (ii) the aggregate unpaid
principal amount of all Reimbursement Obligations of the Borrower at such time
due and payable in respect of all drawings made under such Letter of Credit,
minus (b) the sum of (i) any amount provided by the Borrower as cash collateral
in respect of such Letter of Credit, and (ii) the amount of any Letter of Credit
unconditionally guaranteed by EDC on terms in form and substance acceptable to
the Majority Banks. For purposes of this Agreement, a Bank (other than the
Issuing Bank) shall be deemed to hold a Letter of Credit Liability in an amount
equal to its participation interest in the related Letter of Credit under
Section 2.03 hereof.
     “Lien” shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property, but does not include a right of set-off created in the ordinary course
of business unless such right of set-off is created for the purposes of securing
obligations created, issued or incurred for borrowed money. For purposes of this
Agreement and the other Loan Documents, a Person shall be deemed to own subject
to a Lien any Property that it has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement (other than an operating lease) relating to such
Property.
     “Loan” shall have the meaning given to such term in Section 2.01(a) hereof.
     “Loan Documents” shall mean this Agreement, the Notes, the Letter of Credit
Documents, the Designated Hedging Agreements, the Security Documents and the Fee
Letter provided that, for purposes of the definition of “Material Adverse
Effect” and SECTIONS 4, 5, 7, 8 and 9, “Loan Documents” shall not include any
Designated Hedge Agreement.
     “Majority Banks” shall mean, at any time, Banks having greater than 51% of
the aggregate amount of the Commitments at such time, or if the Commitments
shall have been terminated, Banks holding greater than 51% of the sum of the
aggregate unpaid principal amount of the Loans and the Letter of Credit
Liabilities at such time.

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     “Mandatory Costs” shall mean the percentage rate per annum calculated by
the Administrative Agent in accordance with Annex II hereto.
     “Material Adverse Effect” shall mean a material adverse effect on (a) the
Property, business, operations, condition (financial or otherwise), liabilities
or capitalization of the Borrower and its Restricted Subsidiaries taken as a
whole, (b) the ability of the Borrower or any material Restricted Subsidiary to
perform its respective obligations under any of the Loan Documents to which it
is a party, (c) the validity or enforceability of any of the Loan Documents,
(d) the right and remedies of any Bank and the Administrative Agent under any of
the Loan Documents, as the case may be (other than any such material adverse
effect resulting from the failure of the Administrative Agent or any Bank to
take actions to maintain such rights or remedies and other than as those rights
and remedies are subject to the qualifications contained in the legal opinions
delivered pursuant to Section 7.01(b) hereof), or (e) the timely payment of the
principal of or interest on the Loans, Reimbursement Obligations or other
amounts payable in connection therewith.
     “Maturity Date” shall mean February 22, 2010, the three-year anniversary of
the Closing Date, as such date may be extended by written agreement in
accordance with Section 12.04 hereof.
     “Net Available Proceeds” shall mean:
          (a) in the case of any Disposition by the Borrower or a Restricted
Subsidiary, the amount of Net Cash Payments received in connection with such
Disposition; and
          (b) in the case of any Casualty Event with respect to any Property of
the Borrower or any of its Restricted Subsidiaries, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received by
the Borrower and its Restricted Subsidiaries in respect of such Casualty Event
(excluding proceeds of business interruption insurance) net of (i) reasonable
expenses incurred by the Borrower and its Restricted Subsidiaries in connection
therewith and (ii) contractually required repayments of Indebtedness to the
extent secured by a Lien on such Property and any income and transfer taxes
payable by the Borrower or any of its Restricted Subsidiaries in respect of such
Casualty Event.
     “Net Cash Payments” shall mean, with respect to any Disposition, the
aggregate amount of all cash payments, and the fair market value of any non-cash
consideration, received by the Borrower and its Restricted Subsidiaries directly
or indirectly in connection with such Disposition; provided that (a) Net Cash
Payments shall be net of (i) the amount of any legal, title and recording tax
expenses, commissions and other fees and expenses paid by the Borrower and its
Restricted Subsidiaries in connection with such Disposition and (ii) any
foreign, federal, state,

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provincial and local income or other taxes estimated to be payable by the
Borrower and its Restricted Subsidiaries as a result of such Disposition (but
only to the extent that (x) such estimated taxes are in fact paid to the
relevant Governmental Authority within three months of date of such Disposition
or placed in escrow for the payment of such taxes or (y) the amount of such
estimated taxes is less than $500,000 (or its equivalent in another currency
converted at the applicable exchange rate as of the date of such Disposition)
and the payment of such taxes is being contested in good faith and by
appropriate proceedings), (b) Net Cash Payments shall not include any cash
payment (or portion thereof) received in any fiscal year of the Borrower in
respect of such Disposition to the extent that such cash payment (or portion
thereof), together with all cash payments with respect to other Dispositions
therefore received in such fiscal year, does not exceed $250,000 (or its
equivalent in another currency converted at the applicable exchange rate as of
the date of such Disposition) and (c) Net Cash Payments shall be net of any
repayments by the Borrower or any of its Restricted Subsidiaries of Indebtedness
to the extent that (i) such Indebtedness is secured by a Lien on the Property
that is the subject of such Disposition and (ii) such Indebtedness is to be
repaid as a condition to or requirement of the Disposition of such Property.
     “New Wholly Owned Subsidiary” shall have the meaning given to such term in
Section 9.08 hereof.
     “Notes” shall mean the promissory notes provided for by Section 2.08(a)
hereof, executed on the date of this Agreement, and any promissory notes
delivered in substitution or exchange therefor, in each case as the same may be
modified and supplemented and in effect from time to time.
     “Offtaker” shall mean Empresa Colombiana de Petróleos — Ecopetrol S.A. and
any other Eligible Buyer.
     “Offtake Agreements” shall mean, collectively, (i) each agreement entered
into between the Borrower or any of its Restricted Subsidiaries and an Offtaker
as listed on Schedule VI hereto, and (ii) any other purchase agreements entered
into between the Borrower or any of its Restricted Subsidiaries and an Offtaker
that provide for the purchase by such Offtaker of Hydrocarbons from the Borrower
or any of its Restricted Subsidiaries, that are in form and substance reasonably
satisfactory to the Administrative Agent and that further provide, to the
Administrative Agent’s reasonable satisfaction, that substantially all payments
thereunder shall be made to the relevant Collection Account, as each such
agreement may be amended, restated, supplemented, replaced or otherwise modified
in accordance with this Agreement.
     “Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made

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hereunder to the Administrative Agent, any Bank or the Issuing Bank or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement, but in all events not including any Excluded Taxes.
     “Partnership” shall mean Gran Tierra Energy Colombia, Ltd. (formerly Argosy
Energy International), a limited partnership organized under the laws of the
State of Utah (Registered No. 2110646-0180).
     “Partnership Pledge Agreement” shall mean a pledge agreement governed by
the laws of the State of New York, dated on or about the date hereof (as the
same may be amended, restated, substituted or supplemented from time to time),
in form and substance satisfactory to the Administrative Agent, granting in
favor of the Administrative Agent for the ratable benefit of the Secured Parties
a first-priority security interest in all of the partnership interests in the
Partnership.
     “Permitted Investments” shall mean: (a) direct obligations of the United
States of America or Canada, or of any agency of either thereof, or obligations
guaranteed as to principal and interest by the United States of America or
Canada, or by any agency of either thereof, in either case maturing not more
than 12 months from the date of acquisition thereof; (b) certificates of deposit
issued or bankers’ acceptances issued by any Bank or any other bank or trust
company organized under the laws of the United States of America or Canada (or
any state or province thereof) and having capital, surplus and undivided profits
of at least $500,000,000 (or equivalent amount in other currencies), maturing
not more than 12 months from the date of acquisition thereof; (c) commercial
paper rated A-1 or better or P-1 or better by Standard & Poor’s Ratings Group, a
division of McGraw-Hill, Inc. or Moody’s Investors Service, Inc. respectively,
maturing not more than 90 days from the date of acquisition thereof;
(d) commercial paper rated A-2 or better (but less than A-1) or P-2 or better
(but less than P-1) by Standard and Poor’s Rating Group or Moody’s Investors
Services, Inc. respectively, maturing not more than 30 days from the date of
acquisition thereof; (e) money market funds which have a rating of “AAA m” or
“AAA mg” by S&P or have otherwise been approved in writing by the Majority
Banks; (f) any other investments approved in writing by the Majority Banks; and
(g) fully collateralized repurchase agreements with a term of not more than
90 days for securities described in subparagraph (a) above and entered into with
a bank or trust company satisfying the criteria set forth in subparagraph
(b) above.
     “Permitted Liens” shall mean those Liens permitted pursuant to Section 9.06
hereof.
     “Person” shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).

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     “Post-Default Rate” shall mean, in respect of any principal of any Loan,
any Reimbursement Obligation or any other amount under this Agreement, any Note
or any other Loan Document that is not paid when due (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to 2% plus the
Applicable Margin plus the Eurodollar Rate (calculated as if all such
outstanding amounts were Loans with an Interest Period of one month plus
Mandatory Costs, if any).
     “Present Value of Reserves” shall mean, on any date, estimated net cash
flow expressed in US Dollars (after development expenses and production taxes)
in respect of Proved Reserves attributable to Hydrocarbon Properties calculated
in accordance with the provisions of Section 1.03.
     “Property” shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
     “Proved Reserves” shall mean reserves (to the extent of the net interest of
the Borrower and its Restricted Subsidiaries therein) comprised of quantities of
Hydrocarbons that geologic and engineering data demonstrate with reasonable
certainty to be recoverable in the future from known reservoirs under existing
conditions, provided that such reserves are recoverable from (a) existing wells,
whether from completion intervals currently open and producing to market, or
completion intervals currently open but not currently producing or zones behind
casing of existing wells, or (b) new wells on undrilled acreage. Proved
Developed Producing Reserves on undrilled acreage shall be limited to those
drilling units offsetting productive units that are reasonably certain to be
productive when drilled. Other undrilled units may also be credited with Proved
Reserves where continuity of production from existing productive formations can
be demonstrated with reasonable certainty. For purposes of determining whether
any Hydrocarbon Properties of the Borrower or any of its Restricted Subsidiaries
contain Proved Reserves, the most recent Reserve Evaluation Report shall be
determinative.
     “Quarterly Dates” shall mean the last day of March, June, September and
December in each year, the first of which shall be the first such day after the
date of this Agreement; provided that if any such day is not a Business Day,
then such Quarterly Date shall be the next succeeding Business Day.
     “Regulation A” and “Regulation D” shall mean, respectively, Regulations A
and D of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.

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     “Regulatory Change” shall mean, with respect to any Bank, any change after
the date of this Agreement in federal, state, provincial or foreign law or
regulations (including, without limitation, Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including such Bank of or under any federal, state, provincial or
foreign law or regulations (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
     “Reimbursement Obligations” shall mean, at any time, the obligations of the
Borrower then outstanding, or that may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by the Issuing
Bank in respect of any drawings under a Letter of Credit.
     “Release” shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
     “Report Delivery Date” shall mean the date which falls (a) 60 days after
each December 31, and (b) 60 days after each June 30.
     “Reserve Evaluation Report” shall mean the report referred to in
Section 1.03(a)(i), and an unsuperseded report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
(in the case of the Reserve Evaluation Report to be delivered by the Independent
Petroleum Engineer pursuant to Section 1.03(a)(ii)) or July 1st (in the case of
the Reserve Evaluation Report required to be delivered by the Borrower pursuant
to Section 1.03(a)(iii)) (or such other date in the event of an interim
redetermination pursuant to Section 1.03(d)) the oil and gas reserves
attributable to the Borrower’s and its Restricted Subsidiaries’ interest in the
production from Hydrocarbon Properties of the Borrower and its Restricted
Subsidiaries, together with a projection of the rate of production and future
net income, taxes, royalties, operating expenses, production sharing volumes and
Development Costs with respect thereto as of such date, based upon the economic
assumptions consistent with the Administrative Agent’s requirements at the time
and using pricing data that the Banks may reasonably determine consistent with
their current lending practices taking into account quality and basis and
differentials related to the production being produced from the Borrower’s and
its Restricted Subsidiaries’ interest in the production from Hydrocarbon
Properties, provided that, with respect to the volume of Hydrocarbons subject to
a Commodity Hedging Agreement, the Banks shall take into consideration the
prices set forth in such Commodity Hedging Agreement.

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     “Reserve Requirement” shall mean, for any Interest Period, the average
maximum rate at which reserves (including, without limitation, any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding one billion US Dollars against
“Eurocurrency liabilities” (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall include any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change with respect to (i) any category of liabilities that includes
deposits by reference to which the applicable rate of interest is to be
determined as provided in the definition of “Eurodollar Rate” in this
Section 1.01 or (ii) any category of extensions of credit or other assets that
includes loans made using the Eurodollar Rate as the applicable rate of
interest.
     “Restricted Subsidiary” shall mean any Subsidiary of the Borrower other
than an Argentine Subsidiary or an Unrestricted Subsidiary.
     “Security Documents” shall mean, collectively, the Canadian Pledge
Agreement, the Colombian Security Documents, the Collection Account Pledge
Agreement, the GP Pledge Agreement, the Partnership Pledge Agreement, and all
other filings required by applicable law to be filed with respect to the
security interests created pursuant to each of the foregoing documents.
     “Secured Parties” shall mean each Bank, each Issuing Bank, each Designated
Hedging Counterparty, the Arranger and the Administrative Agent and each of
their respective successors and permitted assigns from time to time.
     “Solvent” means, with respect to any Obligor, that as of the date of
determination, both (i) (a) the sum of such Obligor’s debt (including contingent
liabilities) does not exceed the present fair saleable value of such Obligor’s
present assets; (b) such Obligor’s capital is not unreasonably small in relation
to its business as contemplated on the Closing Date; and (c) such Obligor has
not incurred and does not intent to incur, or believe (nor should it reasonably
believe) that it shall incur, debts beyond its ability to pay such debts as they
become due (whether at maturity or otherwise); and (ii) such Obligor is
“solvent” within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
     “Subsidiary” shall mean, for any Person, any corporation, partnership or
other entity of which at least a majority of the Voting Stock is at the time
directly or indirectly owned or

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controlled by such Person or one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person.
     “Tangible Net Worth” shall mean, as at any date for any Person, the sum for
such Person (determined on a consolidated basis without duplication in
accordance with GAAP as of the date of its most recent financial statement) of
the following, expressed in US Dollars:
          (a) the amount of Capital Stock, plus
          (b) the amount of surplus and retained earnings (or, in the case of a
surplus or retained earnings deficit, minus the amount of such deficit), minus
          (c) the sum of the following: cost of treasury shares and the book
value of all assets which should be classified as intangibles (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings) but in any event including goodwill, minority
interests (other than minority interests in the production from Hydrocarbon
Properties), research and development costs, trademarks, trade names,
copyrights, patents and franchises, unamortized debt discount and expense, all
accounting reserves, plus
          (d) the amount of noncash writedowns of long-lived assets in
compliance with GAAP;
plus any increase occurring during the period from the date of the Borrower’s
most recent financial statements to the date of determination as a result of any
Equity Issuance by the Borrower.
     “Taxes” shall mean all taxes, levies, imposts, stamp taxes, duties, charges
to tax, fees, deductions, withholdings, royalties, charges, compulsory loans or
restrictions or conditions resulting in a charge which are imposed, levied,
collected, withheld or assessed by any political subdivision or taxing authority
as of the date of this Agreement or at any time in the future together with
interest thereon and penalties with respect thereto, if any, and any payments of
principal, interest, charges, fees or other amounts made on or in respect
thereof, including without limitation production and severance taxes and
windfall profit taxes, and “Tax” and “Taxation” shall be construed accordingly
provided that “Taxes” shall exclude taxes imposed on or measured by the overall
net income or capital of a Person.
     “Unrestricted Properties” shall mean, at any time of determination, the
Properties of the Borrower and its Subsidiaries that (i) are not Hydrocarbon
Properties or (ii) have not been given any value in the Borrowing Base as most
recently determined prior to such time of determination.

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     “Unrestricted Subsidiary” shall mean on the date of this Agreement, each
Person as set forth on Schedule VII hereto, and hereafter, such Subsidiary of
the Borrower (other than Subsidiary Guarantors and Argentine Subsidiaries) as
may be hereafter designated by the Borrower as an “Unrestricted Subsidiary” as
provided in Section 1.04 hereof.
     “US Dollars” and “$” shall mean the lawful currency of the United States of
America.
     “Voting Stock” shall mean, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
Board of Directors or other governing body of such Person.
     “Wholly Owned Subsidiary” shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors’ qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
     1.02 Accounting Terms and Determinations.
          (a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Banks hereunder shall (unless otherwise disclosed to the Banks in writing at the
time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with GAAP applied on a basis consistent with those used
in the preparation of the latest financial statements furnished to the Banks
hereunder (which, prior to the delivery of the first financial statements under
Section 9.01 hereof, shall mean the audited consolidated financial statements of
the Borrower as of December 31, 2005). All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with those used in the preparation of the latest annual or quarterly financial
statements furnished to the Banks pursuant to Section 9.01 hereof (or, prior to
the delivery of the first financial statements under Section 9.01 hereof, used
in the preparation of the audited consolidated financial statements of the
Borrower as at December 31, 2005 and the unaudited consolidated financial
statements for the three months ended September 30, 2006 referred to in
Section 8.02 hereof) unless (i) the Borrower objects to the Banks in writing to
determining such compliance on such basis at the time of delivery of such
financial statements to the Administrative Agent or (ii) the Majority Banks
shall object to the Borrower (through the Administrative Agent) in writing to so
determining such compliance within 30 days after such delivery of such financial
statements, in either of which events such calculations shall be made on a basis
consistent with

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those used in the preparation of the latest financial statements as to which
such objection shall not have been made (which, if objection is made in respect
of the first financial statements delivered under Section 9.01 hereof, shall
mean the financial statements referred to in Section 8.02 hereof).
          (b) At the request of the Majority Banks, through the Administrative
Agent, the Borrower shall deliver to the Administrative Agent (i) a description
in reasonable detail of any material variation between the application of
accounting principles employed in the preparation of such statement and the
application of accounting principles employed in the preparation of the next
preceding annual or quarterly financial statements as to which no objection has
been made in accordance with the last sentence of subsection (a) above and
(ii) reasonable estimates of the difference between such statements arising as a
consequence thereof.
          (c) The Borrower shall not, and shall not permit any Restricted
Subsidiary to, without the prior written consent of the Administrative Agent,
change the last day of its fiscal year from December 31 of each year, or the
last days of the first three fiscal quarters in each of its fiscal years from
March 31, June 30 and September 30 of each year, respectively.
     1.03 Borrowing Base.
          (a) Reserve Evaluation Reports.
               (i) The Borrower has furnished to the Administrative Agent and
the Banks on the date of this Agreement a Reserve Evaluation Report prepared by
the Independent Petroleum Engineer as of June 30, 2006 in respect of the
Colombian Hydrocarbon Properties.
               (ii) On or before the Report Delivery Date falling 60 days after
each December 31, the Borrower shall furnish to the Administrative Agent, for
delivery to the Banks, an updated Reserve Evaluation Report prepared by the
Independent Petroleum Engineer.
               (iii) On or before the Report Delivery Date falling 60 days after
each June 30, the Borrower shall furnish to the Administrative Agent, for
delivery to the Banks, an updated Reserve Evaluation Report prepared by the
Borrower.
          (b) Borrowing Base.
               (i) During the period commencing on the date of this Agreement
and ending on such date as the first redetermination of the Borrowing Base shall
become effective as provided below in this Section 1.03(b), the Borrowing Base
shall be $7,000,000 (subject in each case to any adjustments and
redeterminations provided for by Sections 1.03(c), 1.03(d), 1.03(e), 2.10 and
9.22 hereof) which amount has been determined on the basis of the Reserve
Evaluation

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Report referred to in Section 1.03(a)(i) (with such adjustments to the rates,
factors, values, estimates, assumptions and computations set forth in such
Reserve Evaluation Report as were acceptable to the Banks party to this
Agreement as of the date of this Agreement).
               (ii) As promptly as reasonably practicable after its receipt of
the Reserve Evaluation Report furnished to it pursuant to Section 1.03(a)(ii) or
Section 1.03(a)(iii) (as the case may be), the Administrative Agent (in
consultation with the Majority Banks) shall endeavor to redetermine the
Borrowing Base on the basis of such Reserve Evaluation Report in the manner
provided in this clause (b), notify the Banks of such redetermination and, if
such redetermination is approved by the Majority Banks (or, in the case of an
increase in the Borrowing Base, each of the Banks), notify the Borrower of the
Borrowing Base as so redetermined (or, if the Administrative Agent’s
redetermination is not approved, notify the Borrower of the Borrowing Base as
redetermined by the Majority Banks (or, in the case of an increase in the
Borrowing Base, each of the Banks)) and such redetermined Borrowing Base shall
become effective on the Determination Date immediately following each Report
Delivery Date and shall remain effective until again redetermined as provided in
this Section 1.03(b) (subject to any adjustments and redeterminations provided
for by Sections 1.03(c), 1.03(d) and 1.03(e) hereof, reductions pursuant to
Section 2.10(b), (c) and (d) and Section 9.22 hereof). The determination by the
Administrative Agent (and as approved or redetermined by the Majority Banks (or,
in the case of an increase in the Borrowing Base, each of the Banks)), of the
Borrowing Base for any Determination Period shall be made on the basis of
customary loan parameters of the Banks for production loans to similarly
situated companies which shall include the Present Value of Reserves
attributable to Hydrocarbon Properties as set forth in the applicable Reserve
Evaluation Report for such Determination Period, subject, however, to such
adjustments as the Administrative Agent, with the concurrence of the Majority
Banks, may make in its and their sole discretion to the rates (including without
limitation discount rates), factors, values, assumptions, prices and costs set
forth in such Reserve Evaluation Report and any other relevant information or
factors, including without limitation, any additional Indebtedness or other
obligations that have been incurred or that the Borrower or its Restricted
Subsidiaries intend to incur that the Majority Banks may reasonably deem
appropriate.
               (iii) The Borrower may request that the Administrative Agent and
the Banks give value to Hydrocarbon Properties located outside of Colombia in
determining or redetermining the Borrowing Base (“Foreign Assets”); provided
that no such Foreign Assets shall be given value in the Borrowing Base unless
approved by the Administrative Agent and the Majority Banks (or, in the case of
an increase in the Borrowing Base, each of the Banks); provided further that
(A) the Borrower has obtained and continues to maintain political risk insurance
acceptable to the Administrative Agent (if required by the Administrative Agent)
covering such Foreign Assets and naming the Banks as additional insured parties,
(B) the

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Borrower or such Restricted Subsidiary shall (as the case may be) have granted
to the Banks a Lien on such Foreign Assets substantially equivalent to a first
priority mortgage, and a first priority pledge of the equity interest in the
entity holding such Foreign Assets, or if a Lien substantially equivalent to a
first mortgage or pledge of equity interest is unavailable by operation of law,
such other security as the Administrative Agent (in consultation with the
Majority Banks) shall reasonably determine, each such security document to be in
form and substance reasonably satisfactory to the Administrative Agent, (C) the
Borrower delivers a Reserve Evaluation Report prepared by an Independent
Petroleum Engineer with respect to such Foreign Assets, (D) the Administrative
Agent shall have received such legal opinions in form and substance satisfactory
to the Administrative Agent and covering such items as the Administrative Agent
may reasonably request and (E) the Administrative Agent shall have received (or
the Borrower or such Restricted Subsidiary (as the case may be) shall file, as
appropriate) such other documentation as is customarily delivered in connection
with the granting of a Lien on such Foreign Assets.
          (c) Material Change. The Borrower agrees to notify the Administrative
Agent promptly of any material change of which the Borrower or any of the
Restricted Subsidiaries is aware which reduces or may result in a reduction of
the Borrowing Base by more than 10%.
          (d) Interim Redeterminations. If (i) the Borrower terminates any
Commodity Hedging Agreements that were previously the basis for an increase in
the Borrowing Base, or (ii) so requested by the Majority Banks or the Borrower
at any time after any change in commodity prices, applicable laws, contracts,
material reserve additions, drilling results or the Hydrocarbon Properties as a
result of acquisitions or Dispositions or the pricing parameters that the Banks
apply to similar production loans for similarly situated companies, that are
reasonably expected to result in a change of the Borrowing Base by more than 5%
or the Borrower or any of its Restricted Subsidiaries enters into a Commodity
Hedging Agreement and requests the Banks to evaluate the effect of such
Commodity Hedging Agreements on the Borrowing Base (provided that the Majority
Banks (collectively) pursuant to this clause (ii) and the Borrower may each only
make one such request in any 12-month period), or (iii) so requested by the
Majority Banks at any time (provided that the Majority Banks
(collectively) pursuant to this clause (iii) may only make one such request in
any 12-month period), the Administrative Agent shall, as promptly as reasonably
practicable after the receipt of such request or in the case of clause
(i) above, receives notice of the occurrence of the applicable event, endeavor
to redetermine (in consultation with the Majority Banks) the Borrowing Base as
then in effect on the basis of the then most recent Reserve Evaluation Report or
such new Reserve Evaluation Report, which in the case of material reserve
additions or acquisitions shall be prepared by an Independent Petroleum
Engineer, delivered with such request (subject, however, to such additional
adjustments to the rates, factors, values, estimates, assumptions and
computations as set forth therein as the

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Administrative Agent, with the concurrence of the Majority Banks, may determine
to be appropriate in accordance with their current parameters for similar
production loans for similarly situated companies) and any other relevant
information and factors, including, without limitation, any additional
Indebtedness or other obligations that have been or are reasonably anticipated
to be incurred by the Borrower and its Restricted Subsidiaries and any
Hydrocarbon Properties (and assets relating thereto) acquired by the Borrower
and its Restricted Subsidiaries (which are not subject to any Lien other than
Liens created under the Security Documents or Permitted Liens) that the
Administrative Agent (in consultation with the Majority Banks) may deem
appropriate and as otherwise provided in Section 1.03(b) hereof, provided that,
except with the prior written consent of the Majority Banks, no Hydrocarbon
Properties acquired by any Subsidiary of the Borrower shall be included in the
calculation of the Borrowing Base unless such Subsidiary is or becomes an
Obligor under this Agreement. As promptly as reasonably practicable following
its redetermination of the Borrowing Base, the Administrative Agent shall notify
the Banks of such redetermination and, if such redetermination is approved by
the Majority Banks (or each of the Banks in the case of an increase in the
Borrowing Base), notify the Borrower in writing of the Borrowing Base as so
redetermined (and in any event not later than the Determination Date with
respect to such redetermination) and such redetermined Borrowing Base shall
become effective immediately upon delivery to the Borrower of such notice of
redetermination. The Borrower agrees that, in addition to any other rights that
the Administrative Agent and the Banks may have under the Loan Documents,
immediately upon receipt of notice by the Administrative Agent that the events
described in clauses (i), (ii) or (iii) above have occurred which result in the
occurrence of a Borrowing Base Deficiency, the Administrative Agent has the
right to require JPMorgan Chase Bank N.A., or such other financial institution
with which any Collection Account is maintained to cease honoring instructions
from the Borrower in whose name a Collection Account is maintained and retain
the funds in such Collection Account or as directed by the Administrative Agent,
until (x) the Administrative Agent gives notice to JPMorgan Chase Bank N.A., or
such other financial institution to honor instructions from the Borrower or
(y) the total Loans and Letter of Credit Liabilities outstanding herein are less
than the Borrowing Base as redetermined by the Administrative Agent.
          (e) Determinations, Etc. Notwithstanding any other provision of this
Agreement to the contrary, all determinations and redeterminations and
adjustments by the Administrative Agent (and any determinations and decisions by
each of the Banks or Majority Banks in connection therewith, or in connection
with the provisions of Section 2.10 or 9.22, including any thereof approving or
disapproving a proposed redetermination or redetermination by the Administrative
Agent or effecting any adjustment to any element included in a Reserve
Evaluation Report or the determination or redetermination of the Borrowing Base)
shall be made on a reasonable basis, in good faith and in a manner reasonably
consistent with their loan parameters for similar production loans for similarly
situated companies and consistent with the

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basis on which the initial Borrowing Base was determined to be acceptable to the
Banks (but after giving effect to changes in facts and circumstances occurring
after the date of such initial determination including, but not limited to,
reserves and production, operating expenses, Commodity Hedging Agreement and
economic assumptions with respect to price of Hydrocarbons and inflation), and
any such determination, redetermination or adjustment shall consider any other
relevant information or factors, including without limitation, any additional
Indebtedness or other obligations that have been incurred or that the Borrower
and its Restricted Subsidiaries intend or expect to incur that the Majority
Banks may deem appropriate, provided that, unless otherwise accepted by the
Majority Banks, no Hydrocarbon Properties acquired by any Subsidiary of the
Borrower shall be included in the calculation of the Borrowing Base unless such
Subsidiary is an Obligor under this Agreement.
     1.04 Designation of Subsidiaries as Restricted or Unrestricted
Subsidiaries. By delivery to the Administrative Agent of a new Schedule III
hereto and with the approval of the Majority Banks, such approval not to be
unreasonably withheld, the Borrower may designate a Restricted Subsidiary (other
than a Subsidiary Guarantor, unless the Majority Banks provide prior written
consent to such designation) or an Argentine Subsidiary to be an Unrestricted
Subsidiary or an Unrestricted Subsidiary to be a Restricted Subsidiary or an
Argentine Subsidiary; provided that the Borrower may, without such approval,
designate (by notice to the Administrative Agent which shall promptly notify the
Banks) a corporation or other entity that is formed or acquired as a direct or
indirect Subsidiary of the Borrower after the date of this Agreement (no part of
the business or assets of which was owned by the Borrower or a Restricted
Subsidiary prior to the date of such formation or acquisition and included in
the Borrowing Base or used in connection with the exploration, exploitation,
transportation or marketing of Hydrocarbons from properties included in the
Borrowing Base) to be an Unrestricted Subsidiary on or prior to the date of such
formation or acquisition if, after giving effect thereto, the Borrower would be
in compliance with its obligations with respect to such Subsidiary as an
Unrestricted Subsidiary under Section 9.17 hereof and no other Default shall
have occurred and be continuing.
SECTION 2.
COMMITMENTS, LOANS, NOTES AND PREPAYMENTS.
     2.01 Loans.
          (a) Each Bank severally agrees, in accordance with the terms and
conditions of this Agreement, to make one or more loans (each a “Loan”) to the
Borrower during the Commitment Period in an aggregate amount up to but not
exceeding the lesser of (x) its Commitment and (y) an amount equal to its
Commitment Percentage multiplied by the then effective Borrowing Base; provided
that (i) except during a Deficiency Cure Period, in no event shall the aggregate
principal amount of all Loans and the aggregate amount of all Letter of Credit

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Liabilities exceed the lesser of (x) the aggregate amount of the Commitments as
in effect from time to time, and (y) the then effective Borrowing Base and
(ii) the Borrower may not borrow additional Loans or obtain additional Letters
of Credit at any time while a Borrowing Base Deficiency exists, but may, subject
to the other terms of this Agreement, continue a Loan while a Borrowing Base
Deficiency exists on the last day of the Interest Period of such Loan and in an
amount equal to the principal amount of such Loan.
          (b) Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Borrower may borrow, repay and reborrow the Loans;
provided that no more than five separate Interest Periods may be outstanding at
any one time.
     2.02 Borrowings. The Borrower shall give the Administrative Agent (which
shall promptly notify the relevant Banks) notice of each borrowing hereunder as
provided in Section 4.05 hereof. Not later than 1:00 p.m. New York time on the
date specified for each borrowing hereunder, each relevant Bank shall make
available the amount of the Loan or Loans to be made by it on such date to the
Administrative Agent, at an account specified by the Administrative Agent
maintained by the Administrative Agent, in immediately available funds, for the
account of the Borrower. The amount so received by the Administrative Agent
shall, subject to the terms and conditions of this Agreement, be made available
to the Borrower by depositing the same, in immediately available funds, in an
account of the Borrower designated by the Borrower in writing. Notwithstanding
any provision of this Agreement to the contrary, Loans may only be denominated
in US Dollars.
     2.03 Letters of Credit.
          (a) Issuance. Subject to the terms and conditions of this Agreement,
the Commitments may be utilized, upon the request of the Borrower, in addition
to the Loans provided for by Section 2.01(a) hereof, by the issuance by an
Issuing Bank of letters of credit (collectively, “Letters of Credit”) in US
Dollars for account of the Borrower; provided that if any Letter of Credit is
cash collateralized by the Borrower through a deposit in an account acceptable
to the Issuing Bank, or is fully guaranteed by EDC on terms in form and
substance acceptable to the Majority Banks, the Commitments shall be deemed not
to have been utilized to the extent of the amount of cash collateral so
deposited or the amount of the EDC guarantee, as the case may be. Except during
a Deficiency Cure Period, in no event shall (i) the aggregate amount of all
Letter of Credit Liabilities and the aggregate principal amount of the Loans
exceed the lesser of (A) the aggregate of the Commitments and (B) the then
effective Borrowing Base, (ii) the outstanding aggregate amount of all Letter of
Credit Liabilities, at the time of the issuance of any Letter of Credit, exceed
$5,000,000 and (iii) the expiration date of any Letter of Credit extend beyond
the earlier of the date which is five Business Days prior to the Maturity Date.
The Issuing Bank shall be deemed to hold a Letter of Credit Liability in an
amount equal to its

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retained interest in the related Letter of Credit after giving effect to the
acquisition by the Banks other than the Issuing Bank of their participation
interests under this Section 2.03.
          (b) Letters of Credit Generally. The following additional provisions
shall apply to Letters of Credit:
          (i) The Borrower shall give the Administrative Agent at least three
Business Days’ irrevocable prior notice (effective upon receipt) specifying the
Business Day (which shall be no later than 30 days preceding the Maturity Date)
each Letter of Credit that the Borrower is requesting to be issued, the
beneficiary and the account party or parties therefor and describing in
reasonable detail the proposed terms of such Letter of Credit (including the
beneficiary thereof) and the nature of the obligations proposed to be supported
thereby. Each such notice shall be irrevocable and binding on the Borrower. Upon
receipt of any such notice, the Administrative Agent shall on the same day
advise the Issuing Bank and each Bank of the contents thereof.
          (ii) On each day during the period commencing with the issuance by the
Issuing Bank of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated, each Bank’s Commitment shall be deemed to be
utilized for all purposes of this Agreement in an amount equal to its Commitment
Percentage in US Dollars of the then undrawn face amount of such Letter of
Credit, subject to the proviso in Section 2.03(a) hereof. Each Bank (other than
the Issuing Bank) agrees that, upon the issuance of any Letter of Credit
hereunder, it shall automatically acquire a participation in the Issuing Bank’s
liability under such Letter of Credit in an amount equal to its Commitment
Percentage of such liability, and each such Bank (other than the Issuing Bank)
thereby shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and shall be unconditionally obligated to the Issuing
Bank to pay and discharge when due, its Commitment Percentage of the Issuing
Bank’s liability under such Letter of Credit.
          (iii) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Bank shall promptly
notify the Borrower and each Bank (in each case through the Administrative
Agent) of the amount to be paid by the Issuing Bank as a result of such demand,
the date on which payment is to be made by the Issuing Bank to such beneficiary
in respect of such demand and the amount required by each Bank to reimburse the
Issuing Bank, specifying such Bank’s Commitment Percentage of the amount of the
related demand for payment. The amount of such payment shall be deemed to be a
Loan to the Borrower, with an Interest Period of one month (unless otherwise
selected by the Borrower pursuant to Section 4.05).

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          (iv) In respect of any Letter of Credit, each Bank having a Letter of
Credit Liability with respect to such Letter of Credit (other than the Issuing
Bank) shall, upon demand by the Administrative Agent under clause (iii) above,
pay to the Administrative Agent for the account of the Issuing Bank at an
account specified by the Issuing Bank maintained with the Administrative Agent
and in immediately available funds, the amount of its Commitment Percentage of
any payment under such Letter of Credit upon notice by the Issuing Bank (through
the Administrative Agent) to such Bank requesting such payment and specifying
such amount. Such Bank’s obligation to make such payments to the Administrative
Agent for account of the Issuing Bank under this clause (iv), and the Issuing
Bank’s right to receive the same, shall be absolute and unconditional and shall
not be affected by any circumstance whatsoever, including, without limitation,
(x) the failure of any other Bank to make its payment under this clause (iv),
the financial condition of the Borrower or any other Obligor (or any other
account party), the existence of any Default or (y) the termination of the
Commitments. Each such payment to the Issuing Bank shall be made without any
offset, abatement, withholding or reduction whatsoever. If such Bank shall
default in its obligation to make any such payment to the Administrative Agent
for the account of the Issuing Bank, for so long as such default shall continue
the Administrative Agent shall at the request of the Issuing Bank withhold from
any payments received by the Administrative Agent under this Agreement or any
Note for account of such Bank the amount so in default and the Administrative
Agent shall pay the same to the Issuing Bank in satisfaction of such defaulted
obligation.
          (v) Except as provided in clauses (A) and (B) below, the Borrower
agrees to pay to the Administrative Agent for account of each Bank in respect of
each Letter of Credit issued for the Borrower an issuance fee in an amount
equal, in the aggregate, to 3.0% per annum multiplied by the undrawn face amount
of such Letter of Credit for the period from and including the date of issuance
of such Letter of Credit to and including the date such Letter of Credit is
drawn in full, expires or is terminated (such fee to be non-refundable, to be
paid in arrears on each Quarterly Date and on the Commitment Termination Date
and to be calculated, for any day, after giving effect to any payments made
under (or cash collateral provided or EDC guarantee granted in respect of) such
Letter of Credit on such day); provided always that:
     (A) for each Letter of Credit that is cash collateralized by the Borrower
through a deposit in an account acceptable to the Issuing Bank of an amount
equal to at least the full undrawn face amount of such Letter of Credit, the per
annum letter of credit fee for such cash collateralized Letter of Credit shall
be an amount

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equal to 0.50% multiplied by the undrawn face amount of such Letter of Credit
with effect from the date such Letter of Credit was cash collateralized, and
     (B) for each Letter of Credit that is fully guaranteed by EDC on terms in
form and substance acceptable to the Majority Banks, the per annum letter of
credit fee for such guaranteed Letter of Credit shall be an amount equal to
0.75% multiplied by the undrawn face amount of such Letter of Credit with effect
from the date such Letter of Credit was guaranteed by EDC,
          in each case, for the period such Letter of Credit is to be
outstanding. The Administrative Agent shall pay to each Bank (other than the
Issuing Bank), from time to time at reasonable intervals (but in any event at
least on each Quarterly Date), but only to the extent actually received from or
on behalf of the Borrower, an amount equal to such Bank’s Commitment Percentage
of all such fees in respect of each Letter of Credit (including any such fee in
respect of any period of any renewal or extension thereof).
          (vi) Promptly following the end of each calendar month, each Issuing
Bank shall deliver (through the Administrative Agent) to each Bank and the
Borrower notice describing all Letters of Credit issued by the Issuing Bank
outstanding at the end of such month. Upon the request of any Bank from time to
time, each Issuing Bank shall deliver any other information in its possession
reasonably requested by the Bank with respect to each Letter of Credit then
outstanding and issued by the Issuing Bank.
          (vii) The issuance of each Letter of Credit by the Issuing Bank shall,
in addition to the conditions precedent set forth in SECTION 7 hereof, be
subject to the conditions precedent that (A) such Letter of Credit shall support
such transactions as are consistent with Section 9.14, be in such form and
contain such terms as shall be satisfactory to the Issuing Bank, acting
reasonably, consistent with its then current practices and procedures with
respect to letters of credit of the same type and (B) the Borrower shall have
executed and delivered such applications, agreements and other instruments
relating to such Letter of Credit as the Issuing Bank shall have reasonably
requested consistent with its then current practices and procedures with respect
to letters of credit of the same type, provided that in the event of any
conflict between any such application, agreement or other instrument and the
provisions of this Agreement or any Security Document, the provisions of this
Agreement and the Security Documents shall control.
          (viii) In connection with any Letter of Credit, to the extent that any
Bank fails to pay any amount required to be paid pursuant to clause (iv) of this
Section 2.03(b) on the due date therefor, such Bank shall pay interest to the
Issuing Bank (through the

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Administrative Agent) on such amount from and including such due date to but
excluding the date such payment is made, during the period from and including
such due date to but excluding the date three Business Days thereafter, at a
rate per annum equal to the Eurodollar Rate (for three-month Eurodollar Loans)
in an amount equal to the amount of such required payment (as in effect from
time to time) plus the Applicable Margin plus Mandatory Costs, if any, plus 2%.
          (ix) Without the prior written consent of the Issuing Bank, no Letter
of Credit shall be issued in face amount of less than $500,000.
     As between the Borrower and the Issuing Bank, the Borrower assumes all
risks for the acts and omissions of, or misuse of, the Letters of Credit by the
respective beneficiaries of such Letter of Credit. The Borrower hereby
indemnifies and holds harmless each Bank, the Issuing Bank and the
Administrative Agent from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Bank, the Issuing Bank or the
Administrative Agent may incur (or which may be claimed against such Bank, the
Issuing Bank or the Administrative Agent by any Person whatsoever) by reason of
or in connection with (1) any loss or expense incurred by such Bank or the
Issuing Bank as a result of the Borrower’s failure to honor or fulfill, before
the date specified for the issuance of any Letter of Credit, the applicable
conditions set forth in Section 7 or this Section 2.03 if the Letter of Credit
is not issued on that date because of that failure; and (2) the execution,
delivery, issuance or transfer of or payment or refusal to pay by the Issuing
Bank under any Letter of Credit; provided that the Borrower shall not be
required to indemnify any Bank, the Issuing Bank or the Administrative Agent for
any claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (x) the willful misconduct or gross negligence of
the Issuing Bank in determining whether a request presented under any Letter of
Credit complied with the terms of such Letter of Credit or (y) the Issuing
Bank’s failure to pay under any Letter of Credit after the presentation to it of
a request strictly complying with the terms and conditions of such Letter of
Credit. Nothing in this Section 2.03 is intended to limit the other obligations
of any Obligor, any Bank, the Issuing Bank or the Administrative Agent under
this Agreement.
     2.04 Changes of Commitments. (a) The aggregate unused amount of the
Commitments shall be automatically reduced to zero on the Commitment Termination
Date.
          (b) The Borrower shall have the right at any time or from time to time
(i) so long as no Loans or Letter of Credit Liabilities are outstanding, to
terminate the Commitments, and (ii) to reduce the Commitments in part up to the
aggregate unused amount of the Commitments; provided that (x) the Borrower shall
give notice of each such termination or reduction as provided in Section 4.05
hereof and (y) each partial reduction shall be in an aggregate amount at least
equal to $1,000,000 or in multiples of $500,000 in excess thereof.

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          (c) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
relevant Banks of the contents thereof. Each notice delivered by the Borrower
pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent no later than two Business Days prior to the proposed
effective date of such termination) if such condition is not satisfied. Any
termination or reduction of the Commitments shall be permanent. Each reduction
of the Commitments shall be made ratably among the Banks in accordance with
their respective Commitments.
     2.05 Commitment Fee. The Borrower shall pay to the Administrative Agent for
the account of each Bank in proportion to its respective Commitment Percentage,
a commitment fee for each day at a rate per annum equal to the Applicable
Commitment Fee Rate times such Bank’s Commitment Percentage share of the
Borrowing Base less the aggregate principal amount of all Loans and Letter of
Credit Liabilities outstanding on such day for the period from and including the
Closing Date to but not including the earlier of the date such Bank’s Commitment
is terminated and the Commitment Termination Date. The accrued amount of such
commitment fees shall be payable monthly in arrears and on the Commitment
Termination Date.
     2.06 Lending Offices. The Loans made by each Bank shall be made and
maintained at such Bank’s Applicable Lending Office.
     2.07 Several Obligations; Remedies Independent. With respect to any Loan or
Letter of Credit, the failure of any Bank to make any Loan or provide proceeds
in respect of a Letter of Credit on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan or provide such
proceeds on such date, but neither any Bank nor the Administrative Agent shall
be responsible for the failure of any other Bank to make a Loan or provide such
proceeds to be made or provided by such other Bank, and no Bank shall have any
obligation to the Borrower, the Administrative Agent or any other Bank for the
failure by such other Bank to make any Loan or provide such proceeds required to
be made or provided by such Bank. The amounts payable by the Borrower or any
Obligor at any time hereunder and under the Notes or pursuant to its Guarantee
under SECTION 6, as the case may be, to each Bank shall be a separate and
independent debt, and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement, the Notes and the other Loan Documents
subject to Sections 4.08 and 10 hereof, and it shall not be necessary for any
other Bank or the Administrative Agent to consent to, or be joined as an
additional party in, any proceedings for such purposes.

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     2.08 Notes. (a) Each Loan made by each Bank shall be evidenced by a
promissory note of the Borrower substantially in the form of Exhibit A hereto,
dated the date of this Agreement, payable to such Bank in a principal amount
equal to the amount of its Commitment as originally in effect and otherwise duly
completed.
          (b) The date, amount, interest rate and duration of Interest Period
(if applicable) of each Loan made by each Bank to the Borrower, and each payment
made on account of the principal thereof, shall be recorded by such Bank on its
books and, prior to any transfer of the Note evidencing the Loans held by it,
endorsed by such Bank on the schedule attached to such Note or any continuation
thereof; provided that the failure of such Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing hereunder or under such Note in respect of the
Loans evidenced by such Note.
          (c) No Bank shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Bank’s
Commitment, Loans and Note pursuant to Section 12.06(b) hereof.
     2.09 Optional Prepayments of Loans. Subject to Section 4.04 hereof, the
Borrower shall have the right to prepay Loans, without premium or penalty, at
any time or from time to time, provided that the Borrower shall give the
Administrative Agent notice of such prepayment as provided in Section 4.05
hereof (and, upon the date specified in any such notice of prepayment, the
amount to be prepaid shall become due and payable hereunder).
     2.10 Mandatory Prepayments.
          (a) Borrowing Base. The Administrative Agent shall notify the Borrower
(in a “Deficiency Notice”) as soon as reasonably practicable after becoming
aware at any time that the Borrowing Base as then in effect is less than the sum
of the aggregate principal amount of the Loans and Letter of Credit Liabilities
outstanding at such time (the amount of such difference being called herein the
“Borrowing Base Deficiency”) and within 15 days after the date of delivery of
the Deficiency Notice the Borrower shall notify the Administrative Agent of the
Borrower’s intentions with respect to compliance with the procedures set forth
in this Section 2.10(a). As specified in such notice from the Borrower, the
Borrower shall within 45 days after the date of the Deficiency Notice (the
“Deficiency Cure Period”) prepay, or provide cover in accordance with
Section 2.10(e) hereof, the aggregate principal amount of all Loans and Letter
of Credit Liabilities outstanding at such time, in an amount sufficient to
eliminate such Borrowing Base Deficiency. During a Deficiency Cure Period, any
amount deposited in each Collection Account shall be retained therein, and no
withdrawal may be made from any

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Collection Account without the prior written consent of the Administrative
Agent. Upon its receipt of evidence to its reasonable satisfaction of the
elimination of the Borrowing Base Deficiency giving rise to the Deficiency
Notice in question, the Administrative Agent shall notify the Borrower
accordingly and thereafter, withdrawals may be made from each Collection Account
as if such Borrowing Base Deficiency had not occurred.
          (b) Casualty Events. Upon the date (the “Insurance Date”) 30 days
following the receipt by the Borrower or any of its Restricted Subsidiaries of
the Net Available Proceeds of insurance, condemnation award or other
compensation, in each case in excess of $2,000,000 (or its equivalent in other
currencies, calculated as of the date such proceeds are received) in respect of
any Casualty Event, affecting (i) any Hydrocarbon Property of the Borrower or
any Restricted Subsidiary or (ii) any Foreign Assets of the Borrower or any
Restricted Subsidiary, the Borrower shall, or as applicable, shall cause the
applicable Restricted Subsidiary to (in each case, only if required by the
Administrative Agent to do so) repay the Loans (and/or provide cash collateral
for the Letter of Credit Liabilities as specified in clause (e) below), and if
such Casualty Event or series of related Casualty Events shall result in the
receipt by the Borrower or any of its Restricted Subsidiaries of Net Available
Proceeds in excess of $2,000,000 (or its equivalent amount in other currencies,
calculated as of the date such proceeds are received) in any Determination
Period, the Majority Banks, based on their review of such Casualty Event, may
reduce the Borrowing Base, such reduction in any event not to be in an aggregate
amount in excess of 100% of the Net Available Proceeds of such Casualty Event,
or such lesser amount as may be specified in a written notice from the Majority
Banks, such prepayment and reduction to be effected in each case in the manner
and to the extent specified in clause (e) of this Section 2.10. Nothing in this
clause (b) shall be deemed to limit any obligation of the Borrower and any of
its Restricted Subsidiaries pursuant to any of the Security Documents to remit
to a collateral or similar account maintained by the Administrative Agent the
proceeds of insurance, condemnation award or other compensation received in
respect of any Casualty Event.
          (c) Sale of Assets. Without limiting the obligation of the Obligors to
obtain the consent of the Majority Banks pursuant to Section 9.05 hereof to any
Disposition not otherwise permitted hereunder, no later than five Business Days
prior to the occurrence of any Disposition permitted under Section 9.05 of this
Agreement and expected to result in Net Available Proceeds in excess of
$1,000,000 (or its equivalent amount in other currencies, calculated as of the
date such proceeds are received), the Borrower, on behalf of the applicable
Obligor, shall deliver to the Banks a statement, certified by the chief
financial officer or treasurer of the Borrower, in form and detail satisfactory
to the Administrative Agent, acting reasonably, of the estimated amount of the
Net Available Proceeds of such Disposition and, if (i) the Net Available
Proceeds of such Disposition is in excess of $2,000,000 (or its equivalent
amount in other currencies, calculated as of the date such proceeds are
received), in respect of (A) assets

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which have been given value in determining the Borrowing Base or (B) assets
which have not been given value in determining the Borrowing Base but which are
directly related to exploration, production or transportation of Hydrocarbons or
(ii) the Net Available Proceeds of such Disposition together with the aggregate
of all other such Dispositions by any Obligor within any six-month period
(including as a result of any Casualty Event) of any Hydrocarbon Property or
other Property is in excess of $3,000,000 (or its equivalent amount in other
currencies, calculated as of the date such proceeds are received), then the
Majority Banks, based on their review of the statement referred to in this
Section 2.10(c) may reduce the Borrowing Base in an aggregate amount determined
in accordance with Section 1.03(e); provided that if the Net Available Proceeds
include consideration other than cash or cash equivalents, (i) the
Administrative Agent shall reduce the Borrowing Base by an amount, based on its
reasonable determination of the Borrowing Base attributable to the assets for
which such non-cash or non-cash equivalent consideration was received and
(ii) the Administrative Agent and the Banks shall endeavor to redetermine the
Borrowing Base (within 60 days of the later of (x) the receipt by the
Administrative Agent of a Reserve Evaluation Report or other documentation or
information reasonably requested by the Administrative Agent and (y) the date of
acquisition of such non-cash consideration) based on the value of the non-cash
consideration received. If a Borrowing Base Deficiency results from such
reduction, then the Borrower shall, notwithstanding Section 2.10(a) to the
contrary, immediately prepay the Loans (and/or provide cash collateral for the
Letter of Credit Liabilities) to cure such deficiency. The Administrative Agent
shall endeavor to advise the Borrower within 15 days following receipt of any
such statement of the proposed redetermined Borrowing Base that the
Administrative Agent shall recommend to the Banks, provided that the
Administrative Agent shall have no liability for failure to so advise the
Borrower.
          (d) Application. Prepayments and reductions of the Borrowing Base, if
applicable, described in the above clauses of this Section 2.10 shall be
effected as follows: the Borrowing Base shall be automatically reduced by an
amount equal to the amount specified in such clauses (and to the extent that,
after giving effect to such reduction, the aggregate principal amount of the
Loans, together with the aggregate amount of all relevant Letter of Credit
Liabilities, would exceed the then effective Borrowing Base, the Borrower shall,
subject to the provisions relating to a Deficiency Cure Period, first, prepay
the Loans and second, provide cash collateral for such Letter of Credit
Liabilities with respect to the Borrowing Base, as specified in clause
(e) below, in an aggregate amount equal to such excess).
          (e) Cash Collateral for Letter of Credit Liabilities. In the event
that the Borrower shall be required pursuant to this Section 2.10, or pursuant
to Section 3.01 hereof, to provide cash collateral for Letter of Credit
Liabilities, the Borrower shall effect the same by paying to the Administrative
Agent immediately available funds in an amount equal to the

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required amount, which funds shall be retained by the Administrative Agent as
collateral security for the Letter of Credit Liabilities until such time as the
Letters of Credit shall have been terminated and/or all of the Letter of Credit
Liabilities have been paid in full or the Borrowing Base shall be increased to
an amount sufficient to support such Letter of Credit Liabilities.
Notwithstanding any other provision of this Agreement to the contrary, the
Borrower shall not be required to provide any such cash collateral to the extent
that any such Letter of Credit Liabilities are fully guaranteed by EDC on terms
in form and substance acceptable to the Majority Banks.
SECTION 3.
PAYMENTS OF PRINCIPAL AND INTEREST
     3.01 Repayment of Loans. The Borrower hereby promises to pay to the
Administrative Agent for the account of each Bank the entire outstanding
principal amount of such Bank’s Loans and each Loan shall mature, on the
Maturity Date. All Letter of Credit Liabilities then outstanding (net of all
cash collateral for any such liabilities held at that time pursuant to
Section 2.10(e) hereof) shall be payable to the Administrative Agent for the
account of each Bank having a participation therein on the Commitment
Termination Date. In addition, if following any reduction in the Commitments,
the aggregate principal amount of the Loans, together with the aggregate amount
of all Letter of Credit Liabilities shall exceed the Commitments, the Borrower
shall first, prepay Loans and second, provide cash collateral for Letter of
Credit Liabilities with respect to the Commitments as specified in
Section 2.10(e) above, in an aggregate amount equal to such excess.
     3.02 [Intentionally Omitted]
     3.03 Interest. (a) The Borrower hereby promises to pay to the
Administrative Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank and on any Reimbursement
Obligation for the period from and including the date of such Loan to but
excluding the date such Loan shall be paid in full for each Interest Period
relating thereto, at a rate per annum equal to the Eurodollar Rate for such Loan
for such Interest Period plus the Applicable Margin plus Mandatory Costs, if
any. Notwithstanding the foregoing, the Borrower hereby promises to pay to the
Administrative Agent for account of each Bank interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank, on any
Reimbursement Obligation held by such Bank and on any other amount payable by
the Borrower hereunder or under the Note held by such Bank to or for account of
such Bank, which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the due date thereof to but excluding the date the same is paid in
full.

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          (b) Accrued interest on each Loan shall be payable (i) at the end of
each Interest Period and (ii) upon the payment or prepayment thereof (but only
on the principal amount so paid or prepaid), except that interest payable at the
Post-Default Rate shall be payable from time to time on demand. In connection
with each Loan, promptly after the determination of any interest rate provided
for herein or any change therein, the Administrative Agent shall give notice
thereof to the Banks and to the Borrower, but failure to do so on a timely basis
or at all shall not affect the Borrower’s obligation to pay interest for any
period at the applicable rate determined by the Administrative Agent.
     3.04 Solvency. Each Obligor is, and, upon the incurrence of any Loan,
Letter of Credit Liability or Guarantee by such Obligor on any date on which
this representation and warranty is made, shall be, Solvent.
SECTION 4.
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
     4.01 Payments. (a) Except to the extent otherwise provided herein, all
payments of principal, interest, Reimbursement Obligations and other amounts to
be made by the Borrower under this Agreement and the Notes, and, except to the
extent otherwise provided therein, all payments to be made by the Obligors under
any other Loan Document, shall be made in US Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Administrative Agent
at its account with Barclays Bank PLC, New York (Account No. 050035878; SWIFT
BARCUS33; ABA 026002574; Ref:TFB/Gran Tierra) or such other account as may be
specified by the Administrative Agent from time to time, not later than 2:00
p.m. London time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day).
          (b) Any Bank for whose account any such payment is to be made may (but
shall not be obligated to) debit the amount of any such payment that is not made
by such time (other than any payment not made due to a failure by the
Administrative Agent to forward any such payment to such Bank) to any ordinary
deposit account of the Borrower with such Bank (with notice to the Borrower and
the Administrative Agent), provided that such Bank’s failure to give such notice
shall not affect the validity thereof.
          (c) In connection with making each payment in respect of each Loan or
Letter of Credit, the Borrower shall, at the time of making each payment under
this Agreement or any Note for the account of any Bank, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans, Reimbursement Obligations or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that the

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Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may distribute such payment to the Banks
for application in such manner as it or the Majority Banks, and subject to
Section 4.02 hereof, may determine to be appropriate).
          (d) Each payment received by the Administrative Agent under this
Agreement or any Note for account of any Bank shall be paid by the
Administrative Agent promptly to such Bank, in immediately available funds, for
account of such Bank’s Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.
          (e) Except as provided in the last sentence of the definition of
Interest Period, if the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
     4.02 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) each borrowing of Loans from the Banks under Section 2.01 hereof shall be
made from the Banks, each payment of commitment fee under Section 2.05 hereof in
respect of Commitments shall be made for account of the Banks, and each
termination or reduction of the amount of the Commitments under Section 2.04
hereof shall be applied to the respective Commitments of the Banks, pro rata
according to the amounts of their respective Commitments; (b) each payment or
prepayment of principal of Loans by the Borrower shall be made for the account
of the Banks pro rata in accordance with the respective unpaid principal amounts
of the Loans; provided that if immediately prior to giving effect to any such
payment in respect of any Loans the outstanding principal amount of the Loans
shall not be held by the relevant Banks pro rata in accordance with their
respective Commitments in effect at the time such Loans were made (whether by
reason of a failure of a Bank to make a Loan in the circumstances described in
the second paragraph of Section 12.04 hereof or otherwise), then such payment
shall be applied to the Loans in such manner as shall result, as nearly as is
practicable, in the outstanding principal amount of the Loans being held by such
Banks pro rata in accordance with their respective Commitments; and (c) each
payment of interest on Loans by the Borrower shall be made for account of the
relevant Banks pro rata in accordance with the amounts of interest on such Loans
then due and payable to the respective Banks.
     4.03 Computations. Interest on Loans and commitment fees and letter of
credit fees shall be computed on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which that interest and those fees are payable.
     4.04 Minimum Amounts. Except for mandatory prepayments made pursuant to
Section 2.10 hereof, each borrowing (other than by way of a Letter of Credit)
and partial prepayment of

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principal of Loans shall be in an aggregate amount at least equal to $1,000,000
or in multiples of $500,000 in excess thereof.
     4.05 Certain Notices. Notices by the Borrower to the Administrative Agent
of terminations or reductions of the Commitments and of borrowings and optional
prepayments of Loans and of the duration of Interest Periods for the
continuation of each Loan shall be irrevocable and shall be effective only if
received by the Administrative Agent not later than 11:00 a.m. London time, on
the number of Business Days prior to the date of the relevant termination,
reduction, borrowing or prepayment or the first day of such Interest Period
specified below:

              Number of     Business Notice   Days Prior
Termination or reduction of Commitments
    3  
 
       
Borrowing or prepayment of or duration of Interest Period for Loans
    3  
 
       
Request for issuance or Continuation of Letters of Credit
    3  

     Each such notice of termination or reduction shall specify the amount of
the Commitments to be terminated or reduced. Each such notice of borrowing or
optional prepayment shall specify the Loans to be borrowed or prepaid and the
amount (subject to Section 4.04 hereof) and the date of borrowing or optional
prepayment (which shall be a Business Day) and, if applicable, the relevant
Interest Period. The Administrative Agent shall promptly notify the Banks of the
contents of each such notice. In the event that the Borrower fails to select the
duration of any Interest Period for a Loan, within the time period and otherwise
as provided in this Section 4.05, it shall be deemed to have elected to continue
such Loan with an Interest Period of one month starting on the last day of the
then current Interest Period for such Loan.
     4.06 [Intentionally Omitted]
     4.07 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Bank or an Obligor (the
“Payor”) prior to 11:00 a.m. (London, England time) on the date on which the
Payor is to make payment to the Administrative Agent of (in the case of a Bank)
the proceeds of a Loan to be made by such Bank, or a Bank’s Commitment
Percentage of (x) any payment made by the Issuing Bank under a Letter of Credit
or (y) a participation in a Letter of Credit drawing to be acquired by such
Bank,

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hereunder or (in the case of an Obligor) a payment to the Administrative Agent
for account of one or more of the Banks hereunder (such payment being herein
called the “Required Payment”), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the
Administrative Agent, the Administrative Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient(s)
on such date; and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay
to the Administrative Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date (the
“Advance Date”) such amount was so made available by the Administrative Agent
until the date the Administrative Agent recovers such amount if such amount
relates to a Loan, at a rate per annum equal to the Eurodollar Rate (for
one-month Eurodollar Loans) in an amount equal to the amount of such required
payment (as in effect from time to time) plus the Applicable Margin plus
Mandatory Costs, if any, and, if such recipient(s) shall fail promptly to make
such payment, the Administrative Agent shall be entitled to recover such amount,
on demand, from the Payor, together with interest as aforesaid, provided that if
neither the recipient(s) nor the Payor shall return the Required Payment to the
Administrative Agent within three Business Days of the Advance Date, then,
retroactively to the Advance Date, the Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows:
          (i) if the Required Payment shall represent a payment to be made by
the Borrower to a Bank, the Borrower and such Bank shall each be obligated
retroactively to the Advance Date to pay interest in respect of the Required
Payment at the Post-Default Rate (and, in case the Bank shall return the
Required Payment to the Administrative Agent, without limiting the obligation of
the Borrower, if applicable, under Section 3.03 hereof to pay interest to such
recipient(s) at the Post-Default Rate in respect of the Required Payment) and
          (ii) if the Required Payment shall represent a payment to be made by a
Bank to the Borrower, such Bank and the Borrower shall each be obligated
retroactively to the Advance Date to pay interest in respect of the Required
Payment at the Post-Default Rate (and, in case the Borrower shall return the
Required Payment to the Administrative Agent, without limiting any claim the
Borrower may have against the Payor in respect of the Required Payment);
provided that the Administrative Agent shall only be entitled to retain interest
in respect of a Required Payment pursuant to clause (i) or (ii) above from
either the Payor or the recipient.
     4.08 Sharing of Payments, etc. (a) Each of the Obligors agrees that, in
addition to (and without limitation of) any right of set-off, banker’s lien or
counterclaim a Bank may otherwise

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have, each Bank shall be entitled, at its option, to offset balances held by it
for account of such Obligor at any of its offices, in US Dollars or in any other
currency against any principal of or interest on any of such Bank’s Loans,
Reimbursement Obligations or any other amount payable to such Bank hereunder,
that is not paid when due (regardless of whether such balances are then due to
such Obligor), in which case it shall promptly notify such Obligor (through the
Borrower) and the Administrative Agent thereof, provided that such Bank’s
failure to give such notice shall not affect the validity thereof.
          (b) If any Bank shall obtain from any Obligor payment of any principal
of or interest on any Loan or Letter of Credit Liability owing to it or payment
of any other amount under this Agreement or any other Loan Document through the
exercise of any right of set-off, banker’s lien or counterclaim or similar right
or otherwise (other than from the Administrative Agent as provided herein), and,
as a result of such payment, such Bank shall have received a greater percentage
of the principal of or interest on the Loans, Letter of Credit Liabilities or
such other amounts then due hereunder or thereunder by such Obligor to such Bank
than the percentage received by any other Bank, it shall promptly purchase from
such other Banks participations in (or, if and to the extent specified by such
Bank, direct interests in) the Loans, Letter of Credit Liabilities or such other
amounts, respectively, owing to such other Banks (or in interest due thereon, as
the case may be) in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Banks shall share the
benefit of such excess payment (net of any expenses that may be incurred by such
Bank in obtaining or preserving such excess payment) pro rata in accordance with
the unpaid principal of and/or interest on the Loans, Letter of Credit
Liabilities or such other amounts, respectively, owing to each of the Banks,
provided that if at the time of such payment the outstanding principal amount of
the Loans shall not be held by the Banks pro rata in accordance with their
respective Commitments in effect at the time such Loans were made (whether by
reason of a failure of a Bank to make a Loan hereunder in the circumstances
described in the second paragraph of Section 12.04 hereof or otherwise), then
such purchases of participations and/or direct interests shall be made in such
manner as shall result, as nearly as is practicable, in the outstanding
principal amount of the Loans being held by the Banks pro rata according to the
amounts of such Commitments. To such end all the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored.
          (c) The Obligors agree that any Bank so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker’s
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Loans or other amounts (as the case may
be) owing to such Bank in the amount of such participation.

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          (d) Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of any Obligor. If, under any applicable bankruptcy, insolvency or
other similar law, any Bank receives a secured claim in lieu of a set-off to
which this Section 4.08 applies, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Banks entitled under this Section 4.08 to share in the
benefits of any recovery on such secured claim.
     4.09 Maximum Rate Permitted by Law. Under no circumstances shall a Bank be
entitled to receive nor shall it in fact receive a payment or partial payment of
interest, fees or other amounts under this Agreement at a rate that is
prohibited by applicable law. Accordingly, notwithstanding anything herein or
elsewhere contained, if and to the extent that under any circumstances, the
interest received or to be received by a Bank on any amount pursuant to this
Agreement or any agreement or arrangement collateral hereto entered into in
consequence or implementation hereof would, but for this Section 4.09, be a rate
that is prohibited by applicable law, then the effective annual rate of
interest, as so determined, received or to be received by the Bank on such
amount of credit advanced shall be and be deemed to be adjusted to a rate that
is one whole percentage point less than the lowest effective annual rate of
interest that is so prohibited (the “adjusted rate”); and, if a Bank has
received a payment or partial payment which would, but for this Section 4.09, be
so prohibited then any amount or amounts so received by such Bank in excess of
the adjusted rate shall comprise and be deemed to have comprised the credit to
be applied (together with interest thereon at the adjusted rate from the date of
receipt of any such amount by such Bank to the date of its application as
hereinafter provided) to subsequent payment on accounts of interest, fees or
other amounts due to such Bank at the adjusted rate.
SECTION 5.
YIELD PROTECTION, ETC.
     5.01 Additional Costs. (a) The Borrower shall pay directly to each Bank
from time to time, as and by way of additional interest on the Indebtedness
hereunder (to the extent such characterization as interest is permitted by
applicable law), such amounts as such Bank may reasonably determine to be
necessary to compensate such Bank for any costs that such Bank determines are
attributable to its making or maintaining of any Loans or its obligation to make
any Loans hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of any of such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called “Additional
Costs”), resulting from any Regulatory Change after the date of this Agreement
or, with respect to any financial institution that becomes a Bank hereunder
after the date of this Agreement, after the date on which such financial

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institution becomes a Bank hereunder (including any Regulatory Change after such
applicable date with retroactive effect) that:
          (i) changes the basis of taxation of any amounts payable to such Bank
under this Agreement or its Notes in respect of any of such extensions of credit
(other than Excluded Taxes); or
          (ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the determination
of the Eurodollar Rate for such Loans) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of such Bank
(including, without limitation, any of such Loans or any deposits referred to in
the definition of “Eurodollar Rate” in Section 1.01 hereof), or any commitment
of such Bank (including, without limitation, the Commitments of such Bank
hereunder); or
          (iii) imposes any other condition affecting this Agreement or its Note
(or any of such extensions of credit or liabilities) or its Commitment.
If any Bank requests compensation from the Borrower under this Section 5.01(a),
the Borrower may, by notice to such Bank (with a copy to the Administrative
Agent) suspend the obligation of such Bank thereafter to make or maintain the
Eurodollar Loans until the Regulatory Change giving rise to such request ceases
to be in effect, provided that such suspension shall not affect the right of
such Bank to receive the compensation so requested and provided further that
(unless the Borrower exercises its right under Section 5.07 to require such Bank
to assign and delegate all of its interests, rights and obligations under this
Agreement to an assignee that assumes those obligations) the Borrower, at its
election, may prepay all then outstanding Loans of such Bank together with
accrued interest thereon at the end of the Interest Period applicable thereto,
without repaying Loans due to the other Banks and the Commitment Percentages of
the remaining Banks shall be adjusted accordingly. The Administrative Agent
and/or any Bank, as the case may be, shall use its reasonable efforts
(consistent with its internal legal policy and regulatory restrictions) to
mitigate any Additional Costs.
          (b) Without limiting the effect of the provisions of paragraph (a) of
this Section 5.01, in the event that, by reason of any Regulatory Change after
the date of this Agreement or with respect to any financial institution that
becomes a Bank hereunder after the date of this Agreement, after the date on
which such financial institution becomes a Bank hereunder (including any
Regulatory Change after such applicable date with retroactive effect) any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank that includes deposits by reference to which the Eurodollar Loans are
determined as provided in this

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Agreement or a category of extensions of credit or other assets of such Bank
that includes Eurodollar Loans or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets that it may hold, then, if
such Bank so elects by notice to the Borrower (with a copy to the Administrative
Agent), the obligation of such Bank to make Loans hereunder shall be suspended
until such Regulatory Change ceases to be in effect.
          (c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Borrower shall pay directly, as and
by way of additional interest on the Indebtedness hereunder (to the extent such
characterization as interest is permitted by applicable law), to each Bank from
time to time on request such amounts as such Bank may determine, acting
reasonably, to be necessary to compensate such Bank (or, without duplication,
the bank holding company of which such Bank is a subsidiary) for (i) any costs
that it determines, acting reasonably, are attributable to the maintenance by
such Bank (or any Applicable Lending Office or such bank holding company),
pursuant to any law or regulation or any interpretation, directive or request
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) of any court or governmental or monetary authority
(A) following any Regulatory Change after the date of this Agreement or, with
respect to any financial institution that becomes a Bank hereunder after the
date of this Agreement, after the date on which such financial institution
becomes a Bank hereunder (including any Regulatory Change after such applicable
date with retroactive effect) or (B) implementing after the date of this
Agreement or, with respect to any financial institution that becomes a Bank
hereunder after the date of this Agreement, any risk-based capital guideline or
other requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or hereafter issued by
any government or governmental or supervisory authority implementing at the
national level the Basel Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the
Final Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A), such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on the
Commitment or Loans of such Bank (or any Applicable Lending Office or such bank
holding company) to a level below that which such Bank (or any Applicable
Lending Office or such bank holding company) could have achieved but for such
law, regulation, interpretation, directive or request; and (ii) any reduction in
amounts payable to it hereunder (other than a reduction resulting from a higher
rate of Excluded Taxes) or any payment required to be made or return that is
foregone on or calculated with reference to any amount received or receivable by
such Bank under this Agreement as a result of a Regulatory Change after the date
of this Agreement or, with respect to any financial institution that becomes a
Bank hereunder after the date of this Agreement, after the date on which such
financial institution becomes a

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Bank hereunder (including any Regulatory Change after such applicable date with
retroactive effect).
          For purposes of this Section 5.01(c) and Section 5.05 hereof, “Basel
Accord” shall mean the proposals for risk-based capital framework described by
the Basel Committee on Banking Regulations and Supervisory Practices in its
paper entitled “International Convergence of Capital Measurement and Capital
Standards” dated July 1988, as amended, modified and supplemented and in effect
from time to time or any replacement thereof.
          (d) Each Bank shall notify the Borrower of any event occurring after
the date of this Agreement entitling such Bank to compensation under paragraph
(a) or (c) of this Section 5.01 or Sections 5.05 and 5.06 as promptly as
practicable, but in any event within 45 days, after such Bank obtains actual
knowledge thereof; provided that (i) if any Bank fails to give such notice
within 45 days of such an event, such Bank shall, with respect to compensation
payable pursuant to this Section 5.01 or Sections 5.05 and 5.06 in respect of
any costs resulting from such event, only be entitled to payment under this
Section 5.01 or Sections 5.05 and 5.06 for costs incurred from and after the
date 45 days prior to the date that such Bank does give such notice and
(ii) each Bank shall designate a different Applicable Lending Office for the
Loans of such Bank affected by such event if such designation shall avoid the
need for, or reduce the amount of, such compensation and shall not, in the sole
opinion of such Bank, be disadvantageous to such Bank. Each Bank shall furnish
to the Borrower a certificate setting forth the basis and amount of each request
by such Bank for compensation under paragraph (a) or (c) of this Section 5.01 or
Section 5.05 or 5.06. Determinations and allocations by any Bank for purposes of
this Section 5.01 of the effect of any Regulatory Change pursuant to paragraph
(a) or (b) of this Section 5.01, or of the effect of capital maintained pursuant
to paragraph (c) of this Section 5.01, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable by
it in respect of Loans, and of the amounts required to compensate such Bank
under this Section 5.01, shall be conclusive in the absence of manifest error,
provided that each Bank shall, to the extent contractually permitted, treat the
Borrower in a manner consistent with other similarly situated borrowers of such
Bank.
     5.02 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of the Eurodollar Rate for
any Interest Period:
          (i) the Administrative Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits referred
to in the definition of “Eurodollar Rate” in Section 1.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Loans as provided herein; or

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          (ii) the Majority Banks determine, acting reasonably, which
determination shall be conclusive, and notify the Administrative Agent that the
relevant rates of interest referred to in the definition of “Eurodollar Rate” in
Section 1.01 hereof upon the basis of which the rate of interest for Loans for
such Interest Period is to be determined are not likely to be adequate to cover
the cost to such Banks of making or maintaining Loans for such Interest Period;
then the Administrative Agent shall give the Borrower and each Bank prompt
notice thereof, and each Bank shall determine (and shall certify from time to
time in a certificate delivered by such Bank to the Administrative Agent setting
forth in reasonable detail the basis of the computation of such amount) the rate
basis reflecting the cost to such Bank of funding its Loan for such Interest
Period for so long as such condition remains in effect, and such rate basis
shall be binding upon the Borrower and shall apply in lieu of the Eurodollar
Rate for such Interest Period (such certification to be conclusive and binding
on the Borrower in the absence of manifest error); provided that the rate basis
certified by each Bank to the Administrative Agent in accordance with this
Section shall be determined by such Bank in good faith and acting reasonably.
     5.03 Illegality. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Bank or its Applicable Lending Office
to honor its obligation to make or maintain Loans, then such Bank shall promptly
notify the Borrower thereof (with a copy to the Administrative Agent), following
which notice, (a) such Bank’s obligation to make Loans shall be suspended until
such time as such Bank may again make and maintain Loans, (b) if mandated by
applicable law, all then outstanding Loans of such Bank shall be prepaid by the
Borrower together with accrued interest thereon on or before such date as may be
mandated by applicable law, provided that if it is lawful for such Bank to
maintain each such Loan until the end of the Interest Period applicable thereto,
then such prepayment shall instead be made at the end of the Interest Period, in
each case, without the necessity of repaying Loans of any other Bank (and the
Commitment Percentage of the remaining Banks shall be adjusted accordingly).
     5.04 Compensation. The Borrower shall pay to the Administrative Agent for
the account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts, as and by way of additional
interest on the Indebtedness hereunder (to the extent such characterization as
interest is permitted by applicable law), as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
that such Bank determines is attributable to:
          (i) any payment, mandatory or optional prepayment made to such Bank
for any reason (including, without limitation, the acceleration of the Loans
pursuant

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to SECTION 10 hereof) on a date other than the last day of an Interest Period
for such Loan; or
          (ii) any failure by the Borrower for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 7 hereof to be satisfied) to borrow or optionally prepay a Eurodollar
Loan from such Bank on the date for such borrowing specified in the relevant
notice of borrowing or prepayment given pursuant to Section 2.02 or 2.09 hereof,
respectively.
A certificate of any Bank submitted to the Borrower as to the amount necessary
to so compensate such Bank shall be conclusive evidence, absent manifest error,
of the amount due from the Borrower to such Bank.
     Without limiting the effect of the preceding sentence, such compensation
shall include an amount equal to the excess, if any, of (A) the amount of
interest (excluding any Applicable Margin) that otherwise would have accrued on
the principal amount so paid, prepaid or not borrowed for the period from the
date of such payment, prepayment or failure to borrow to the last day of the
then current Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan that would have commenced on the date
specified for such borrowing) at the applicable rate of interest for such Loan
provided for herein over (B) the amount of interest (excluding any Applicable
Margin) that otherwise would have accrued on such principal amount at a rate per
annum equal to the interest component of the amount such Bank would have bid in
the London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Bank).
     5.05 Additional Costs in Respect of Letters of Credit. Without limiting the
obligations of the Borrower under Section 5.01 hereof (but without duplication),
if as a result of (i) any Regulatory Change after the date of this Agreement, or
with respect to financial institution that becomes a Bank hereunder after the
date of this Agreement, the date on which such financial institution becomes a
Bank hereunder (including any Regulatory Change after such applicable date with
retroactive effect) or (ii) the implementation after the date of this Agreement,
or with respect to financial institution that becomes a Bank hereunder after the
date of this Agreement, the date on which such financial institution becomes a
Bank hereunder, of any risk-based capital guideline or other requirement
heretofore or hereafter issued by any government or governmental or supervisory
authority implementing at the national level the Basel Accord, there shall be
imposed, modified or deemed applicable any tax, reserve, special deposit,
capital adequacy or similar requirement against or with respect to or measured
by reference to Letters of Credit issued or to be issued hereunder and the
result shall be to increase the cost to the Issuing Bank of issuing (or of any
Bank of purchasing participations in) or maintaining its obligation hereunder

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to issue (or purchase participations in) any Letter of Credit hereunder or
reduce any amount receivable by the Issuing Bank or any Bank hereunder in
respect of any Letter of Credit (which increases in cost, or reductions in
amount receivable, shall be the result of the Issuing Bank or such Bank’s or
Banks’ reasonable allocation of the aggregate of such increases or reductions
resulting from such event), then, upon demand by the Issuing Bank or such Bank
or Banks (through the Administrative Agent), the Borrower shall pay immediately
to the Administrative Agent for account of the Issuing Bank or such Bank or
Banks, from time to time as specified by the Issuing Bank or such Bank or Banks
(through the Administrative Agent), as and by way of additional interest on the
Indebtedness hereunder (to the extent such characterization as interest is
permitted by applicable law), such additional amounts as shall be sufficient to
compensate the Issuing Bank or such Bank or Banks (through the Administrative
Agent) for such increased costs or reductions in amount. A statement as to such
increased costs or reductions in amount incurred by the Issuing Bank or any such
Bank or Banks, submitted by the Issuing Bank or such Bank or Banks to the
Borrower, shall be conclusive in the absence of manifest error as to the amount
thereof. Any Bank and/or the Issuing Bank, as the case may be, shall use
reasonable efforts (consistent with its internal legal policy and regulatory
restrictions) to mitigate any additional costs pursuant to this Section 5.05.
     5.06 Taxes; Loans and Reimbursement Obligations. (a) Any and all payments
by or on account of any obligation of any Obligor to the Banks hereunder shall
be made free and clear of and without deduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if any Obligor shall be required
to deduct or withhold any Indemnified Taxes or Other Taxes from such payments to
the Banks, then (i) the sum payable shall be increased, as and by way of
additional interest on the Indebtedness hereunder (to the extent such
characterization as interest is permitted by applicable law), as necessary so
that after making all required deductions or withholdings (including deductions
or withholdings applicable to additional sums payable under this Section) the
Administrative Agent, Bank or the Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made, (ii) such Obligor shall make such deductions or
withholdings and (iii) such Obligor shall pay the full amount deducted or
withheld (including the full amount of any deduction or withholding from any
additional sums payable under this Section 5.06(a)) to the relevant Governmental
Authority in accordance with applicable law.
          (b) In addition, such Obligor shall pay any Other Taxes and 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 to the
Administrative Agent, any Bank or the Issuing Bank or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement (but in
all events not including any Excluded Taxes) to the relevant Governmental
Authority in accordance with applicable law.

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          (c) Each Obligor shall indemnify the Administrative Agent, each Bank
and each Issuing Bank, within ten (10) days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Bank or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of any Obligor
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto (other than
such penalties, interest or expenses arising through the negligence or willful
misconduct of the Administrative Agent, such Bank or the Issuing Bank), 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 such payment or liability delivered to such Obligor by a Bank or an
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Bank or an Issuing Bank, shall be conclusive absent manifest error.
          (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by any Obligor to a Governmental Authority, such Obligor shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
          (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which an
Obligor is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to such Obligor (with a
copy to the Administrative Agent) such properly completed and executed
documentation as reasonably required to comply with applicable law and
reasonably requested by such Obligor as shall permit such payments to be made
without withholding or at a reduced rate or as shall permit such Obligor to
recover amounts on account of such payments. If any withholding taxes are
imposed on or with respect to any payment on or under this Agreement, as a
result of which any Obligor is required to make any additional payment to any
Foreign Lender under this Section 5.06, and if such Foreign Lender is entitled
to a cash refund from the authorities that imposed such withholding taxes which
is both identifiable and quantifiable by such Foreign Lender as being
attributable to the imposition of such withholding taxes (a “Tax Refund”), and
such Tax Refund may be obtained without increased liability to such Foreign
Lender, such Foreign Lender shall reimburse such Obligor such amount as such
Foreign Lender shall determine acting in good faith to be attributable to the
Tax Refund, together with any interest received thereon (attributable to such
additional payment) as shall leave such Foreign Lender after the reimbursement
in the same position as it would have been if the additional payment had not
been required; provided that, if any Tax Refund reimbursed by a Foreign Lender
to such Obligor is subsequently disallowed, such Obligor shall repay such
Foreign

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Lender such amount (together with interest and any applicable penalty payable by
such Foreign Lender to the relevant taxing authority) promptly after receipt of
notice by such Foreign Lender of such disallowance. Each Obligor agrees to
reimburse each such Foreign Lender for such Foreign Lender’s reasonable
out-of-pocket expenses, if any, incurred in complying with any request hereunder
and agrees that all costs incurred by such Foreign Lender in respect of this
Section 5.06(e) may be deducted from the amount of any reimbursement to such
Obligor in respect of any Tax Refund pursuant to this Section 5.06(e).
          (f) Notwithstanding any other provision of this Section 5.06 to the
contrary, the Obligors shall not be required to indemnify the Administrative
Agent, any Bank or the Issuing Bank to the extent of any withholding tax imposed
by reason of a failure of the Administrative Agent, such Bank or the Issuing
Bank, as the case may be, to comply with any certification, information,
documentation or other reporting requirement if compliance is required by
applicable law, administrative practice or an applicable treaty as a
precondition to exemption from, or reduction in the rate of deduction or
withholding of, such withholding taxes (provided that any such certification,
information, documentation or other reporting requirement required by
administrative practice is generally followed by other similarly situated
financial institutions), including, without limitation, any failure to comply
with the requirement to provide documentation in accordance with
Section 5.06(e).
     5.07 Replacement of Banks. If (i) a Bank requests compensation under
Sections 5.01, 5.05 or 5.06, (ii) Section 5.03 becomes applicable to any Bank,
(iii) the Borrower is required to pay additional amounts pursuant to
Section 5.04 to a particular Bank materially in excess of amounts required to be
paid to the other Banks, or (iv) a Bank does not consent to the Borrower’s
request for any amendment pursuant to Section 12.04 (but only if the Majority
Banks have consented to such amendment), or (v) a Bank is in default under its
obligations pursuant to SECTION 2 hereof, the Borrower may, at its sole expense
and effort, upon notice to such Bank and the Administrative Agent, require such
Bank to assign and delegate, without recourse (in accordance with and subject to
the restrictions, including required consents, contained in Section 12.06), all
of its interests, rights and obligations under this Agreement to an assignee
that assumes those obligations (which assignee may be another Bank); provided
that (i) such Bank receives payment from the assignee or from the Borrower of an
amount equal to the obligations owing to such Bank (to the extent of the
outstanding principal, accrued interest and fees included in those obligations),
together with any additional amounts due pursuant to Section 5.01, 5.05 or 5.06
(in the case of all other amounts so included) and (ii) in the case of any such
assignment resulting from a claim for compensation under Section 5.01, 5.05 or
5.06, such assignment shall result in a reduction in such compensation or
payments. A Bank shall not be required to make any such assignment and
delegation if, as a result of a waiver by such Bank of its right under
Section 5.01, 5.03, 5.05 or 5.06, as applicable, the circumstances entitling the
Borrower to

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require such assignment and delegation have ceased to apply or if a Bank
determines in its sole discretion, that such transfer would result in additional
costs not indemnified by the Borrower and notifies the Borrower of such
additional costs together with a reasonably detailed description of such
additional costs; provided that if the Borrower subsequently agree to indemnify
such Bank for such costs, such Bank shall be required to make such assignment.
SECTION 6.
GUARANTEE.
     6.01 Guarantee. The Original Guarantors and the Subsidiary Guarantors
(collectively, the “Guarantors”) hereby jointly and severally guarantee to the
Secured Parties the prompt payment in full when due (whether at stated maturity,
by acceleration or otherwise) of the principal of and interest on the Loans made
by the Banks to, and the Notes held by each Bank from, and Reimbursement
Obligations in respect of Letters of Credit of, and the Designated Hedging
Obligations of, the Borrower and all other amounts from time to time owing to
the Secured Parties by the Borrower under this Agreement, under the Notes, under
each Designated Hedging Agreement and by any Obligor under any of the other Loan
Documents to which such Obligor is a party, in each case strictly in accordance
with the terms thereof (such obligations being herein collectively called the
“Guaranteed Obligations”). The Guarantors hereby further jointly and severally
agree that if the Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the
Guarantors shall promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Guaranteed Obligations, the same shall be promptly paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance with
the terms of such extension or renewal.
     6.02 Obligations Unconditional. The obligations of the Guarantors under
Section 6.01 hereof are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrower under this Agreement, the Notes, the
Designated Hedging Agreements or any other agreement or instrument referred to
herein or therein, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 6.02 that the obligations of the Guarantors hereunder shall be absolute
and unconditional, joint and several, under any and all circumstances. Without
limiting the generality of the foregoing, it is agreed that the occurrence of
any one or more of the following shall not alter or impair the liability of the
Guarantors hereunder which shall remain absolute and unconditional as described
above:

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          (i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
          (ii) any of the acts mentioned in any of the provisions of this
Agreement, the Notes, the Designated Hedging Agreements or any other agreement
or instrument referred to herein or therein shall be done or omitted;
          (iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement, the
Notes, the Designated Hedging Agreements or any other agreement or instrument
referred to herein or therein shall be waived or any other guarantee of any of
the Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
          (iv) any Lien granted to, or in favor of, the Administrative Agent or
any Bank as security for any of the Guaranteed Obligations shall fail to be
perfected.
Each of the Guarantors hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that any
Secured Party exhaust any right, power or remedy or proceed against the Borrower
or any Guarantor under this Agreement, the Notes, the Designated Hedging
Agreements or any other agreement or instrument referred to herein or therein,
or against any other Person under any other guarantee of, or security for, any
of the Guaranteed Obligations. Each Guarantor agrees that its obligations
pursuant to this Section 6 shall not be affected by any assignment or
participation entered into by any Bank pursuant to Section 12.06 hereof.
     6.03 Reinstatement. The obligations of the Guarantors under this Section 6
shall automatically be reinstated if and to the extent that for any reason any
payment by or on behalf of the Borrower or any Guarantor in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise and the Guarantors jointly and
severally agree that they shall indemnify the Secured Parties on demand for all
reasonable costs and expenses (including, without limitation, fees of counsel)
incurred by them in connection with such rescission or restoration, including
any such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or similar
payment under any bankruptcy, insolvency or similar law.

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     6.04 Subrogation. Until all Loans have been paid in full, all Letter of
Credit Liabilities have been cash collateralized or paid or discharged in full,
all Commitments have been terminated and all Designated Hedging Agreements have
been terminated, each Guarantor hereby waives all rights of subrogation or
contribution, whether arising by contract or operation of law or otherwise by
reason of any payment by it pursuant to the provisions of this Section 6.
     6.05 Remedies. The Guarantors jointly and severally agree that, as between
the Guarantors and the Banks, the obligations of the Borrower under this
Agreement and the Notes may be declared to be forthwith due and payable as
provided in SECTION 10 hereof (and shall be deemed to have become automatically
due and payable in the circumstances provided in said Section 10) for purposes
of Section 6.01 hereof notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against the Borrower and that, in the event of such declaration
(or such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by the Borrower) shall
forthwith become due and payable by the Guarantors for purposes of said Section
6.01.
     6.06 Continuing Guarantee. The guarantee in this Section 6 is a continuing
guarantee, and shall apply to all Guaranteed Obligations whenever arising.
     6.07 Instrument for the Payment of Money. Each Guarantor hereby
acknowledges that the guarantee in this Section 6 constitutes an instrument for
the payment of money, and consents and agrees that any Secured Party, at its
sole option, in the event of a dispute by such Guarantor in the payment of any
moneys due hereunder, shall have the right to bring motion-action under New York
CPLR Section 3213.
     6.08 Rights of Contribution. The Guarantors hereby agree, as between
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below) by reason of the payment by such Guarantor of any Guaranteed
Obligations, each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the next sentence), pay to such Excess Funding
Guarantor an amount equal to such Guarantor’s Pro Rata Share (as defined below
and determined, for this purpose, without reference to the Properties, debts and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of a
Guarantor to any Excess Funding Guarantor under this Section 6.08 shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Guarantor under the other provisions of this Section 6 and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full of all of such
obligations.

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     For purposes of this Section 6.08, (i) “Excess Funding Guarantor” shall
mean, in respect of any Guaranteed Obligations, a Guarantor that has paid an
amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
“Excess Payment” shall mean, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations and (iii) “Pro Rata Share” shall mean, for any
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all Properties of such Guarantor
(excluding any shares of stock of any other Guarantor) exceeds the amount of all
the debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder and any obligations of any other Guarantor that have been
Guaranteed by such Guarantor) to (y) the amount by which the aggregate fair
saleable value of all Properties of all of the Guarantors exceeds the amount of
all the debts and liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of the Guarantors
hereunder and under the other Loan Documents) of all of the Guarantors,
determined as of the date enforcement of the Guaranteed Obligations is sought.
     6.09 General Limitation on Guarantee Obligations. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other applicable law in the
jurisdiction of organization of any Guarantor affecting the rights of creditors
generally, if the obligations of any Guarantor under Section 6.01 hereof would
otherwise, taking into account the provisions of Section 6.08 hereof, be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under said
Section 6.01, then, notwithstanding any other provision hereof to the contrary,
the amount of such liability shall, without any further action by such
Guarantor, any Secured Party or any other Person, be automatically limited and
reduced to the highest amount that is valid and enforceable and not subordinated
to the claims of other creditors as determined in such action or proceeding.
SECTION 7.
CONDITIONS PRECEDENT.
     7.01 Conditions to Effectiveness. The effectiveness of this Credit
Agreement is subject to the receipt by the Administrative Agent of the following
documents and evidence, each of which shall be satisfactory to in both form and
substance:
          (a) Resolutions, etc.. (i) Resolutions for each Obligor, authorizing
its execution, delivery and performance of each Loan Document to which it is to
be party, (ii) the constitutional documents of each Obligor, and (iii) a
certificate duly executed and delivered by an authorized officer of each
Obligor, dated as of the Closing Date and certifying the incumbency and
signatures of its officers authorized to execute each Loan Document on its

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behalf, and the full force and validity of the aforesaid corporate resolutions
and constitutional documents of such Obligor.
          (b) Opinions of Counsel. An opinion, each to be dated on or about the
date of this Agreement and in form and substance satisfactory to the
Administrative Agent and the Banks, of (i) Gómez-Pinzón Abogados, Colombian
counsel to the Administrative Agent and the Banks, (ii) Jones Day, special New
York counsel to the Administrative Agent and the Banks, (iii) Osler, Hoskin &
Harcourt, Canadian counsel to the Borrower, (iv) Kummer Kaempfer Bonner Renshaw
& Ferrario, Nevada counsel to the Borrower, (v) McGuireWoods LLP, Delaware and
New York counsel to the GP, and (vi) Snell & Wilmer L.L.P., Utah counsel to the
Partnership.
          (c) Notes. The Notes, duly executed and delivered, in form and
substance satisfactory to the Administrative Agent and its counsel.
          (d) Security Documents. The Security Documents, each duly executed and
delivered by the parties thereto, in form and substance satisfactory to the
Administrative Agent and its counsel, together with share certificates,
direction letters, acknowledgement notices, and any other documents in
connection with the liens created thereby as the Administrative Agent may
reasonably require.
          (e) Designated Hedging Agreements. Each Designated Hedging Agreement
entered into in connection with Section 9.24 hereof, duly executed and delivered
by the parties thereto, in form and substance satisfactory to the Administrative
Agent and its counsel.
          (f) Loan Documents. Each other Loan Document, duly executed and
delivered by the parties thereto, in form and substance satisfactory to the
Administrative Agent and its counsel.
          (g) Offtake Agreement. The Administrative Agent shall have received a
duly executed copy of each Offtake Agreement listed on Schedule VI hereto.
          (h) Governmental Approvals. Evidence satisfactory to the
Administrative Agent, acting reasonably, that all governmental and third-party
consents and approvals necessary in connection with the financing hereunder and
the Loan Documents and the other transactions contemplated hereby and thereby
have been obtained (without the imposition of any conditions not already
satisfied) and are in full force and effect; all applicable waiting periods have
expired without any action being taken by any competent authority; and no law or
regulation is applicable (in the reasonable judgment of the Administrative
Agent) that restrains, prevents or imposes materially adverse conditions upon
the financing hereunder or thereunder, or any security therefor or any of the
other transactions contemplated hereby or thereby.

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          (i) Reserve Evaluation Report. A Reserve Evaluation Report dated as of
June 30, 2006 in respect of the Colombian Hydrocarbon Properties prepared by the
Independent Petroleum Engineer, in form and substance satisfactory to the
Administrative Agent.
          (j) Insurance Certificates. Certificates of insurance evidencing the
existence of all insurance required to be maintained by the Obligors pursuant to
Section 9.04 hereof and the designation of the Administrative Agent, if required
by Administrative Agent, as agent, as the loss payee thereunder or as an
additional insured, as the case may be, in respect of all insurance covering
Hydrocarbon Properties. In addition, the Borrower shall have delivered a
certificate of the chief financial officer or treasurer of the Borrower setting
forth the insurance obtained by it in accordance with the requirements set forth
in Section 9.04 and stating that such insurance is in full force and effect and
that all premiums then due and payable thereon have been paid.
          (k) Process Agent. Evidence satisfactory to the Administrative Agent
and the Banks that CT Corporation shall have accepted agency for service of
process pursuant to Section 12.15 hereof.
          (l) Schedules and Exhibits. Each Schedule and Exhibit to this
Agreement, which shall be in form and substance satisfactory to each Bank and
the Borrower, all acting reasonably.
          (m) Event of Default. No Event of Default has occurred and is
continuing or is reasonably expected to occur immediately following the making
of any Loans or the issuance of any Letter of Credit.
          (n) Know your Customer Documentation. The Administrative Agent and the
Banks shall have received, and be reasonably satisfied in form and substance
with, all documentation and other information required by bank regulatory
authorities under applicable “know-your-customer” and anti-money laundering
rules and regulations, including but not restricted to the USA PATRIOT Act
(Title III of Pub. L. 107-56), the United Kingdom Proceeds of Crime Act 2002 and
the United Kingdom Money Laundering Regulations 2003.
          (o) Other Documents. Such other documents as the Administrative Agent,
any Bank, the Issuing Bank or special New York counsel to Standard Bank Plc may
reasonably request.
The effectiveness of this Agreement is also subject to the payment by the
Borrower of such fees as the Borrower shall have agreed to pay or deliver to any
Bank or the Administrative Agent in connection herewith, including, without
limitation, the reasonable fees and expenses of Jones Day, special New York
counsel to the Administrative Agent, in connection with the negotiation,

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preparation, execution and delivery of this Agreement, the Notes and the other
Loan Documents and the extensions of credit hereunder.
     7.02 Effectiveness and Subsequent Extensions of Credit.
     The obligation of the Banks to make any Loans and the obligation of an
Issuing Bank to issue any Letter of Credit on or after the Closing Date is
subject to the further conditions precedent that, both immediately prior to the
making of such Loans or the issuance of such Letter of Credit and also
immediately after giving effect thereto and to the intended use thereof: (i) no
Default shall have occurred and be continuing; (ii) the representations and
warranties made by each Obligor in SECTION 8 hereof and in each of the other
Loan Documents to which it is a party, shall be true and complete in all
material respects on and as of the date of the making of such Loans or the
issuance of such Letter of Credit with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date);
(iii) no event or events shall have occurred which alone or in the aggregate
could reasonably be expected to have a Material Adverse Effect; and (iv) in the
case of any Loan or Letter of Credit, the aggregate principal amount of Loans
and Letter of Credit Liabilities shall not exceed the Borrowing Base as
determined pursuant to Sections 1.03 and 2.10 hereof. Each Notice of Borrowing
or request for the issuance of a Letter of Credit by the Borrower hereunder
shall constitute a certification by each Obligor to the effect set forth in the
preceding sentences (both as of the date of such notice or request and, unless
the Borrower otherwise notifies the Administrative Agent prior to the date of
such borrowing or issuance, as of the date of such borrowing or issuance).
SECTION 8.
REPRESENTATIONS AND WARRANTIES.
     Each Obligor represents and warrants to the Banks, the Issuing Bank and the
Administrative Agent that:
     8.01 Corporate Existence. Each Obligor: (a) is a corporation, partnership
or other entity duly incorporated or formed, validly existing and in good
standing (where applicable) under the laws of the jurisdiction of its
organization or formation; (b) has all requisite corporate, partnership or other
applicable entity power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (c) is qualified
to do business and is in good standing (where applicable) in all jurisdictions
in which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify could reasonably be expected to have a
Material Adverse Effect. The Colombian Branch has been duly formed and

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validly existing as a branch of an oil service related company in good standing
(where applicable) under the laws of Colombia.
     8.02 Financial Condition. The Borrower has heretofore furnished to the
Administrative Agent with sufficient copies for each of the Banks the audited
consolidated financial statements of the Borrower as at December 31, 2005 and
unaudited consolidated financial statements of the Borrower for the three months
ended September 30, 2006. All such financial statements fairly present the
consolidated financial condition of the Borrower as at said date in accordance
with GAAP. Neither the Borrower nor any of its Subsidiaries has on the date of
this Agreement any material contingent liabilities, liabilities for Taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or provided
for in its financial statements most recently delivered (including the notes
thereto or as otherwise disclosed to the Administrative Agent in writing prior
to the date hereof). Except as disclosed in writing to the Administrative Agent
on or prior to the date of this Agreement (or on or prior to the date of any
subsequent affirmation or repetition of this representation and warranty, as
applicable), since September 30, 2006 there has been no material adverse change
in the consolidated financial condition, operations or business taken as a whole
of the Borrower from that set forth in said financial statements as at said
date.
     8.03 Litigation. Except as disclosed to the Administrative Agent in writing
prior to the date of this Agreement (or, prior to the date of any subsequent
affirmation or repetition of this representation and warranty, as applicable),
there are no legal or arbitral proceedings, or any proceedings by or before any
Governmental Authority, now pending or (to the knowledge of any Obligor)
threatened against any Obligor which, if adversely determined could reasonably
be expected to have a Material Adverse Effect.
     8.04 No Breach. None of the execution and delivery of this Agreement and
the Notes and the other Loan Documents to which such Obligor is a party, the
consummation of the transactions herein and therein contemplated or compliance
with the terms and provisions hereof and thereof shall conflict with or result
in a breach of, or require any consent under, the charter or by-laws or other
constitutive document of such Obligor, or any applicable law or regulation, or
any order, writ, injunction or decree of any Governmental Authority, or any
agreement or instrument to which the Borrower or any of its Restricted
Subsidiaries is a party or by which any of them or any of their Property is
bound or to which any of them is subject, or constitute a default under any such
agreement or instrument, or (except for Liens created pursuant to the Security
Documents and the other Loan Documents) result in the creation or imposition of
any Lien upon any Property of the Borrower or any of its Restricted Subsidiaries
pursuant to the terms of any such agreement or instrument, except for any such
conflict with or breach of applicable law, regulation, order, injunction or
decree of any Governmental Authority, or default under such agreement or
instrument, that would not have a Material Adverse Effect.

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     8.05 Action. Each Obligor has all necessary corporate, partnership or other
applicable entity power, capacity, authority and legal right to execute, deliver
and perform its obligations under each of the Loan Documents to which it is or
is intended to be a party; the execution, delivery and performance by each
Obligor of each of the Loan Documents to which it is or is intended to be a
party have been duly authorized by all necessary corporate, partnership or other
applicable entity action on its part (including, without limitation, any
required shareholder approvals); and this Agreement has been duly and validly
executed and delivered by each Obligor and constitutes, and each of the Notes
and the other Loan Documents to which it is a party when executed and delivered
by such Obligor (in the case of the Notes, for value) shall constitute, its
legal, valid and binding obligation, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors’ rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
     8.06 Approvals. No authorizations, approvals or consents of, and except for
filings and recordings in respect of the Liens created pursuant to the Security
Documents and except for customary 8-K filings, no filings or registrations
with, any Governmental Authority, or any securities exchange, are necessary for
the execution, delivery or performance by any Obligor of the Loan Documents to
which it is a party or for the legality, validity or enforceability hereof or
thereof.
     8.07 Use of Credit. Neither the Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (as defined in Regulations U and X of the Board
of Governors of the Federal Reserve System), and no part of the proceeds of any
extension of credit hereunder shall be used to buy or carry any such margin
stock.
     8.08 Taxes. As and when required by applicable law, the Borrower and its
Subsidiaries have filed either directly or indirectly through the Borrower all
income tax returns under applicable law required to be filed and all other
material tax returns that are required to be filed by them in any local or
foreign jurisdiction and have paid either directly or indirectly through the
Borrower all Taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower or any of its Subsidiaries (other than those the amount
or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or the applicable Subsidiaries, as the
case may be), except to the extent failure to comply therewith by an
Unrestricted Subsidiary would not have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of Taxes and other

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governmental charges are, in the opinion of such Obligor, adequate. No Obligor
has given or been requested to give a waiver of the statute of limitations
relating to the payment of federal, provincial, local and foreign Taxes or other
impositions.
     8.09 Compliance with Laws and Agreements. Except as disclosed in writing to
the Administrative Agent on or prior to the date of this Agreement (or on or
prior to the date of any subsequent affirmation or repetition of this
representation and warranty, as applicable), each of the Borrower and its
Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its Property and all indentures,
agreements and other instruments binding upon it or its Property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
     8.10 Environmental Matters. (a) Each of the Borrower and its Subsidiaries
has obtained all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its business as
now being or as proposed to be conducted, except to the extent failure to have
any such permit, license or authorization would not have a Material Adverse
Effect. Each of such permits, licenses and authorizations is in full force and
effect and each of the Borrower and its Subsidiaries is in compliance with the
terms and conditions thereof, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply therewith would not have a Material
Adverse Effect.
          (b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Borrower or any of its Subsidiaries to have any environmental,
health or safety permit, license or other authorization required under any
Environmental Law in connection with the conduct of the business of the Borrower
or any of its Subsidiaries or with respect to any generation, treatment,
storage, recycling, transportation, discharge or disposal, or any Release of any
Hazardous Materials generated by the Borrower or any of its Subsidiaries and
which in any case could reasonably be expected to have a Material Adverse
Effect.
          (c) Except as set forth on Schedule V (or, after the date of this
Agreement, as disclosed to the Administrative Agent in writing):

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          (i) neither the Borrower nor any of its Restricted Subsidiaries owns
or operates a treatment, storage or disposal facility requiring a permit under
any foreign or local statute that has not already been obtained where the
failure to obtain such permit could reasonably be expected to have a Material
Adverse Effect;
          (ii) to the knowledge of the Borrower and its Subsidiaries after due
inquiry in accordance with standard hydrocarbon industry practice, no
polychlorinated biphenyls (PCB’s) are or have been present at any site or
facility now or previously owned, operated or leased by the Borrower or any of
its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect;
          (iii) to the knowledge of the Borrower and its Subsidiaries after due
inquiry in accordance with standard hydrocarbon industry practice, no asbestos
or asbestos-containing materials is or has been present at any site or facility
now or previously owned, operated or leased by the Borrower or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse
Effect;
          (iv) to the knowledge of the Borrower and its Subsidiaries after due
inquiry in accordance with standard hydrocarbon industry practice, there are no
underground storage tanks or surface impoundments for Hazardous Materials,
active or abandoned, at any site or facility now or previously owned, operated
or leased by the Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect (provided that all such tanks or
impoundments which could not reasonably be expected to have a Material Adverse
Effect have been set forth on Schedule V or, if acquired after the date of this
Agreement, have been disclosed to the Administrative Agent in writing);
          (v) to the knowledge of the Borrower and its Subsidiaries after due
inquiry in accordance with standard hydrocarbon industry practice, no Hazardous
Materials have been Released at, on or under any site or facility now or
previously owned, operated or leased by the Borrower or any of its Subsidiaries
in a reportable quantity established by statute, ordinance, rule, regulation or
order which could reasonably be expected to have a Material Adverse Effect
(provided that all such Releases which could not reasonably be expected to have
a Material Adverse Effect have been set forth on Schedule V or, if such Release
occurs after the date of this Agreement, have been disclosed to the
Administrative Agent in writing); and
          (vi) to the knowledge of the Borrower and its Subsidiaries after due
inquiry in accordance with standard hydrocarbon industry practice, no Hazardous
Materials have been otherwise Released at, on or under any site or facility now
or

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previously owned, operated or leased by the Borrower or any of its Subsidiaries
that would have a Material Adverse Effect.
          (d) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Borrower or any of its Restricted
Subsidiaries and no site or facility now or, to the knowledge of the Borrower,
previously owned or operated by the Borrower or any of its Restricted
Subsidiaries is listed or proposed by any Governmental Authority as a site
requiring investigation or clean-up and which in any case could reasonably be
expected to have a Material Adverse Effect.
          (e) As of the date of this Agreement, no Liens have arisen and remain
outstanding under or pursuant to any Environmental Laws on any site or facility
owned or operated by the Borrower or any of its Restricted Subsidiaries, and no
government action has been taken or is in process that could subject any such
site or facility to Liens under or pursuant to any Environmental Laws and
neither the Borrower nor any of its Restricted Subsidiaries would be required to
place any notice or restriction relating to the presence of Hazardous Materials
at any site or facility owned by it in any deed to the real property on which
such site or facility is located. Upon each subsequent affirmation or repetition
of this representation and warranty, no Liens have arisen and remain outstanding
under or pursuant to any Environmental Laws on any site or facility owned or
operated by the Borrower or any of its Restricted Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect, and no government
action has been taken or is in process that could subject any such site or
facility to Liens under or pursuant to any Environmental Laws which could
reasonably be expected to result in a Material Adverse Effect and neither the
Borrower nor any of its Restricted Subsidiaries would be required to place any
notice or restriction relating to the presence of Hazardous Materials at any
site or facility owned by it in any deed to the real property on which such site
or facility is located.
          (f) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or that are in the possession of
the Borrower or any of its Restricted Subsidiaries in relation to any site or
facility now or previously owned, operated or leased by the Borrower or any of
its Restricted Subsidiaries which have not been made available to the Banks that
indicate any fact or condition that would reasonably be expected to have a
Material Adverse Effect.
     8.11 Subsidiaries, etc. (a) With respect to representations under this
Section 8.11(a) made or deemed made after the date of this Agreement, set forth
in the most recently updated Schedule III delivered by the Borrower to the
Administrative Agent from time to time is a true and complete list of all of the
Subsidiaries of the Borrower, together with, for each such Subsidiary, (i) the
jurisdiction of organization of such Subsidiary, (ii) each Person holding

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ownership interests in such Subsidiary, (iii) the nature of the ownership
interests held by each such Person and the percentage of ownership of such
Subsidiary represented by such ownership interests and (iv) indicating whether
each such Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary.
Except as disclosed in Schedule III hereto, (x) each of the Borrower and its
Subsidiaries owns, free and clear of Liens (other than Liens created pursuant to
the Security Documents), and has the unencumbered right to vote, all outstanding
ownership interests in each Person shown to be held by it in Schedule III
hereto, (y) all of the issued and outstanding capital stock of each such Person
organized as a corporation is validly issued, fully paid and nonassessable and
(z) there are no outstanding Equity Rights with respect to such Person which are
not disclosed in Schedule III hereto.
          (b) None of the Restricted Subsidiaries of the Borrower is, on the
date of this Agreement, subject to any indenture, agreement, instrument or other
arrangement of the type described in the last sentence of Section 9.15 hereof.
     8.12 True and Complete Disclosure. The information (other than
projections), reports, financial statements, exhibits, disclosure letters and
schedules furnished in writing to the Administrative Agent, an Issuing Bank or
any Bank in connection with the negotiation, preparation or delivery of this
Agreement and the other Loan Documents or included herein or therein or
delivered pursuant hereto or thereto and prepared by or on behalf of the
Obligors (or, when prepared by any other Person, to the knowledge of the
Borrower) when taken as a whole do not contain any untrue statement of material
fact or omit to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading. All written information (other than projections) furnished after the
date of this Agreement by the Obligors to the Administrative Agent, the Issuing
Bank or the Banks in connection with this Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby when prepared by or on
behalf of the Obligors shall be, (or, when prepared by any other person to the
knowledge of the Borrower shall be) true, complete and accurate in every
material respect on the date as of which such information is stated or
certified; and all projections delivered to the Administrative Agent and the
Banks were based on assumptions believed in good faith to be reasonable at the
time such projections were made (it being understood that no assurance can be
given that any such assumption will be realized). As of the date hereof, there
is no fact known to any Obligor that could reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Loan
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to the Banks for use in connection with the
transactions contemplated hereby or thereby.
     8.13 Title to Properties. The Borrower and each of its Restricted
Subsidiaries has good and indefeasible title to the Properties shown to be owned
by it on its most recent financial statements, free and clear of all Liens
(other than Permitted Liens), except for minor title defects

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that would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect; provided that other than in respect to of Permitted
Liens, no such title defects exists with respect to the Hydrocarbon Properties.
     8.14 Capitalization. Schedule IV sets forth as of the date of this
Agreement (or, with respect to representations under this Section 8.14 made or
deemed made after the date of this Agreement, set forth in the most recently
updated Schedule IV delivered by the Borrower to the Administrative Agent sets
forth as of such date) the authorized capital stock of each Restricted
Subsidiary and the amount of such capital stock issued and outstanding
(including currently outstanding warrants and stock options).
     8.15 Insurance. The Borrower and its Subsidiaries maintain insurance with
financially sound and reputable third party insurers of a character usually
maintained by Persons engaged in the same or similar businesses, against loss,
damage and liability of the kinds and in the amounts customarily maintained by
such Persons. All such insurance is in full force and effect and all premiums
due and payable on such insurance has been paid.
     8.16 ERISA. Neither the Borrower nor any other Obligor or Restricted
Subsidiary maintains any employee pension benefit plan which is subject to the
provisions of Title IV of ERISA.
SECTION 9.
COVENANTS OF THE OBLIGORS.
     Each Obligor covenants and agrees with the Banks, the Issuing Bank and the
Administrative Agent that, so long as any Commitment, Loan or Letter of Credit
Liability is outstanding and until payment in full of all amounts payable by the
Borrower hereunder:
     9.01 Financial Statements, Etc. The Borrower shall (for itself and on
behalf of each of the other Obligors) deliver to the Administrative Agent (with
sufficient copies for each Bank):
          (a) as soon as available and in any event within 60 days after the end
of each quarterly fiscal period of each fiscal year of the Borrower (other than
the last quarterly fiscal period of each fiscal year of the Borrower),
consolidated and consolidating statements of income, retained earnings and cash
flow of the Borrower for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets of the Borrower as at the end of
such period, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the corresponding period in the
preceding fiscal year, accompanied by (i) a certificate of a senior financial
officer of the Borrower, which certificate shall state that said consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the

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Borrower, and said consolidating financial statements reconcile to the
consolidated financial statements of the Borrower, and that such consolidated
financial statements have been prepared in accordance with GAAP, as at the end
of, and for, such period (subject to normal year-end audit adjustments), and
(ii) a certificate of a senior officer of the Borrower setting forth the
valuation of Indebtedness included in clause (c) of the definition of
Indebtedness, if any;
          (b) as soon as available and in any event within 105 days after the
end of each fiscal year of the Borrower, consolidated and consolidating
statements of income, retained earnings and cash flow of the Borrower for such
fiscal year and the related consolidated and consolidating balance sheets of the
Borrower as at the end of such fiscal year, setting forth in each case in
comparative form the corresponding consolidated and consolidating figures for
the preceding fiscal year, and accompanied (i) in the case of said consolidated
statements and balance sheet of the Borrower, by an opinion thereon of
independent certified public accountants of recognized international standing,
which opinion shall state that said consolidated financial statements fairly
present the consolidated financial position and results of operations of the
Borrower as at the end of, and for, such fiscal year in accordance with GAAP and
(ii) in the case of said consolidating statements and balance sheet, by a
certificate of a senior financial officer of the Borrower, which certificate
shall state that said consolidating financial statements reconcile to the
consolidated financial statements of the Borrower, and that such consolidating
financial statements have been prepared in accordance with GAAP, as at the end
of, and for, such fiscal year;
          (c) promptly upon their filing, copies of all registration statements,
regular periodic reports and any other statements or reports (including material
change reports), if any, which the Borrower shall have filed with any securities
exchange or securities regulatory authority;
          (d) promptly upon the mailing thereof to the public shareholders of
the Borrower, copies of all financial statements, reports and proxy statements
so mailed (other than any such statements or reports delivered pursuant to
clause (c) above);
          (e) on or before each Report Delivery Date, the applicable Reserve
Evaluation Report;
          (f) promptly after the Borrower or any of its Restricted Subsidiaries
knows or has reason to believe that any Default has occurred, a notice of such
Default describing the same in reasonable detail and, together with such notice
or as soon thereafter as possible, a description of the action that the Borrower
or any of its Restricted Subsidiaries has taken or proposes to take with respect
thereto;

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          (g) within 30 days after the end of each fiscal quarter, a report
prepared by or on behalf of the Borrower detailing production of Hydrocarbons by
the Borrower and its Restricted Subsidiaries during such fiscal quarter,
including gross production, and net production after royalties of the Borrower
and its Restricted Subsidiaries and such other related information as the
Administrative Agent may reasonably request;
          (h) within 30 days after the end of each fiscal year of the Borrower,
a report prepared by or on behalf of the Borrower detailing (i) the projected
production of Hydrocarbons by the Borrower and its Restricted Subsidiaries in
each of the next four fiscal quarters and the assumptions used in calculating
such projections, and (ii) the projected Capital Expenditures to be incurred by
the Borrower and its Restricted Subsidiaries in each of the next four fiscal
quarters, with a breakdown of those Capital Expenditures to be used for the
development of proved undeveloped reserves in Colombian Hydrocarbon Properties,
and the assumptions used in calculating such projections;
          (i) within 30 days after the end of each fiscal year of the Borrower,
copies of all insurance policies maintained by the Borrower and its Restricted
Subsidiaries, and within ten (10) Business Days of the renewal of any such
insurance policy, a copy of the renewal schedule in respect of such insurance
policy;
          (j) no later than 30 days before the end of each fiscal year of the
Borrower, an annual operating budget for the Borrower and its Restricted
Subsidiaries for the forthcoming fiscal year; and
          (k) from time to time such other information regarding the financial
condition, operations, business, or Properties of the Borrower or any of its
Subsidiaries as any Bank or the Administrative Agent may reasonably request.
The Borrower shall furnish to the Administrative Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b) above, a
certificate of a senior financial officer of the Borrower (i) to the effect that
no Default has occurred and is continuing (or, if any Default has occurred and
is continuing, describing the same in reasonable detail and describing the
action that the Borrower has taken or proposes to take with respect thereto),
and (ii) setting forth in reasonable detail the computations necessary to
determine whether the Borrower is in compliance with Sections 9.08(g), 9.10 and
9.16 hereof as of the end of the respective quarterly fiscal period or fiscal
year, which computations in respect of Sections 9.10 and 9.16 shall be in
accordance with GAAP. The Borrower shall be entitled to use electronic mail to
furnish to the Administrative Agent the financial statements, reports,
certificates and other documents to be delivered pursuant to this Section 9.01,
provided that, if requested by the Administrative Agent

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at any time, the Borrower shall promptly deliver to the Administrative Agent a
paper copy of such financial statement, report, certificate or other document.
     9.02 Litigation. The Borrower shall promptly give to the Administrative
Agent notice of all legal or arbitral proceedings, and of all proceedings by or
before any Governmental Agency, and any material development in respect of such
legal or other proceedings, affecting the Borrower or any of its Subsidiaries,
except proceedings which, if adversely determined, would not have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Borrower
shall give to the Administrative Agent notice of the assertion of any
Environmental Claim by any Person against, or with respect to the activities of,
the Borrower or any of its Restricted Subsidiaries and notice of any alleged
violation of or non-compliance with any Environmental Laws or any permits,
licenses or authorizations, other than any Environmental Claim or alleged
violation which, if adversely determined, would not have a Material Adverse
Effect.
     9.03 Existence, Etc. The Borrower shall, and shall cause each of its
Restricted Subsidiaries to:
          (a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (provided that nothing in this
Section 9.03 shall prohibit any transaction expressly permitted under
Section 9.05 hereof);
          (b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including Environmental Laws
and, if applicable to the Borrower or any of its Restricted Subsidiaries at any
time hereafter, the Employee Retirement Income Security Act of 1974 (“ERISA”))
if failure to comply with such requirements could reasonably be expected to have
a Material Adverse Effect;
          (c) pay and discharge all Taxes imposed on it or on its income or
profits or on any of its Properties prior to the date on which penalties attach
thereto, except those that are being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
established by the applicable Obligor;
          (d) pay and discharge all trade debt and royalties when due and
payable, except those that are being contested in good faith and by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
established by the applicable Obligor;
          (e) maintain or cause the maintenance all of its Properties used or
useful in its business in good working order and condition and in compliance
with applicable laws and insurance requirements (ordinary wear and tear
excepted) and maintain and operate (or to the

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extent that the Borrower or one of its Restricted Subsidiaries is not the
operator of any Hydrocarbon Properties, use its reasonable commercial efforts to
cause the operator thereof to do so) its Hydrocarbon Properties in accordance
with prudent industry standards (provided that nothing in this Section 9.03
shall prohibit any transaction permitted by Sections 9.05, 9.06, 9.08 and 9.09);
          (f) keep adequate records and books of account, in which complete
entries shall be made in accordance with GAAP; and
          (g) promptly obtain from time to time at its own expense and at all
times maintain in full force and effect without any material modification or
amendment, all such governmental licenses, authorizations, registrations,
consents, permits and approvals as may be required for the Borrower or its
Restricted Subsidiaries to (a) comply with its obligations, and preserve its
rights under, each of the Loan Documents and (b) maintain the existence,
priority and perfection of the Liens purported to be created under the Security
Documents.
     9.04 Insurance. The Borrower shall, and shall cause each of its Restricted
Subsidiaries (including without limitation the Subsidiary Guarantors) to, keep
insured by financially sound and reputable insurers all Property of a character
customarily insured by Persons engaged in the same or similar businesses
similarly situated against loss or damage of the kinds and in the amounts
customarily insured against by such Persons and carry such other insurance as is
customarily carried by such Persons or as is required by applicable law.
     9.05 Prohibition of Fundamental Changes; Disposition of Assets. The
Borrower shall not, nor shall it permit any of its Restricted Subsidiaries to,
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution). The Borrower shall ensure that the GP remains the general partner
of the Partnership, and the Borrower shall continue to own, directly or
indirectly, all of the Voting Stock of each Restricted Subsidiary. The Borrower
shall not, nor shall it permit any of its Restricted Subsidiaries to, acquire
any business or Property (other than Hydrocarbon Properties and related assets)
from, or Capital Stock (other than the Capital Stock of Persons engaged in the
acquisition and exploitation of, or the exploration for or development or
production of, Hydrocarbon reserves and activities reasonably related thereto)
of, or be a party to any acquisition of, any Person except for purchases of
inventory and other Property to be sold or used in the ordinary course of
business and Investments permitted under Section 9.08 hereof. The Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to, convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, any part of its business or Property (if any such conveyance,
sale, lease, transfer or disposal would result in a Borrowing Base Deficiency,
including by way of disposition of the Capital Stock of a Restricted
Subsidiary), whether now owned or hereafter acquired including, without
limitation, receivables

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and leasehold interests, but excluding, and without duplication, (i) obsolete or
worn-out Property, tools or equipment no longer used or useful in its business
so long as the amount thereof sold in any single fiscal year by the Borrower and
its Restricted Subsidiaries shall not have an aggregate fair market value in
excess of $2,000,000 (or its equivalent in other currencies), (ii) any
Hydrocarbons produced or sold in the ordinary course of business and on ordinary
business terms excluding any sale or lease of interests in Hydrocarbons in the
ground, (iii) on and after the date of this Agreement, any other Properties of
the Borrower and its Restricted Subsidiaries (other than Unrestricted
Properties), including any such disposition by way of disposition of the Capital
Stock of any Restricted Subsidiary provided that the aggregate fair market value
of such other Properties (including such Capital Stock) conveyed, sold, leased,
transferred or otherwise disposed of on or after the date of this Agreement
shall not exceed $1,000,000 (or its equivalent in other currencies) during any
Determination Period, and provided further that such conveyance, sale, lease,
transfer or other disposition shall not include any accounts receivable or
inventory of the Borrower or any of its Restricted Subsidiaries other than such
accounts, receivable or inventory, (x) incidental to the sale of Hydrocarbon
Properties and (y) created or produced from such Hydrocarbon Properties on or
after the effective date of any such conveyance, sale, lease, transfer or other
disposition of such Hydrocarbon Properties, (iv) the expiration of leases
covering Hydrocarbon Properties, (v) Unrestricted Properties, (vi) sales or
dispositions of Hydrocarbon Properties (and related tangibles) resulting from
any pooling or unitization entered into in the ordinary course of business when,
in the reasonable judgment of the Borrower, it is necessary to do so in order to
facilitate the orderly exploration, development or operation of such Hydrocarbon
Properties, (vii) Dispositions of any business or Property from one Obligor to
another, (viii) Dispositions permitted by Section 9.06, and (ix) the sale of the
Capital Stock of Unrestricted Subsidiaries. Notwithstanding the foregoing
provisions of this Section 9.05:
          (a) any Restricted Subsidiary of the Borrower may be amalgamated,
merged or consolidated with or into: (i) the Borrower if the Borrower shall be
the continuing or surviving corporation or (ii) any other such Restricted
Subsidiary; provided (A) that if any such transaction shall be between a
Subsidiary Guarantor and a Restricted Subsidiary not a Subsidiary Guarantor, and
such Subsidiary Guarantor is not the resulting, continuing or surviving entity,
then the resulting, continuing or surviving entity shall have assumed all of the
obligations of such Subsidiary Guarantor hereunder and (B) the resulting,
continuing or surviving Restricted Subsidiary shall either be organized in
(1) the same jurisdiction as the Restricted Subsidiary that is not the surviving
Subsidiary, (2) the same jurisdiction as the surviving Subsidiary if the assets
of the non-surviving Subsidiary have a de minimis value or derive substantially
all of their value from the jurisdiction in which the surviving Subsidiary is
organized, (3) any state of the United States of America or province of Canada,
or (4) such other jurisdiction as approved by the Majority Banks, acting
reasonably;

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          (b) any Restricted Subsidiary of the Borrower may sell, lease,
transfer or otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise) to the Borrower or a Wholly Owned Subsidiary of the
Borrower which is a Restricted Subsidiary; provided that (i) if any such sale is
by a Subsidiary Guarantor to a Restricted Subsidiary of the Borrower not a
Subsidiary Guarantor, then such Restricted Subsidiary shall have assumed all of
the obligations of such Subsidiary Guarantor hereunder and (ii) such Wholly
Owned Subsidiary that is buying, leasing or otherwise acquiring such Property is
incorporated in (A) the same jurisdiction as the selling, leasing, transferring
or disposing Restricted Subsidiary, (B) the same jurisdiction as the Wholly
Owned Subsidiary if the assets of the disposing Restricted Subsidiary have a de
minimis value or derive substantially all of their value from the jurisdiction
in which the Wholly Owned Subsidiary is organized, (C) any state of the United
States of America or province of Canada, or (D) such other jurisdiction as
approved by the Majority Banks, acting reasonably; and
          (c) the Borrower or any Restricted Subsidiary of the Borrower may
merge or consolidate with any other Person if (i) in the case of a merger or
consolidation of the Borrower, the Borrower is the surviving corporation and, in
any other case, the surviving corporation is a Wholly Owned Subsidiary of the
Borrower which is a Restricted Subsidiary and (ii) after giving effect thereto
no Default would exist hereunder.
     9.06 Limitation on Liens. The Borrower shall not, nor shall it permit any
of its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of their Property, whether now owned or hereafter acquired,
except:
          (a) Liens created pursuant to the Security Documents;
          (b) Liens in existence on the date of this Agreement and listed on
Schedule II hereto;
          (c) Liens imposed by any Governmental Authority for taxes,
assessments, charges or levies not yet due or which are being contested in good
faith and by appropriate proceedings if, unless the amount thereof is not
material with respect to it or its financial condition, adequate reserves with
respect thereto are maintained on the books of the Borrower or the affected
Subsidiaries, as the case may be, in accordance with GAAP;
          (d) Liens, privileges or charges imposed by law, such as statutory
liens and deemed trusts, workers’ compensation, unemployment insurance, pension
and employment law 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 45 days or which are being contested
in good faith and by appropriate proceedings and Liens securing judgments

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(but only to the extent, for an amount and for a period not resulting in an
Event of Default under Section 10(h) hereof);
          (e) pledges or deposits under worker’s compensation, unemployment
insurance and other social security or similar legislation;
          (f) (i) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety, stay,
appeal and indemnity bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business, and (ii) Liens to secure
Indebtedness permitted pursuant to Section 9.07(e) in an amount not to exceed
$2,000,000; provided that, for the avoidance of doubt, nothing in this clause
(f) shall be construed to permit the making of any deposit to secure an
Obligor’s obligations under any Hedging Agreement (other than a Designated
Hedging Agreement);
          (g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of Property, or minor imperfections in title thereto which, in the aggregate,
are not material in amount, and which do not in any case materially detract from
the value of the Property subject thereto or interfere with the ordinary conduct
of the business of the Borrower or any of its Restricted Subsidiaries;
          (h) Liens on Property of any Person which becomes a Restricted
Subsidiary of the Borrower after the date of this Agreement, provided that such
Liens are in existence at the time such Person becomes a Restricted Subsidiary
of the Borrower and were not created in anticipation or contemplation thereof;
          (i) Liens upon real and/or tangible personal Property acquired after
the date of this Agreement (by purchase, construction or otherwise) by the
Borrower or any of its Restricted Subsidiaries, each of which Liens existed on
such Property before the time of its acquisition and was not created in
anticipation or contemplation thereof, provided that such Lien shall not spread
to cover any other Property of the Borrower or any such Restricted Subsidiary;
          (j) [Intentionally Omitted]
          (k) undetermined or inchoate Liens arising in the ordinary course of
and incidental to construction, maintenance or current operations of any Obligor
which relate to obligations which are not overdue or which are being contested
in good faith and by appropriate proceedings and for which appropriate reserves
have been established in accordance with GAAP;
          (l) Liens incurred or created in the ordinary course of business and
in accordance with sound industry practice in respect of the exploration,
development or operation

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of Hydrocarbon Properties, or related production or processing facilities in
which such Person has an interest, or for the transmission of Hydrocarbons as
security in favor of any other Person conducting the exploration, development,
operation or transmission of the Property to which such Liens relate, for the
applicable Obligor’s portion of the costs and expenses of such exploration,
development, operation or transmission, provided that such Liens are not overdue
or are being contested in good faith and by appropriate proceedings and for
which appropriate reserves have been established in accordance with GAAP;
          (m) the Lien or any right of distress reserved in or exercisable under
any real property lease for rent or otherwise to effect compliance with the
terms of such lease in respect of which the rent or other obligations is not at
the time overdue or which is being contested in good faith and by appropriate
proceedings and for which appropriate reserves have been established in
accordance with GAAP;
          (n) overriding royalty interests, net profit interests, reversionary
interests and carried interests in respect of Hydrocarbon Properties of any
Obligor that (i) are in existence at the time any such Hydrocarbon Properties
are acquired by such Obligor, (ii) come into existence within six months
following the date of the acquisition of such Hydrocarbon Properties or
(iii) are entered into between Obligors;
          (o) farmout interests entered into in the ordinary course of business
on standard industry terms, provided that the value of such interests taken
together with all other farmout interests as set forth in the most recent
Reserve Evaluation Report prior to the granting of such interests shall not at
any time exceed $2,000,000 (or its equivalent in other currencies) in the
aggregate;
          (p) any right of first refusal or similar agreement with respect to
any Properties, provided such right is on ordinary business terms and provides
for the receipt of value for the Properties subject to such right in an amount
(or on a basis which should result in an amount) not substantially less than the
fair market value of such Properties;
          (q) contractual Liens which arise in the ordinary course of business
under operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out agreements, division orders, contracts
for the sale, transportation or exchange of oil and natural gas, unitization and
pooling declarations and agreements, area of mutual interest agreements,
overriding royalty agreements, marketing agreements, processing agreements, net
profits agreements, development agreements, gas balancing or deferred production
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or other geophysical permits or agreements,
and other agreements which are usual and customary in the oil and gas business
and are for claims that are not delinquent or that are being contested in

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good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP, provided that any such Lien referred to in
this clause does not materially impair the use of the Property covered by such
Lien for the purposes for which such Property is held by the Borrower or any
Restricted Subsidiary or materially impair the value of such Property subject
thereto;
          (r) Liens arising solely by virtue of any statutory or common law
provision relating to banker’s liens, rights of set-off or similar rights and
remedies and burdening only deposit accounts or other funds maintained with a
creditor depository institution, provided that no such deposit account is a
dedicated cash collateral account or is subject to restrictions against access
by the depositor in excess of those set forth by regulations promulgated by the
Board of Governors of the Federal Reserve System of the United States, and no
such deposit account is intended by the Borrower or any of its Restricted
Subsidiaries to provide collateral to the depository institution;
          (s) Liens on cash or securities pledged to secure performance of
tenders, surety and appeal bonds, government contracts, performance and return
of money bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business, provided that the aggregate amount of Indebtedness permitted
to be secured by such Liens under this Section 9.06(u) shall not at any time
exceed $2,000,000 (or its equivalent in other currencies) except with the prior
written consent of the Majority Banks;
          (t) judgment and attachment Liens not giving rise to an Event of
Default, provided that any appropriate legal proceedings which may have been
duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall not
have expired and no action to enforce such Lien has been commenced;
          (u) Liens securing Indebtedness permitted under Section 9.07(i);
          (v) Liens on the Property of any Obligor which are not otherwise
permitted by the foregoing paragraphs of this Section 9.06 if the indebtedness,
liabilities or other obligations secured by such Liens are incurred in the
ordinary course of business of such Obligor, provided that the aggregate amount
of indebtedness, liabilities or other obligations permitted to be secured by
such Liens under this Section 9.06(p) shall not at any time exceed $2,000,000
(or its equivalent in other currencies); and

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          (w) any extension, renewal or replacement of Liens permitted by the
foregoing paragraphs of this Section 9.06, provided that the Liens permitted
hereunder shall not be spread to cover any additional Indebtedness or Property
(other than a substitution of like Property).
     9.07 Indebtedness. The Borrower shall not, nor shall it permit any of the
Restricted Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
          (a) Indebtedness to the Administrative Agent, the Issuing Bank and the
Banks hereunder or under any Loan Document;
          (b) Indebtedness of Restricted Subsidiaries to the Borrower or to
other Restricted Subsidiaries, or of the Borrower to Restricted Subsidiaries
that are subordinated to the obligations of the Obligors to the Secured Parties
under the Loan Documents;
          (c) Indebtedness of the Argentine Subsidiaries to the Borrower or to
any Restricted Subsidiary, and Indebtedness of the Borrower or any of its
Restricted Subsidiaries to an Argentine Subsidiary that is subordinated to the
obligations of the Obligors to the Secured Parties under the Loan Documents;
          (d) [Intentionally Omitted]
          (e) Indebtedness extended by suppliers on normal trade terms in
connection with purchases of goods and services in the ordinary course of
business in an aggregate amount at any time not to exceed $2,000,000 (or its
equivalent in other currencies);
          (f) Indebtedness in respect of Taxes, assessments or governmental
charges, and Indebtedness in respect of claims for labor, materials or supplies
incurred in the ordinary course of business to the extent that payment thereof
shall not be overdue for a period of more than 45 days;
          (g) Indebtedness pursuant to Designated Hedging Agreements;
          (h) Indebtedness secured by investments in or deposits with financial
institutions referred to in Sections 9.08(d) and (e);
          (i) Indebtedness in the form of Capital Lease Obligations up to
$1,000,000 (or its equivalent in other currencies) outstanding at any time;
          (j) Indebtedness existing as of the Closing Date and set forth in
Schedule IX;

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          (k) Indebtedness incurred under working capital facilities or
short-term local currency loans or letters of credit up to $1,000,000 (or its
equivalent in other currencies) outstanding at any time;
          (l) Indebtedness (i) incurred to finance the purchase or construction
of capital assets (which shall be deemed to exist if the Indebtedness is
incurred at or within 180 days before or after the purchase or construction of
the capital assets) or (ii) of a Restricted Subsidiary acquired after the date
hereof, which Indebtedness existed at the time of such acquisition and was not
incurred in contemplation of such acquisition and extensions, renewals,
refinancings and replacements thereof that do not increase the outstanding
principal amount thereof (inclusive of premium and fees and expenses); provided
that (x) the aggregate principal amount of such Indebtedness incurred after the
Closing Date under clauses (i) and (ii) shall not exceed $2,000,000 outstanding
at any time and (y) such Indebtedness shall be recourse solely to the assets
purchased or constructed with the proceeds of such Indebtedness;
          (m) Indebtedness associated with bonds or surety obligations required
by governmental requirements in connection with the operation of the Hydrocarbon
Properties; and
          (n) endorsements of negotiable instruments for collection in the
ordinary course of business.
     9.08 Investments. The Borrower shall not, nor shall it permit any of its
Restricted Subsidiaries to, make or permit to remain outstanding any Investments
except:
          (a) [Intentionally Omitted];
          (b) operating deposit accounts with banks;
          (c) Permitted Investments;
          (d) Investments by the Borrower and its Restricted Subsidiaries in
capital stock of Restricted Subsidiaries, in Indebtedness of the Borrower or any
of its Restricted Subsidiaries or in Indebtedness of other Subsidiaries
permitted pursuant to Section 6.08 or 9.07(b) hereof, in each case, which may be
made, either directly or through an investment in or deposit with a financial
institution located or operating in the jurisdiction of the applicable
Subsidiary or any applicable branch thereof, or a financial institution located
or operating in the United States (provided the interest of the Borrower in any
such investment in the case of capital stock of a Restricted Subsidiary which is
directly owned by an Obligor is subject to a first priority Lien of the Lenders
in form and substance satisfactory to the Administrative Agent, acting
reasonably);

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          (e) Investments by the Borrower or any of its Restricted Subsidiaries
in capital stock of any Argentine Subsidiary or in Indebtedness of any Argentine
Subsidiary permitted pursuant to Section 9.07(c) hereof;
          (f) Investments which may be made in the Capital Stock of any Wholly
Owned Subsidiary of the Borrower formed or acquired by the Borrower or any of
its other Wholly Owned Subsidiaries (other than Unrestricted Subsidiaries) after
the date of this Agreement (a “New Wholly Owned Subsidiary”), provided that
(i) such New Wholly Owned Subsidiary is maintained as a separate Subsidiary of
the Borrower, (ii) such New Wholly Owned Subsidiary is engaged principally in
the business of the acquisition and exploitation of, exploration for and/or
development, production, processing, marketing, gathering and sales of oil, gas
or other Hydrocarbons, (iii) the Borrower complies with Section 9.16 hereof with
respect to such New Wholly Owned Subsidiary immediately following the
consummation of such Investment by the Borrower;
          (g) loans and advances by the Borrower and its Restricted Subsidiaries
to their respective employees in the ordinary course of their business as
presently conducted in an aggregate principal amount not to exceed $250,000 (or
its equivalent in other currencies) at any time outstanding;
          (h) Investments made with the proceeds of net income attributable to
any Unrestricted Subsidiary by such Unrestricted Subsidiary or another
Unrestricted Subsidiary;
          (i) Investments made directly or through any Restricted Subsidiary or
Argentine Subsidiary for the acquisition, exploration and development of
interests in Hydrocarbon Properties and tangibles relating thereto;
          (j) Investments made with the proceeds of Capital Stock of the
Borrower or any Unrestricted Subsidiary issued after the date of this Agreement;
provided that no such equity investment considered independently shall cause any
Subsidiary or Unrestricted Subsidiary to become a Restricted Subsidiary;
          (k) Investments made in any compensation plan or incentive arrangement
established by any Obligor or a Restricted Subsidiary for its employees or
executives, provided that the aggregate amount of any such Investment shall not
exceed $250,000 in any fiscal year of the Borrower;
          (l) any purchase or redemption of Capital Stock or Equity Rights from
a departing director or officer of any Obligor or a Restricted Subsidiary,
provided that the aggregate amount of any such purchase or redemption shall not
exceed $1,000,000 in any fiscal year of the Borrower; and

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          (m) to the extent not included in the foregoing clauses (a) through
(l), additional Investments up to but not exceeding $500,000 (or its equivalent
in other currencies) in the aggregate; provided that any cash dividends received
by the Borrower or any Restricted Subsidiary from an Unrestricted Subsidiary, up
to the amount of the Investments in such Unrestricted Subsidiary, shall reduce
pro tanto the aggregate amount of the Investments in such Unrestricted
Subsidiary for purposes of calculating compliance with such $500,000 limitation.
     9.09 Dividend Payments. The Borrower shall not, nor shall it permit any of
the Restricted Subsidiaries to, declare or make any Dividend Payment at any
time; provided that, if no Default, Event of Default or Borrowing Base
Deficiency shall have occurred and be continuing or shall occur as a result of
the making of such Dividend Payment, (i) any Wholly Owned Subsidiary of the
Borrower may declare and make Dividend Payments to the Borrower or other Wholly
Owned Subsidiaries that are Restricted Subsidiaries, and (ii) the Borrower may,
in each of its fiscal years, declare and make Dividend Payments in an amount not
exceeding $2,000,000 or such greater amount as may be approved by the Majority
Banks in their discretion.
     9.10 Financial Covenants.
          (a) The Borrower shall not permit the Debt Coverage Ratio as of the
end of any of its fiscal quarters to be greater than 2.0 to 1.0.
          (b) The Borrower shall not permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities, as of the end of any of its fiscal
quarters, to be less than 1.10 to 1.0.
          (c) The Borrower and its Restricted Subsidiaries shall, for each
calendar year prior to the Maturity Date (commencing with the calendar year
ending December 31, 2007), incur a minimum aggregate amount of $5,000,000 in
such calendar year of Capital Expenditures in connection with the development of
proved reserves located in the Colombian Hydrocarbon Properties.
     9.11 Collection Account. The Borrower shall direct all Offtakers to, and
shall deposit all other revenues from the Borrower’s and its Restricted
Subsidiaries’ interests in the Hydrocarbon Properties, as received, into the
Collection Account in US Dollars or such other currency as the Majority Banks
may approve in their reasonable discretion. Amounts deposited in each Collection
Account may be freely withdrawn by the applicable Obligor in whose name the
Collection Account is maintained except (a) while a Borrowing Base Deficiency
has occurred and is continuing, (b) at any time after the Administrative Agent
exercises its rights pursuant to Section 1.03(d) hereof or any other Loan
Document to require JPMorgan Chase Bank, N.A., (or such other financial
institution with which any Collection Account is maintained) to cease

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honoring instructions from the Borrower and retain all funds deposited in each
Collection Account, and (c) at any time after an Event of Default referred to in
clause (f) or (g) of SECTION 10 has occurred and is continuing unwaived, or at
any time after any other Event of Default referred to in SECTION 10 has occurred
and either all or any portion of the Loans shall have been declared to be due
and payable pursuant to SECTION 10 and/or the Administrative Agent shall have
given notice to the Borrower that the Commitments have been terminated. No
deposit account may be opened or maintained in substitution for, or as an
alternate to, a Collection Account without the Administrative Agent’s prior
written consent and without the Administrative Agent having received a duly
executed account pledge agreement (in form and substance satisfactory to the
Administrative Agent) granting in favor of the Administrative Agent for the
ratable benefit of the Secured Parties a first-priority security interest in
such substitute or alternate deposit account and all amounts standing to the
credit thereof from time to time.
     9.12 Lines of Business. The Borrower shall not, nor shall it permit any of
its Restricted Subsidiaries to, engage to any substantial extent in any line or
lines of business activity other than the business of the acquisition,
exploration, development, gathering, production (excluding refining, but
including for the avoidance of doubt any customary field processing with respect
to the Borrower’s or its Restricted Subsidiaries’ own production), processing,
marketing or sale of Hydrocarbons or products derived from any of the foregoing
and transactions reasonably associated therewith or reasonably required to
support such activities; provided that the foregoing shall not prohibit
(a) service agreements or similar agreements entered into between Obligors in
the normal course of business in each case related to activities described in
this Section 9.12, and (b) other transactions expressly permitted by this
Agreement.
     9.13 Transactions with Affiliates. Except as expressly permitted by this
Agreement (or as set forth in Schedule X), the Borrower shall not, and shall not
permit any Restricted Subsidiaries to, directly or indirectly: (a) make any
Investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise
dispose of any Property to an Affiliate; (c) merge into or consolidate with or
purchase or acquire Property from an Affiliate; or (d) enter into any other
transaction directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, Guarantees and assumptions of obligations of an
Affiliate); provided that (i) any Affiliate who is an individual may serve as a
director, officer or employee of any of the Borrower and its Subsidiaries and
receive reasonable compensation for his or her services in such capacity;
(ii) any of the Borrower and its Restricted Subsidiaries may enter into
transactions with Affiliates (other than extensions of credit to Affiliates) in
the ordinary course of business if the monetary or business consideration
arising therefrom would be substantially as advantageous to the Borrower and its
Restricted Subsidiaries as the monetary or business consideration which would
obtain in a comparable transaction with a Person not an Affiliate; and (iii) the
foregoing shall not prohibit service agreements or similar agreements entered
into between Obligors in the normal course of

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business and consistent with similar agreements entered into by other similarly
situated oil and gas exploration and production companies, in each case related
to activities described in Section 9.12.
     9.14 Use of Proceeds.
          (a) The Borrower shall use the proceeds of the Loans and the Letters
of Credit to fund expenditures incurred in connection with (i) the exploitation,
development or production of Hydrocarbons from the Colombian Hydrocarbon
Properties, (ii) Investments made directly or through any of its Restricted
Subsidiaries or the Argentine Subsidiaries in connection with the acquisition,
exploration and development of interests in Hydrocarbon Properties as permitted
by this Agreement and tangibles relating thereto and the payment of any costs,
fees or expenses required in connection therewith, (iii) exploration,
exploitation, transportation or marketing of Hydrocarbons from properties
included in the Borrowing Base and their general corporate purposes, and
(iv) other transactions expressly permitted by this Agreement.
          (b) None of the Administrative Agent, the Issuing Bank nor any Bank
shall have any responsibility to monitor or verify the application by the
Borrower of any amounts borrowed pursuant to this Agreement.
     9.15 Certain Obligations Respecting Subsidiaries. Except as permitted by
Section 9.05 hereof, the Borrower shall, and shall cause each of its Restricted
Subsidiaries to, take such action from time to time as shall be necessary to
ensure that the Borrower and each of its Restricted Subsidiaries at all times
own (subject only to the Lien of the Security Documents) at least the same
percentage of the issued and outstanding shares of each class of stock of each
of such Restricted Subsidiaries the stock of which is subject to the Lien of the
Security Documents as is owned on the date of this Agreement or, in the case of
New Wholly Owned Subsidiaries which are Restricted Subsidiaries created or
acquired after the date of this Agreement (other than any Wholly Owned
Subsidiaries of such Persons), the stock of which are required to be subject to
the Lien of the Security Documents, 100% of each class of stock of each of such
Subsidiaries (each of the Subsidiaries referred to above being herein called, a
“Pledged Subsidiary”). Without limiting the generality of the foregoing and
except as permitted by Section 9.05, none of the Borrower and its Restricted
Subsidiaries shall sell, transfer or otherwise dispose of any shares of stock in
any Pledged Subsidiary owned by it, nor permit any Pledged Subsidiary to issue
any shares of stock of any class whatsoever to any Person (other than to the
Borrower or another Obligor). In the event that any such additional shares of
stock are issued by any Pledged Subsidiary, the respective Obligor agrees
forthwith to deliver to the Administrative Agent pursuant to the Security
Documents the certificates evidencing such shares of stock, accompanied by
undated stock powers executed in blank and shall take such other action as the
Administrative Agent shall request to perfect the security interest created
therein pursuant to the

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Security Documents. Except as expressly permitted by this Agreement, the
Borrower shall not and shall not permit any of its Restricted Subsidiaries to
enter into any indenture, agreement, instrument or other arrangement (other than
this Agreement and the other Loan Documents) that, directly or indirectly,
prohibits or restrains, or has the effect of prohibiting or restraining, or
imposes (i) conditions upon the incurrence or payment of Indebtedness of the
Borrower and its Restricted Subsidiaries, or the declaration or payment of
dividends to the Borrower or any of its Restricted Subsidiaries or (ii) any
other conditions or terms that, in the case of this clause (ii) only, could
reasonably be expected to have a Material Adverse Effect.
     9.16 Additional Subsidiary Guarantors. The Borrower shall take such action,
and shall cause each of its Subsidiaries formed or acquired after the date of
this Agreement to take such action from time to time as shall be necessary to
ensure that each of such Subsidiaries (other than Unrestricted Subsidiaries)
with Tangible Net Worth of more than 5% of the Tangible Net Worth of the
Borrower determined on a consolidated basis in accordance with GAAP is a
Subsidiary Guarantor hereunder and an Obligor hereunder. Each Subsidiary of the
Borrower that is required to become a Subsidiary Guarantor after the date of
this Agreement shall execute such instruments and agreements, in form and
substance satisfactory to, and as required by the Administrative Agent, acting
reasonably, to acknowledge that such Subsidiary has all of the obligations of a
Subsidiary Guarantor pursuant to this Agreement and to confirm that the Security
Documents constitute a Lien on its Properties free of any other encumbrances
except those described in Section 9.06.
     9.17 Unrestricted Subsidiaries. The Borrower:
          (a) shall cause the management, business and affairs of each of the
Borrower and its Subsidiaries to be conducted in such a manner (including,
without limitation, by keeping separate books of account, furnishing separate
financial statements of Unrestricted Subsidiaries to creditors and potential
creditors thereof and by not permitting Properties of the Borrower and its
respective Subsidiaries to be commingled) so that each Unrestricted Subsidiary
that is a corporation shall be treated as a corporate entity separate and
distinct from the Borrower and the Restricted Subsidiaries;
          (b) except for Indebtedness permitted pursuant to Section 9.07 hereof
and Investments permitted pursuant to Section 9.08 hereof, shall not, and shall
not permit any of the Restricted Subsidiaries to, incur, assume, Guarantee or be
or become liable for any Indebtedness or other obligations of any of the
Unrestricted Subsidiaries; and
          (c) shall not permit any Unrestricted Subsidiary to hold any capital
stock of or other ownership interest in, or any Indebtedness of, any Restricted
Subsidiary.

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     9.18 Limitations on Sale and Leaseback Transactions. The Borrower shall
not, nor shall it permit any of its Restricted Subsidiaries to, enter into,
renew or extend any transaction or series of related transactions pursuant to
which the Borrower or any such Restricted Subsidiary sells or transfers any
Property in connection with the leasing, or the release against installment
payments, or as part of an arrangement involving the leasing or release against
installment payments, of such Property to the Borrower or any of its Restricted
Subsidiaries (“Sale and Leaseback Transaction”), other than any such Sale and
Leaseback Transaction which constitutes non-recourse debt and which was entered
into by a Restricted Subsidiary prior to the designation of such Subsidiary as a
Restricted Subsidiary (or acquisition of such Restricted Subsidiary) and
recourse, in all events, is only to the assets subject to such sale leaseback
(and does not provide for recourse to any assets of such Restricted Subsidiary,
other than the assets subject to such sale leaseback, for any reason, including
without limitation pursuant to any tax indemnification or similar agreement).
     9.19 Environmental Matters.
          (a) The Borrower shall, and shall cause each of its Subsidiaries to
comply in all material respects with all Environmental Laws now or hereafter
applicable to the Borrower or its Subsidiaries, and shall obtain, at or prior to
the time required by applicable Environmental Laws, all environmental, health
and safety permits, licenses and other authorizations necessary for its
operations and maintain such authorizations in full force and effect, except to
the extent failure to have any such permit, license or authorization could not
reasonably be expected to have a Material Adverse Effect.
          (b) The Borrower shall, and shall cause each of its Subsidiaries to,
promptly furnish to the Administrative Agent all requests for information,
notices of claim, demand letters, and other notifications, received by the
Borrower or its Subsidiaries, to the effect that, in connection with its
ownership or use of any of its Properties or the conduct of any of its business,
it may be potentially responsible in any material amount with respect to any
investigation or clean-up of Hazardous Material at any location.
     9.20 No Action to Affect Security Documents. Except for transactions
expressly permitted hereby, the Borrower shall not, nor shall it permit its
Subsidiaries to, do anything to adversely affect the priority of any Lien
created pursuant to any Security Document.
     9.21 Visits to Properties. The Borrower shall, and shall cause each of its
Restricted Subsidiaries to, permit representatives of the Administrative Agent
to visit and inspect any of its Properties (including any Hydrocarbon Property)
and examine and make abstracts from any of its books and records on reasonable
notice at any reasonable time (but, so long as no Event of Default shall have
occurred and be continuing, no more than twice in any calendar year) and to

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discuss the business, operations, properties and financial and other condition
of the Borrower and its Restricted Subsidiaries with officers and employees of
the Borrower and its Restricted Subsidiaries and, together with representatives
of the Borrower, with its independent certified public accountants. The Borrower
shall, and shall cause each of its Restricted Subsidiaries to, pay all costs and
expenses incurred by the Administrative Agent in connection with any such visit,
inspection or examination pursuant to this Section; provided, that so long as no
Event of Default shall have occurred and be continuing, the Borrower shall not
be obliged to pay such costs and expenses for more than one such visit and
inspection in any calendar year.
     9.22 Title Defects. The Borrower shall, promptly upon becoming aware of the
existence of any title defect or any encumbrance (other than Permitted Liens)
affecting any Hydrocarbon Property which has been given material value in the
most recent Reserve Evaluation Report (other than title defects which do not
materially and adversely impact the value of such Hydrocarbon Property), give
the Administrative Agent prompt written notice of such title defect or
encumbrance, and in such case, the Borrower shall or shall cause the applicable
Subsidiary to undertake to take all steps necessary to cure such title defect or
discharge such encumbrance; provided that if the Borrower or the applicable
Subsidiary is unable or unwilling to cure such title defect or discharge such
encumbrance to the reasonable satisfaction of the Administrative Agent within 60
days following the date on which the Borrower shall have given the notice
referred to in this Section 9.22, then the remedy of the Administrative Agent
and the Banks shall be to cause the Borrowing Base to be reduced by an amount
equal to the value (or such portion thereof which has been impaired) assigned to
such Hydrocarbon Property in the most recent Borrowing Base which reductions may
lead to the provisions of Section 2.10(a) becoming applicable and actions taken
by the Administrative Agent and the Banks in that regard.
     9.23 Offtake Agreements.
          (a) The Borrower shall not, nor shall it permit its Restricted
Subsidiaries to, amend, modify, supplement or terminate any material Offtake
Agreement or joint operating agreement governing the Hydrocarbon Properties
without the prior written consent of the Majority Banks, such consent not to be
unreasonably withheld or delayed, unless such amendment, modification,
supplement or termination could not reasonably be expected to have a Material
Adverse Effect.
          (b) Within 30 days of the Closing Date, the Borrower shall ensure that
a duly executed irrevocable consent of the Offtaker under each material Offtake
Agreement in effect on the Closing Date in form and substance reasonably
satisfactory to the Administrative Agent, is delivered to the Administrative
Agent, pursuant to which such Offtaker shall agree to make all payments under
such Offtake Agreement to the Collection Account; provided that in the case of

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any Offtake Agreement with a national oil company, the 30 day deadline may be
extended with the prior written consent of the Majority Banks.
     9.24 Designated Hedging Agreements. The Borrower and/or any of its
Restricted Subsidiaries shall no later than the Closing Date, enter into and
maintain one or more Designated Hedging Agreements for the purpose of obtaining
protection (whether pursuant to zero-cost collars or other hedging instruments)
against fluctuations in the price of oil in respect of at least 50% of their
projected aggregate net share of production after royalties for a period of at
least 3 years after the Closing Date from proved developed reserves identified
in the Reserve Evaluation Report prepared by the Independent Petroleum Engineer
as of June 30, 2006 in respect of the Colombian Hydrocarbon Properties, provided
that the Borrower and/or any of its Restricted Subsidiaries may, from time to
time, maintain Designated Hedging Agreements for aggregate volumes of less than
50% of their projected aggregate net share of production after royalties
provided it notifies the Administrative Agent of such reduced aggregate volumes
and obtains the Administrative Agent’s prior written consent before doing so,
and provided such reduction is consistent with prudent industry practices at
such time. For the purposes of this Section 9.24, the phrase “net share
production after royalties” shall mean the Borrower’s and its Restricted
Subsidiaries’ combined share of oil and gas production net of royalties and
production sharing obligations and excluding those volumes of production in
which export taxes, duties or government regulation make such volumes not
exposed to price risk in a material way.
     9.25 Further Assurances. Each Obligor shall, after notice thereof from the
Administrative Agent, do all such further acts and things and execute and
deliver all such further documents as shall be reasonably requested by the
Administrative Agent in order to give effect to this Agreement and the Loan
Documents and shall cause the same to be registered wherever, in the opinion of
the Administrative Agent, such registration may be required or advisable to
preserve, perfect or validate or continue the perfected status of any deemed or
other Lien granted pursuant to a Security Document or to enable such Bank to
exercise and enforce its rights hereunder with respect to such deemed or other
Lien.
SECTION 10.
EVENTS OF DEFAULT.
     If one or more of the following events (herein called “Events of Default”)
shall occur and be continuing:
          (a) The Borrower shall default in the payment when due (whether at
stated maturity or upon mandatory prepayment) of any principal of or interest on
any Loan or Reimbursement Obligation, any fee or any other amount payable by it
hereunder or under any other Loan Document and, where its failure to pay is
caused solely by administrative or technical

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error, such failure shall continue unremedied for a period of three (3) Business
Days (other than any default in a payment due on the Maturity Date, which shall
be an immediate Event of Default upon such failure); or
          (b) The Borrower or any of its Restricted Subsidiaries shall default
in the payment when due of any principal of or interest on any of its other
Indebtedness aggregating $2,000,000 or more (or its equivalent in any other
currency), or in the payment when due of $2,000,000 or more (or its equivalent
in any other currency) under any Hedging Agreement, and such default shall
continue unremedied for any applicable grace period; or any event specified in
any note, agreement, indenture or other document evidencing or relating to any
such Indebtedness or any event specified in any such Hedging Agreement shall
occur if the effect of such event is to cause, or (with the giving of any notice
or the lapse of time or both) to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its stated
maturity in an amount aggregating $2,000,000 or more (or its equivalent in any
other currency) or to have the interest rate thereon reset to a level so that
securities evidencing such Indebtedness trade at a level specified in relation
to the par value thereof; or
          (c) Any representation, warranty or certification made or deemed made
herein or in any other Loan Document (or in any modification or supplement
hereto or thereto) by any Obligor, or any certificate furnished to any Bank, the
Issuing Bank or the Administrative Agent pursuant to the provisions hereof or
thereof, shall prove to have been false or misleading as of the time made or
furnished in any material respect and such representation or warranty, if
capable of cure, remains uncured for 30 or more days following any Obligor’s
knowledge thereof; or
          (d) Any Obligor shall default in the performance of any of its
obligations under any of (i) Sections 2.10(a), 9.01, 9.05, 9.06 or 9.11 (to the
extent any such default continues unremedied for a period of 5 Business Days
after the earlier of (A) the notification of such default to such Obligor by the
Administrative Agent and (B) the date such Obligor knows or becomes aware of (or
ought reasonably to have known, or have become aware of the occurrence of such
default) or (ii) Sections 9.07, 9.08, 9.09, 9.10, 9.12, 9.14, 9.15, 9.18, 9.22
(but subject to the proviso thereof) or 9.24; or any Obligor shall default in
the performance of any of its other obligations in this Agreement or any other
Loan Document and such default shall continue unremedied for a period of 30 days
after the earlier of (i) the notification of such default to such Obligor by the
Administrative Agent and (ii) the date such Obligor knows or becomes aware of
(or ought reasonably to have known, or have become aware of) the occurrence of
such default; or

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          (e) The Borrower or any of its Restricted Subsidiaries shall admit in
writing its inability to, or be generally unable to, pay its debts as such debts
become due; or
          (f) The Borrower or any of its Restricted Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its Property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary proceeding for bankruptcy under any
bankruptcy or insolvency law, (iv) file a petition or take any other action
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization relating to the relief of debtors, liquidation, dissolution,
arrangement relating to the relief of debtors or winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition or any other action filed
against it in an involuntary case under bankruptcy or insolvency law in its
jurisdiction of organization or where any material assets are located, or
(vi) threaten or take any corporate action for the purpose of effecting any of
the foregoing or fail to act in defense therefor; or
          (g) Except as permitted by Section 9.05, a proceeding or case shall be
commenced, without the application or consent of the Borrower or any of its
Restricted Subsidiaries, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver, custodian,
trustee, examiner, liquidator or the like of the Borrower or such Restricted
Subsidiary or of all or any substantial part of its Property, or (iii) similar
relief in respect of the Borrower or such Restricted Subsidiary under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 60 or more days;
or an order for relief against the Borrower or such Restricted Subsidiary shall
be entered in an involuntary case under the bankruptcy or insolvency law in its
jurisdiction of organization or where any material assets are located; or
          (h) A final judgment or judgments for the payment of money in excess
of $2,000,000 in the aggregate (or its equivalent in any other currency) shall
be rendered by a one or more courts, administrative tribunals or other bodies
having jurisdiction against the Borrower or any of its Restricted Subsidiaries
and the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within 60 days
from the date of entry thereof and the Borrower or the relevant Restricted
Subsidiary shall not, within said period of 60 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal; or

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          (i) Any Property of any Obligor is seized pursuant to legal process
and not bonded, discharged or released within 30 days, and material value has
been ascribed to such property in the most recent Reserve Evaluation Report; or
          (j) Any Governmental Authority shall take any action to condemn,
seize, nationalize or appropriate any portion of the Property of any Obligor
(either with or without payment of compensation) used in the exploration or
development of properties and the fair market value of such Property constitutes
greater than 10% of the then-current Borrowing Base; or
          (k) The Liens created by the Security Documents shall at any time not
constitute a valid Lien perfected as required hereunder on the collateral
intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein) in favor
of the Secured Parties specified to be benefited by such Security Document, free
and clear of all other Liens (other than Permitted Liens or except as and to the
extent provided in Section 9.22), or, except for expiration, termination or
satisfaction of the obligations thereunder in accordance with its terms, any of
the Security Documents shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be contested by any
Obligor, provided that such termination, cessation, invalidity or imperfection
is not attributable to any action or inaction of the Administration Agent, and
provided further that the Obligors shall use all reasonable commercial efforts
to cure such termination, cessation, invalidity or imperfection promptly upon
being notified thereof by the Administrative Agent; or
          (l) Any Obligor defaults on any of its obligations under an Offtake
Agreement where the effect of such default is to entitle the Offtaker under such
Offtake Agreement, either immediately or with the giving of notice, the lapse of
time or a combination thereof, (i) to terminate such Offtake Agreement, or to
take any other course of action with respect thereto and (ii) such action could
reasonably be expected to have a Material Adverse Effect.
     THEREUPON: (1) in the case of an Event of Default other than one referred
to in clause (f) or (g) of this SECTION 10 with respect to any Obligor, the
Administrative Agent may and, upon request of the Majority Banks, shall, by
notice to the Borrower, terminate the Commitments and/or declare the principal
amount then outstanding of, and the accrued interest on, the Loans, the
Reimbursement Obligations and all other amounts payable by the Obligors
hereunder and under the Notes to be forthwith due and payable, whereupon such
amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by each Obligor; and (2) in the case of the occurrence of an Event of
Default referred to in clause (f) or (g) of this SECTION 10 with

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respect to any Obligor, the Commitments shall automatically be terminated and
the principal amount then outstanding of, and the accrued interest on, the
Loans, the Reimbursement Obligations and all other amounts payable by the
Obligors hereunder and under the Notes shall automatically become immediately
due and payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by each Obligor.
     In addition, upon the occurrence and during the continuance of any Event of
Default (if the Administrative Agent has declared the principal amount then
outstanding of, and accrued interest on, the Loans and all other amounts payable
by the Borrower hereunder and under the Notes to be due and payable), the
Obligors agree that they shall, if requested by the Administrative Agent or the
Majority Banks through the Administrative Agent (and, in the case of any Event
of Default referred to in clause (f) or (g) of this SECTION 10 with respect to
any Obligor, forthwith, without any demand or the taking of any other action by
the Administrative Agent or such Banks) provide cash collateral for all Letters
of Credit by paying to the Administrative Agent in immediately available funds
an amount equal to the then aggregate undrawn face amount of all Letters of
Credit, which funds shall be held by the Administrative Agent, as collateral
security in the first instance for the Letter of Credit Liabilities.
     All monies received by the Administrative Agent or any Bank from the
exercise of remedies hereunder, under the Security Documents or under any other
Loan Documents shall, unless otherwise required by the terms of the other Loan
Documents or by applicable law, be applied as follows:
     first, to the payment of all expenses (to the extent not otherwise paid by
any Obligor) incurred by the Administrative Agent and the Banks in connection
with the exercise of such remedies, including, without limitation, all costs and
expenses of collection, attorneys’ fees and disbursements, court costs and any
foreclosure expenses;
     second, to the payment of all accrued and unpaid interest on the Loans, pro
rata to each Bank according to the amount of accrued and unpaid interest then
owing to such Bank;
     third, to the payment pro rata of any fees then accrued and payable to each
Bank under this Agreement in respect of the Loans;
     fourth, to the payment pro rata of the respective outstanding principal
amounts of the Loans and Letter of Credit Liabilities and all amounts owed to
any Designated Hedging Counterparty under a Designated Hedging Agreement;
     fifth, to the payment pro rata of all other amounts owed by the Borrower to
the Administrative Agent or any Bank under this Agreement or any other Loan
Document, and if

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such proceeds are insufficient to pay such amounts in full, to the payment of
such amounts pro rata; and
     sixth, any surplus remaining after the indefeasible payment in full in cash
of all of the above amounts shall be distributed to the Borrower or to
whomsoever shall be lawfully entitled thereto.
SECTION 11.
THE ADMINISTRATIVE AGENT.
     11.01 Appointment, Powers and Immunities. Each Bank hereby irrevocably
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Loan Documents with such powers as are specifically
delegated to such Administrative Agent by the terms of this Agreement and of the
other Loan Documents, to which such Administrative Agent is a party, together
with such other powers as are reasonably incidental thereto. The Administrative
Agent (which term as used in this sentence and in Section 11.05 and the first
sentence of Section 11.06 hereof shall include reference to its Affiliates and
its own and its Affiliates’ officers, directors, employees and agents):
(a) shall have no duties or responsibilities (including fiduciary or implied
duties) except those expressly set forth in this Agreement and in the other Loan
Documents, to which such Administrative Agent is a party, and shall not by
reason of this Agreement or any other Loan Document be a trustee for any Bank;
(b) shall not be responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement or in any other Loan
Document, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement or any other Loan Document,
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any collateral security provided for by any of the Security
Documents, or of this Agreement, any Note or any other Loan Document or any
other document referred to or provided for herein or therein, or for any failure
by the Borrower, any other Obligor or any other Person to perform any of its
obligations hereunder or thereunder; (c) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or under any other
Loan Document; (d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other Loan Document or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct; and (e) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights or powers
expressly contemplated by this Agreement and the other Loan Documents that the
Administrative Agent is required to exercise following its receipt of written
instructions from the Majority Banks, as the case may be, in accordance with the
provisions of this Agreement and the other Loan Documents. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it in good faith.

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     The Administrative Agent may deem and treat the payee of any Note as the
holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent, together with the consent of the Borrower to such assignment or transfer
(to the extent provided in Section 12.06(b) hereof).
     11.02 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, fax, telex, electronic
mail or other electronic means) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel, independent accountants and other
experts selected by the Administrative Agent. As to any matters not expressly
provided for by this Agreement or any other Loan Document, the Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or thereunder in accordance with instructions given by the
Majority Banks, and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks.
     11.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on Loans, Reimbursement Obligations or of commitment
fees) unless the Administrative Agent has received notice from a Bank or any
Obligor specifying such Default and stating that such notice is a “Notice of
Default”. In the event that the Administrative Agent receives such a notice of
the occurrence of a Default, the Administrative Agent shall give prompt notice
thereof to the Banks. The Administrative Agent shall (subject to Section 11.07
hereof) take such action with respect to such Default as shall be directed by
the Majority Banks, provided that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interest of the
Banks, except to the extent that this Agreement expressly requires that such
action be taken, or not be taken, only with the consent or upon the
authorization of the Majority Banks or all of the Banks, as the case may be.
     11.04 Rights as a Bank. The Bank serving as Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Bank as any other
Bank and may exercise the same as though it were not the Administrative Agent,
and such Bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
Affiliate thereof as if it were not the Administrative Agent hereunder.
     11.05 Indemnification. The Banks agree to indemnify the Administrative
Agent (to the extent not reimbursed under Sections 12.03 and 12.07 hereof, but
without limiting the obligations of the Obligors under said Sections 12.03 and
12.07), ratably in accordance with the

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aggregate principal amount of the Loans and Reimbursement Obligations held by
the Banks (or, if no Loans or Reimbursement Obligations are at the time
outstanding, ratably in accordance with their respective Commitments or, if no
Loans, Reimbursement Obligations or Commitments are at the time outstanding or
in effect, ratably in accordance with their respective Commitments as most
recently in effect) for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent (including by any Bank) arising out of or by
reason of any investigation in or in any way relating to or arising out of this
Agreement or any other Loan Document or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses that the Obligors are
obligated to pay under Sections 12.03 and 12.07 hereof, but excluding, unless a
Default has occurred and is continuing, normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or the enforcement
of any of the terms hereof or thereof or of any such other documents, provided
that no Bank shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the party to be indemnified.
     11.06 Non-Reliance on Agent and Other Banks. Each Bank agrees that it has,
independently and without reliance on the Administrative Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Borrower and its Subsidiaries and decision
to enter into this Agreement and that it shall, independently and without
reliance upon the Administrative Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by any Obligor of this Agreement or
any of the other Loan Documents or any other document referred to or provided
for herein or therein or to inspect the Properties or books of the Borrower or
any of its Subsidiaries. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
of its Subsidiaries (or any of their Affiliates) that may come into the
possession of the Administrative Agent or any of its affiliates.
     11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under the other Loan Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Banks of their indemnification
obligations under Section

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11.05 hereof against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action.
     11.08 Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving notice thereof to the
Banks and the Borrower, and the Administrative Agent may be removed at any time
with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Banks and shall have accepted such appointment within
30 days after the retiring Administrative Agent’s giving of notice of
resignation or the Majority Banks’ removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, that shall be a bank experienced in transactions
of the type contemplated by this Agreement and which has an office in New York,
New York or London, England with a combined capital and surplus of at least
$500,000,000 (or an equivalent amount in other currencies). Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and such retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent’s resignation or removal hereunder as
Administrative Agent, the provisions of this SECTION 11 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Administrative Agent.
     11.09 Consents under Other Loan Documents. The Administrative Agent may,
with the prior written consent of the Majority Banks (but not otherwise) consent
to any modification, supplement or waiver under any of the Loan Documents other
than this Agreement, to which the Administrative Agent is a party, provided that
without the prior consent of each Bank, the Administrative Agent shall not
(except as provided herein or in the Security Documents to which the
Administrative Agent is a party) release any collateral or otherwise terminate
any Lien under any Loan Document providing for collateral security, or agree to
additional obligations being secured by such collateral security, except that no
such consent shall be required, and the Administrative Agent is hereby
authorized, to release any Lien covering Property which is the subject of a
disposition of Property permitted hereunder.
     11.10 Collateral Sub-Agents. Each Bank by its execution and delivery of
this Agreement agrees that, in the event it shall hold any Permitted Investments
referred to therein, such Permitted Investments shall be held in the name and
under the control of such Bank, and such Bank shall hold such Permitted
Investments as a collateral sub-agent for the Administrative

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Agent thereunder. Each Obligor by its execution and delivery of this Agreement
hereby consents to the foregoing.
     11.11 Dealings With the Administrative Agent. In the absence of written
notice or any actual knowledge of a lack of authority of the Administrative
Agent to act for and on behalf of the Banks in respect of any matter hereunder
or under the Loan Documents, the Obligors shall be entitled to conclusively
assume that any certificate, directive or other writing of the Administrative
Agent in connection with such matter has been duly authorized by the Banks in
accordance with this Agreement.
SECTION 12.
MISCELLANEOUS.
     12.01 Waiver. No failure on the part of the Administrative Agent or any
Bank to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
     12.02 Notices. All notices, requests and other communications provided for
herein and under the Security Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) may be given or
made by fax or other writing and faxed, mailed or delivered to the intended
recipient:
          (a) in the case of any Obligor, at the “Address for Notices” specified
below the name of such Obligor on the signature pages hereof;
          (b) in the case of the Administrative Agent, at the “Address for
Notices” specified below its name on the signature pages hereof;
          (c) in the case of each Issuing Bank, at the “Address for Notices”
specified below the name of the Issuing Bank on the signature pages hereof; and
          (d) in the case of any Bank, at its address (or fax number) set forth
in its Administrative Questionnaire;
or, as to any party, at such other address as shall be designated by such party
in a notice to the Borrower and the Administrative Agent given in accordance
with this Section 12.02. Except as otherwise provided in this Agreement, all
such communications shall be deemed to have been duly given when transmitted by
fax (and receipt is electronically confirmed), personally

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delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid. Notwithstanding the foregoing, any notice or other
communication provided for herein and under the Security Documents may be given
or made by electronic mail, if the Administrative Agent agrees that this is to
be an accepted form of communication and if the Administrative Agent and each
Obligor has notified the other in writing of its electronic mail address and/or
any other information required to enable the sending and receipt of information
by that means and promptly following any changes thereto, provided that, except
as provided in Section 9.01, the foregoing shall not apply to any notice or
other communication to a Secured Party which has notified the Administrative
Agent that it does not wish to receive any notice or other communication by
electronic mail. Unless the Administrative Agent otherwise prescribes, notices
and other communications sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as
by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and provided further that such notice
or other communication is actually received in readable form by the intended
recipient.
     12.03 Expenses. The Obligors hereby jointly and severally agree to pay or
reimburse each of the Banks and the Administrative Agent for paying: (a) all
reasonable and documented out-of-pocket costs and expenses of the Administrative
Agent (including, without limitation, the reasonable fees and expenses of Jones
Day, special New York counsel to the Administrative Agent, and Gómez-Pinzón
Abogados, Colombian counsel to the Administrative Agent), in connection with (A)
the negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and the extensions of credit hereunder; provided that in no
event shall the foregoing include any costs or expenses in respect of in-house
counsel or advisors of the Administrative Agent or of any Bank or Participant
(as defined below) and (B) any modification, supplement or waiver of any of the
terms of this Agreement or any of the other Loan Documents; (b) all reasonable
out-of-pocket costs and expenses of the Banks and the Administrative Agent
(including, without limitation, reasonable counsel fees and expenses) in
connection with (i) any Default and any enforcement or collection proceedings
resulting therefrom or in connection with the negotiation of any restructuring
or “work-out” (whether or not consummated), or the obligations of the Obligors
hereunder and (ii) the enforcement of this Section 12.03 or Section 12.07; and
(c) all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement or any of the other Loan Documents or any other document referred to
herein or therein and all costs, expenses, taxes, assessments and other charges
incurred in connection with any filing, registration, recording or perfection of
any security interest contemplated by any Loan Document or any other document
referred to therein; provided that in no event shall the Obligors be responsible
for

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paying any amounts or costs incurred as a result of the gross negligence or
willful misconduct of the Administrative Agent or any Bank.
     12.04 Amendments, Etc. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement may be modified or supplemented only
by an instrument in writing signed by the Obligors, the Administrative Agent and
the Majority Banks (and if such amendment relates to the rights or obligations
of the Issuing Bank or any Letter of Credit, the Issuing Bank) and any provision
of this Agreement may be waived by the Majority Banks (and if such amendment
relates in any way to any Letter of Credit, the Issuing Bank); provided that no
modification, supplement or waiver shall, unless by an instrument signed by all
of the affected Banks or by the Administrative Agent acting with the consent of
all of the Banks whose rights or interests are affected thereby: (i) increase,
or extend the term of any of the Commitments, or extend the time or waive any
requirement for the reduction or termination of any of the Commitments,
(ii) extend the date fixed for the payment of principal of or interest on the
Loans, the Reimbursement Obligations or any fee hereunder, (iii) reduce the
amount of any such payment of principal, (iv) reduce the rate at which interest
is payable thereon or any fee is payable hereunder, (v) alter the rights or
obligations of the Obligors to prepay Loans under Section 2.10, (vi) alter the
terms of this Section 12.04, (vii) change the currency of any payment required
hereunder or under the other Loan Documents or (viii) modify the definition of
the term “Majority Banks” or modify in any other manner the number or percentage
of the Banks required to make any determinations or waive any rights hereunder
or waive or modify any provision hereof. Any modification or supplement of this
Agreement that increases any of the obligations or reduces or impairs any of the
rights of, or otherwise adversely affects the interests of, the Administrative
Agent or the Issuing Bank under this Agreement or any of the other Loan
Documents shall require the consent of the Administrative Agent or the Issuing
Bank (as the case may be).
     Anything in this Agreement to the contrary notwithstanding, if:

  (x)   at a time when the conditions precedent set forth in Section 7 hereof to
any Loans or other extension of credit hereunder are, in the opinion of the
Majority Banks satisfied, any Bank shall fail to fulfill its obligations to make
the Loan to be made by it; or     (y)   any Bank shall fail to pay to the
Administrative Agent for the account of the Issuing Bank the amount of such
Bank’s Commitment Percentage of the Commitments of any payment under a Letter of
Credit pursuant to Section 2.03(b)(v) hereof;

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then, for so long as such failure shall continue, such Bank shall (unless the
Majority Banks, determined, in either case, as if such Bank were not a “Bank”
hereunder, shall otherwise consent in writing) be deemed for all purposes
relating to amendments, modifications, waivers or consents under this Agreement
or any of the other Loan Documents (including, without limitation, under this
Section 12.04 and under Section 11.09 hereof) to have no Loans, Letter of Credit
Liabilities or Commitments, shall not be treated as a “Bank” hereunder when
performing the computation of Majority, and shall have no rights under the
preceding paragraph of this Section 12.04 or under Section 11.09 hereof;
provided that any action taken by the other Banks with respect to the matters
referred to in the preceding paragraph shall not be effective as against such
Bank.
     12.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
     12.06 Assignments and Participations.
          (a) No Obligor may assign any of its rights or obligations hereunder
or under the Notes without the prior consent of the Majority Banks and the
Administrative Agent.
          (b) Each Bank may (with the prior consent of the Borrower, not to be
unreasonably withheld, conditioned or delayed) assign and, so long as no Default
shall have occurred and be continuing, if required by the Borrower in accordance
with Section 5.07 upon at least five (5) Business Days’ notice to such Bank and
the Administrative Agent, shall, assign any of its Loans, its Note, its
Commitment and its Letter of Credit Interest (but only with the consent of, in
the case of an outstanding Commitment, the Administrative Agent and, in the case
of a Commitment or a Letter of Credit Interest in connection with Letters of
Credit, the Issuing Bank); provided that
          (i) no such consent by the Borrower or the Administrative Agent or the
Issuing Bank shall be required in the case of any assignment to another Bank;
          (ii) any such partial assignment (other than to another Bank) shall be
in an amount at least equal to $1,000,000 and; provided that in each case unless
a Bank is assigning all of its Loans, Letter of Credit Interests and
Commitments, the assigning Bank shall maintain a Commitment of not less than
$1,000,000;
          (iii) each such permitted assignment by a Bank of its Loans, Note,
Commitment and Letter of Credit Interest shall be made in such manner so that
the same portion of its Loans, Note, Commitment and Letter of Credit Interest is
assigned to the respective assignee;

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          (iv) each such assignment made as a result of a demand by the Borrower
pursuant to this Section 12.06(b) shall be arranged by the Borrower after
consultation with the Administrative Agent and shall be either an assignment of
all of the rights and obligations of the assigning Bank under this Agreement or
an assignment of a portion of such rights and obligations made concurrently with
another such assignment or other such assignments that together cover all of the
rights and obligations of the assigning Bank under this Agreement; and
          (v) no Bank shall be obligated to make any such assignment as a result
of a demand by the Borrower pursuant to this Section 12.06(b) unless and until
such Bank shall have received one or more payments from either the Borrower or
one or more assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Loans and Reimbursement Obligations owing to
such Bank (or that such Reimbursement Obligations have been irrevocably assumed
by the assignee Bank), together with accrued interest thereon to the date of
payment of such principal amount and all other amounts payable to such Bank
under this Agreement.
     Upon execution and delivery by the assignee to the Borrower, the
Administrative Agent and the Issuing Bank, to the extent required above, of an
instrument in writing pursuant to which such assignee agrees to become a “Bank”
hereunder (if not already a Bank) having the Commitment, Loans and, if
applicable, the Letter of Credit Interest specified in such instrument, and upon
consent thereto by the Administrative Agent as provided in this Section 12.06(b)
and the Issuing Bank, the assignee shall have, to the extent of such assignment
(unless provided in such assignment with the consent of the Administrative Agent
and the Issuing Bank), the obligations, rights and benefits of a Bank hereunder
holding the Commitment, Loans and, if applicable, the Letter of Credit Interest
(or portions thereof) assigned to it (in addition to the Commitment, Loans and
Letter of Credit Interest theretofore held by such assignee) and the assigning
Bank shall, to the extent of such assignment, be released from the Commitment,
Loans and Letter of Credit Interest (or portion thereof) so assigned. Upon each
such assignment, the assigning Bank shall pay the Administrative Agent an
assignment fee of $3,000.
          (c) Each Bank may sell or agree to sell to one or more other Persons
(a “Participant”) a participation in all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its Commitment and the Loans and/or Letter of Credit Interest held by
it). In the event of any such participation by a Bank of participating interests
to a Participant, such Bank’s obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance thereof
and the Obligors shall continue to deal solely and directly with such “Bank” for
all purposes hereunder and such Participant shall not have any other rights or
benefits under this Agreement, any Note or any other Loan Document, except as
provided in Section 4.08(c) hereof (the

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Participant’s rights against such Bank in respect of such participation to be
those set forth in the agreements executed by such Bank in favor of the
Participant). All amounts payable by the Obligors to any Bank under SECTION 5
hereof in respect of Loans, Letter of Credit Interests and its Commitment, shall
be determined as if such Bank had not sold or agreed to sell any participations
in such Loans, Letter of Credit Interest and Commitment, and as if such Bank
were funding each of such Loans, Letter of Credit Interests and Commitment in
the same way that it is funding the portion of such Loans, Letter of Credit
Interests and Commitment in which no participations have been sold. In no event
shall a Bank that sells a participation agree with the Participant to take or
refrain from taking any action hereunder or under any other Loan Document except
that such Bank may agree with the Participant that it shall not, without the
consent of the Participant, agree to any of the following (to the extent the
rights or interest of the Participant are adversely affected thereby):
(A) increase or extend the term, or extend the time or waive any requirement for
the reduction or termination, of such Bank’s Commitment, (B) extend the date
fixed for the payment of principal of or interest on the related Loan or Loans,
Reimbursement Obligations or any portion of any fee hereunder, (C) reduce the
amount of any such payment of principal, (D) reduce the rate at which interest
is payable thereon, or any fee hereunder payable to the Participant, to a level
below the rate at which the Participant is entitled to receive such interest or
fee, (E) alter the rights or obligations of the Borrower to prepay the related
Loans or (F) consent to any other modification, supplement or waiver hereof or
of any of the other Loan Documents to the extent that the same, under
Section 11.09 or 12.04 hereof, requires the consent of each Bank.
          (d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, including, without limitation,
Section 12.06(c) hereof, any Bank may assign and pledge all or any portion of
its Loans and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Bank from its
obligations hereunder.
          (e) A Bank may furnish any information concerning the Borrower or any
of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 12.13 hereof.
          (f) Anything in this Section 12.06 to the contrary notwithstanding, no
Bank may assign or participate any interest in any Loan or Reimbursement
Obligation held by it hereunder to the Obligors or any of their Affiliates or
Subsidiaries without the prior written consent of each Bank.

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          (g) The Administrative Agent shall provide copies to the Borrower from
time to time (and promptly following any request from the Borrower for such
copies) of the Administrative Questionnaire as completed by each Bank.
     12.07 Indemnification. Each Obligor hereby jointly and severally agrees
(i) to indemnify each Secured Party and their respective directors, officers,
employees, attorneys and agents from, and hold each of them harmless against,
any and all losses, liabilities, claims, damages or expenses incurred by any of
them (including, without limitation, any and all losses, liabilities, claims,
damages or expenses incurred by each Secured Party, whether or not such Secured
Party is a party thereto) (collectively, “Damages”) arising out of or by reason
of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by each Obligor of
the proceeds of any of the extensions of credit hereunder, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence, bad faith or willful misconduct of the Person to
be indemnified) and (ii) not to assert any claim against a Secured Party, any of
its affiliates, or any of its respective directors, officers, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to any of
the transactions contemplated herein or in any other Loan Document; provided
that each Obligor may enforce the obligations, if applicable, of the Banks and
the Issuing Bank hereunder. Without limiting the generality of the foregoing,
each Obligor shall indemnify each Secured Party from, and hold each Secured
Party harmless against, any losses, liabilities, claims, damages or expenses
described in the preceding sentence (but excluding, as provided in the preceding
sentence, any loss, liability, claim, damage or expense incurred by reason of
the gross negligence, bad faith or willful misconduct of the Person to be
indemnified) arising under any Environmental Law as a result of the past,
present or future operations of the Borrower or any of its Subsidiaries (or any
predecessor in interest to the Borrower or any of its Subsidiaries), or the
past, present or future condition of any site or facility owned, operated or
leased by the Borrower or any of its Subsidiaries (or any such predecessor in
interest), or any Release or threatened Release of any Hazardous Materials from
any such site or facility, including any such Release or threatened Release
which shall occur during any period when the Administrative Agent or any Bank
shall be in possession of any such site or facility following the exercise by
the Administrative Agent or any Bank of any of its rights and remedies hereunder
or under any of the Security Documents other than any Release caused by the
gross negligence, bad faith or willful misconduct of the Administrative Agent or
any Bank or any agent, security agent or receiver acting on behalf of the
Administrative Agent or any Bank.

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     12.08 Survival. The obligations of the Obligors under Sections 2.03, 5.01,
5.04, 5.05, 5.06, 12.03 and 12.07 hereof, the obligations of the Subsidiary
Guarantors under Section 6.03 hereof and the obligations of the Banks under
Section 11.05 hereof shall survive the repayment of the Loans and Reimbursement
Obligations and the termination of the Commitments. In addition, each
representation and warranty made, or deemed to be made by a notice of any
extension of credit (whether by means of a Loan or a Letter of Credit), herein
or pursuant hereto shall survive the making of such representation and warranty,
and no Bank shall be deemed to have waived, by reason of making any extension of
credit hereunder (whether by means of a Loan or a Letter of Credit), any Default
which may arise by reason of such representation or warranty proving to have
been false or misleading, notwithstanding that such Bank or the Administrative
Agent may have had notice or knowledge or reason to believe that such
representation or warranty was false or misleading at the time such extension of
credit was made.
     12.09 Captions. The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
     12.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart, including by facsimile or pdf (with an original
subsequently delivered).
     12.11 Governing Law; Submission to Jurisdiction; Waiver of Immunity. This
Agreement shall be governed by, and construed in accordance with, the law of the
State of New York. Each Obligor hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York state court sitting in The Borough of Manhattan, New York City for
the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Obligor irrevocably
waives, to the fullest extent permitted by applicable law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. In addition, to the extent that
any Obligor may be entitled, in any jurisdiction in which judicial proceedings
may at any time be commenced with respect to this Agreement or any other Loan
Document, to claim for itself or its revenues, assets or properties any immunity
from suit, the jurisdiction of any court, attachment prior to judgment,
attachment in aid of execution of a judgment, set-off, execution of a judgment
or any other legal process, and to the extent that in any such jurisdiction
there may be attributed such immunity (whether or not claimed), such Obligor
irrevocably agrees not to claim and hereby irrevocably waives such immunity to
the fullest extent permitted by the laws of such jurisdiction and hereby agrees
that the foregoing waiver shall be enforced to the fullest extent permitted
under the Foreign Sovereign Immunities

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Act of 1976 of the United States of America, as amended, and is intended to be
irrevocable for the purpose of such Act.
     12.12 Waiver of Jury Trial. EACH OF THE OBLIGORS, THE ADMINISTRATIVE AGENT,
THE BANKS AND THE ISSUING BANK HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
     12.13 Treatment of Certain Information.
          (a) Each of the Banks and the Administrative Agent agrees (on behalf
of itself and each of its affiliates, directors, officers, employees and
representatives) to keep confidential, in accordance with their customary
procedures for handling confidential information of the same nature and in
accordance with safe and sound banking practices, any non-public information
supplied by any Obligor or any of its Subsidiaries pursuant to this Agreement,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the Banks or Administrative Agent, (iii) to bank
examiners, auditors or accountants, (iv) to the Administrative Agent or any
other Bank, (v) in connection with any litigation in respect of the Loan
Documents to which any one or more of the Banks or the Administrative Agent is a
party or (vi) subject to the terms of this Section 12.13(a), to any assignee or
participant (or prospective assignee or participant) or to any actual or
prospective counterparty (or its advisors) to any securitization, swap or
derivative transaction relating to the Obligors and the obligations created or
incurred under the Loan Documents; provided that such assignee, participant or
counterparty agrees to comply with this Section 12.13.
          (b) In the event a Bank or the Administrative Agent is required to
disclose confidential information pursuant to this Section 12.13, it shall only
disclose such information as it is legally required to disclose or it would
customarily disclose under similar circumstances to any Governmental Authority
(in each case, without requiring any additional consent from or the giving of
notice to any Obligor) and shall use reasonable efforts to obtain confidential
treatment for any information so disclosed. In addition, it shall if legally
permitted promptly provide notice of the requirement to the Borrower setting out
the requirements and circumstances surrounding the required disclosure and any
other information it deems relevant so that the Borrower may take any
appropriate steps on behalf of itself and any Obligor to protect such
confidential information.
     12.14 Judgment Currency. This is an international loan transaction in which
the specification of US Dollars is of the essence, and the stipulated currency
shall in each instance be

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the currency of account and payment in all instances. A payment obligation in
one currency hereunder (the “Original Currency”) shall not be discharged by an
amount paid in another currency (the “Other Currency”), whether pursuant to any
judgment expressed in or converted into any Other Currency or in another place
except to the extent that such tender or recovery results in the effective
receipt by the payee of the full amount of the Original Currency payable by it
under this Agreement. If for the purpose of obtaining judgment in any court it
is necessary to convert a sum due hereunder in the Original Currency into the
Other Currency, the rate of exchange that shall be applied shall be that at
which in accordance with normal banking procedures the Administrative Agent or
any Bank hereunder could purchase Original Currency with the Other Currency on
the Business Day next preceding the day on which such judgment is rendered. The
obligation of each Obligor in respect of any such sum due from it to the
Administrative Agent or under any other Loan Document (in this Section 12.14
called an “Entitled Person”) shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the extent
that on the Business Day following receipt by such Entitled Person of any sum
adjudged to be due hereunder in the Other Currency such Entitled Person may in
accordance with normal banking procedures purchase and transfer the Original
Currency to New York with the amount of the judgment currency so adjudged to be
due; and each Obligor hereby, as a separate obligation and notwithstanding any
such judgment, agrees jointly and severally to indemnify such Entitled Person
against, and to pay such Entitled Person on demand, in the Original Currency,
the amount (if any) by which the sum originally due to such Entitled Person in
the Original Currency hereunder exceeds the amount of the Original Currency so
purchased and transferred.
     12.15 Agent for Service of Process. EACH OBLIGOR HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION AS ITS DESIGNEE, APPOINTEE AND
AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT
OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING. IF FOR ANY REASON
SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH,
EACH OBLIGOR, AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW
YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO
THE ADMINISTRATIVE AGENT. EACH OBLIGOR AND THE ADMINISTRATIVE AGENT IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID TO THE ADMINISTRATIVE AGENT AND SUCH OBLIGOR AT
ITS RESPECTIVE ADDRESS REFERRED TO IN SECTION 12.02.

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     12.16 Entire Agreement. This Agreement and the other Loan Documents
constitute the entire agreement among the parties with respect to the subject
matter of this Agreement and such other Loan Documents and supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter of this Agreement.
     12.17 USA PATRIOT Act Notice. Each Bank and the Administrative Agent (for
itself and not on behalf of any Bank) hereby notifies the Obligors 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”), it is required to obtain, verify and
record information that identifies each Obligor, which information includes the
name and address of each Obligor and other information that will allow such Bank
or the Administrative Agent, as applicable, to identify such Obligor in
accordance with the Act. Each Obligor shall, and shall cause each of its
Subsidiaries to, provide, to the extent commercially reasonable, such
information and take such actions as are reasonably requested by each Bank and
the Administrative Agent to maintain compliance with the Act.
     12.18 English Language. This Agreement has been negotiated and executed in
the English language. All certificates, reports, notices and other documents and
communications given or delivered pursuant to this Agreement shall be in the
English language or, if not in English and if requested by the Administrative
Agent, accompanied by a certified English translation thereof. The English
language version of any such document for purposes of this Agreement shall
control the meaning of the matters set forth herein.
[Remainder of page left blank intentionally]

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

                  /s/ Manuel Gonzalez-Spahr      

  BORROWER

GRAN TIERRA ENERGY INC.
      By:   /s/ Dana Coffield         Name:   Dana Coffield        Title:  
President & CEO     

            Address for Notices:

300, 611 10th Avenue SW
Calgary, Alberta
Canada T2R OB2       Attention:
Tel:
Fax:
Email:   Chief Financial Officer
(403) 265 3221
(403) 265 3242
martineden@grantierra.com               

Credit Agreement

 

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            ORIGINAL GUARANTORS

GRAN TIERRA ENERGY COLOMBIA, LTD.
by Argosy Energy Corp., its General Partner
 
    By:   /s/ James Hart         Name:           Title:        

  Address for Notices:
c/o Gran Tierra Energy Inc.
300, 611 10th Avenue SW
Calgary, Alberta
Canada T2R OB2 
    Attention:
Tel:
Fax:
Email:   Chief Financial Officer
(403) 265 3221
(403) 265 3242
martineden@grantierra.com   

  ARGOSY ENERGY CORP.
      By:   /s/ James Hart         Name:           Title:        

  Address for Notices:
c/o Gran Tierra Energy Inc.
300, 611 10th Avenue SW
Calgary, Alberta
Canada T2R OB2
    Attention:
Tel:
Fax:
Email:   Chief Financial Officer
(403) 265 3221
(403) 265 3242
martineden@grantierra.com               

Credit Agreement

 

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            ARRANGER, ADMINISTRATIVE AGENT AND ISSUING BANK

STANDARD BANK PLC
      By:   /s/ SJ Branchflower         Name:   SJ Branchflower        Title:  
Senior Manager     

  By:   /s/ Manuel Gonzalez-Spahr         Name:           Title:        

  Address for Notices:

5th Floor, Cannon Bridge House
25 Dowgate Hill
London EC4R 2SB
Attention: Transaction Management
Tel:             +44 (0) 20 7815 4059
Fax:             +44 (0) 20 7815 4099
Email:          steve.branchflower@standardbank.com

With a copy to:
1211 Avenue of the Americas
New York, NY 10036
United States of America
Attention: Manuel Gonzalez-Spahr
Tel:             +1 (212) 407 5000
Fax:             +1 (212) 407 5125
Email:          manuel.gonzalez@standardny.com

                       

Credit Agreement

 

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            BANKS

STANDARD BANK PLC
      By:   /s/ SJ Branchflower         Name:   SJ Branchflower        Title:  
Senior Manager     

  By:   /s/ Manuel Gonzalez-Spahr         Name:           Title:        

  Address for Notices:

5th Floor, Cannon Bridge House
25 Dowgate Hill
London EC4R 2SB
Attention: Transaction Management
Tel:             +44 (0) 20 7815 4059
Fax:             +44 (0) 20 7815 4099
Email:          steve.branchflower@standardbank.com
With a copy to:
1211 Avenue of the Americas
New York, NY 10036
United States of America
Attention: Manuel Gonzalez-Spahr
Tel:             +1 (212) 407 5000
Fax:             +1 (212) 407 5125
Email:          manuel.gonzalez@standardny.com

                       

Credit Agreement

 

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ANNEX I
BANKS AND COMMITMENTS

              Amount of Commitment Bank   (as of the Closing Date)
Standard Bank Plc
  $ 7,000,000  

Annex I-1

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ANNEX II
MANDATORY COST FORMULA

1.   The Mandatory Cost is an addition to the interest rate to compensate Bank
for the cost of compliance with (a) the requirements of the Bank of England
and/or the Financial Services Authority (or, in either case, any other authority
which replaces all or any of its functions) or (b) the requirements of the
European Central Bank.

2.   On the first day of each Interest Period (or as soon as possible
thereafter) the Administrative Agent shall calculate, as a percentage rate, a
rate (the “Additional Cost Rate”) for each Bank, in accordance with the
paragraphs set out below. The Mandatory Cost shall be calculated by the
Administrative Agent as a weighted average of the Banks’ Additional Cost Rates
(weighted in proportion to the percentage participation of each Bank in the
relevant Loan) and shall be expressed as a percentage rate per annum.

3.   The Additional Cost Rate for any Bank lending from an Applicable Lending
Office in a Participating Member State shall be the percentage notified by that
Bank to the Administrative Agent. This percentage shall be certified by that
Bank in its notice to the Administrative Agent to be its reasonable
determination of the cost (expressed as a percentage of that Bank’s
participation in all Loans made from such Applicable Lending Office) of
complying with the minimum reserve requirements of the European Central Bank in
respect of loans made from such Applicable Lending Office.

4.   The Additional Cost Rate for any Bank lending from an Applicable Lending
Office in the United Kingdom shall be calculated by the Administrative Agent as
follows:

             
 
    E x 0.01     percent per annum.
 
         
 
    300      

    Where:

   E   is designed to compensate Banks for amounts payable under the Fees Rules
and is calculated by the Administrative Agent as being the average of the most
recent rates of charge supplied by the Reference Banks to the Administrative
Agent pursuant to paragraph 6 below and expressed in pounds per £1,000,000.

5.   For the purposes of this Annex:

Annex II-1

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  (a)   “Special Deposits” has the meaning given to it from time to time under
or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the
Bank of England;     (b)   “Reference Banks” means the banks customarily
referred to as reference banks for the purpose of calculating the Additional
Cost Rate as determined by the Administrative Agent acting reasonably;     (c)  
“Fees Rules” means the rules on periodic fees contained in the FSA Supervision
Manual or such other law or regulation as may be in force from time to time in
respect of the payment of fees for the acceptance of deposits;     (d)   “Fee
Tariffs” means the fee tariffs specified in the Fees Rules under the activity
group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required
pursuant to the Fees Rules but taking into account any applicable discount
rate);     (e)   “Tariff Base” has the meaning given to it in, and shall be
calculated in accordance with, the Fees Rules; and     (f)   “Participating
Member State” means any member state of the European Communities that adopts or
has adopted the euro as its lawful currency in accordance with legislation of
the European Community relating to Economic and Monetary Union.

6.   The Administrative Agent shall obtain from each Reference Bank as soon as
practicable the rate of charge payable by that Reference Bank to the Financial
Services Authority pursuant to the Fees Rules in respect of the relevant
financial year of the Financial Services Authority (calculated for this purpose
by that Reference Bank as being the average of the Fee Tariffs applicable to
that Reference Bank for that financial year) and expressed in pounds per
£1,000,000 of the Tariff Base of that Reference Bank.

7.   Each Bank shall supply any information required by the Administrative Agent
for the purpose of calculating its Additional Cost Rate. In particular, but
without limitation, each Bank shall supply the following information on or prior
to the date on which it becomes a Bank:

  (a)   the jurisdiction of its Applicable Lending Office; and     (b)   any
other information that the Administrative Agent may reasonably require for such
purpose.

Annex II-2

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    Each Bank shall promptly notify the Administrative Agent of any change to
the information provided by it pursuant to this paragraph.   8.   The rates of
charge of each Reference Bank for the purpose of “E” above shall be determined
by the Administrative Agent based upon the information supplied to it pursuant
to the paragraphs above and on the assumption that, unless a Bank notifies the
Administrative Agent to the contrary, each Bank’s obligations in relation to
cash ratio deposits and Special Deposits are the same as those of a typical bank
from its jurisdiction of incorporation with an Applicable Lending Office in the
same jurisdiction as its Applicable Lending Office.   9.   The Administrative
Agent shall have no liability to any person if such determination results in an
Additional Cost Rate which over or under compensates any Bank and shall be
entitled to assume that the information provided by any Bank or Reference Bank
pursuant to the paragraphs above is true and correct in all respects.   10.  
The Administrative Agent shall distribute the additional amounts received as a
result of the Mandatory Cost to the Banks on the basis of the Additional Cost
Rate for each Bank based on the information provided by each Bank and each
Reference Bank pursuant to the paragraphs above.   11.   Any determination by
the Administrative Agent pursuant to this Annex in relation to a formula, the
Mandatory Cost, an Additional Cost Rate or any amount payable to a Bank shall,
in the absence of manifest error, be conclusive and binding on all parties.  
12.   The Administrative Agent may from time to time, after consultation with
the Borrower and the Banks, determine and notify to all parties any amendments
which are required to be made to this Annex in order to comply with any change
in law, regulation or any requirements from time to time imposed by the Bank of
England, the Financial Services Authority or the European Central Bank (or, in
any case, any other authority which replaces all or any of its functions) and
any such determination shall, in the absence of manifest error, be conclusive
and binding on all parties.

Annex II-3

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SCHEDULE I
Eligible Buyers

1.   Empresa Colombiana de Petróleos — Ecopetrol S.A.

Schedule I-1

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SCHEDULE II
Liens
None.

Schedule II-1

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SCHEDULE III
Subsidiaries

                              Direct or       Owner of Shares /            
Indirect   Jurisdiction of   Ownership     No.   Name of Subsidiary   Subsidiary
  Organization   Percentage   Type of Subsidiary
1.
  Argosy Energy Corp.   Direct   Delaware   Borrower (100%)   Restricted
 
                   
2.
  Gran Tierra Energy Colombia, Ltd.   Indirect   Utah   Borrower (99.2857%)
Argosy Energy Corp. (0.7143%)   Restricted
 
                   
3.
  1203647 Alberta Inc.   Direct   Alberta   Borrower (100%)   Argentine
 
                   
4.
  Gran Tierra Goldstrike Inc.   Indirect   Alberta   1203647 Alberta Inc. (100%)
  Argentine
 
                   
5.
  Gran Tierra Energy Inc. (Alberta)   Indirect   Alberta   Gran Tierra
Goldstrike Inc. (100%)   Argentine
 
                   
6.
  Gran Tierra Energy Argentina S.A.   Indirect   Argentina   Gran Tierra Energy
Inc. (Alberta) (100%)   Argentine
 
                   
7.
  PCE S.A.   Indirect   Ecuador   Gran Tierra Energy Inc. (Alberta) (100%)  
Argentine

Schedule III-1

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SCHEDULE IV
Capitalization

                                                                  Owner of
Shares /         Jurisdiction of   Type of   Issued   Par   Ownership No.   Name
of Company   Organization   Subsidiary   Shares   Value   Percentage
1.
  Argosy Energy Corp.   Delaware   Restricted     1,000     $ 0.001     Borrower
(100%)
 
                               
2.
  Gran Tierra Energy Colombia, Ltd.   Utah   Restricted     N/A       N/A    
Borrower (99.2857%), Argosy Energy Corp. (0.7143%)

Schedule IV-1

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SCHEDULE V
Environmental Matters
None.

Schedule V-1

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SCHEDULE VI
Offtake Agreements

1.   Offtake Agreement dated December 1, 2006 (Contract No. VSM-GPS-011-2006)
between Ecopetrol S.A. (as purchaser) and Argosy Energy International (as
seller)

Schedule VI-1

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SCHEDULE VII
Unrestricted Subsidiaries
None.

Schedule VII-1

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SCHEDULE VIII
Argentine Subsidiaries

1.   1203647 Alberta Inc.   2.   Gran Tierra Goldstrike Inc.   3.   Gran Tierra
Energy Inc.   4.   Gran Tierra Energy Argentina S.A.   5.   PCE S.A.

Schedule VIII-1

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SCHEDULE IX
Existing Indebtedness
None.
Schedule IX-1

 

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SCHEDULE X
Transactions with Affiliates
None.
Schedule X-1