Exhibit 10.1

 

Execution Version

 

 

[tlogo.jpg]

 

CREDIT AGREEMENT

 

Dated as of August 30, 2013

 

among

 

GRAN TIERRA ENERGY INTERNATIONAL HOLDINGS LTD.,

as Borrower,

 

GRAN TIERRA ENERGY INC.,

as Parent,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent and Global Coordinator,

 

SOCIETE GENERALE,

as Syndication Agent,

 

THE BANK OF NOVA SCOTIA,

as Documentation Agent,

 

and

 

The Lenders Party Hereto

 

 

 

Sole Lead Arranger and Sole Bookrunner

WELLS FARGO SECURITIES, LLC

 

 

 

 

 

 

Table of Contents

 

    Page       Article I     Definitions and Accounting Matters 1       Section
1.01 Terms Defined Above 1       Section 1.02 Certain Defined Terms 1      
Section 1.03 Types of Loans and Borrowings 26       Section 1.04 Terms
Generally; Rules of Construction 26       Section 1.05 Accounting Terms and
Determinations; GAAP 26       Article II     The Credits 26       Section 2.01
Commitments 26       Section 2.02 Loans and Borrowings 27       Section 2.03
Requests for Borrowings 28       Section 2.04 Interest Elections 28      
Section 2.05 Funding of Borrowings 29       Section 2.06 Termination and
Reduction of Aggregate Maximum Credit Amounts 30       Section 2.07 Borrowing
Base 31       Section 2.08 Letters of Credit 33       Article III    Payments of
Principal and Interest; Prepayments; Fees 37       Section 3.01 Repayment of
Loans 37       Section 3.02 Interest 37       Section 3.03 Alternate Rate of
Interest 38       Section 3.04 Prepayments 38       Section 3.05 Fees 39      
Article IV     Payments; Pro Rata Treatment; Sharing of Set-offs 40      
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs 40    
  Section 4.02 Presumption of Payment by the Borrower 41       Section 4.03
Defaulting Lenders 41       Article V     Increased Costs; Break Funding
Payments; Taxes; Illegality 44       Section 5.01 Increased Costs 44      
Section 5.02 Break Funding Payments 45       Section 5.03 Taxes 44       Section
5.04 Designation of Different Lending Office 47       Section 5.05 Illegality 47

 

i

 

 

Table of Contents

(continued)

 

    Page       Article VI     Conditions Precedent 47       Section 6.01
Effective Date 47       Section 6.02 Each Credit Event 50       Section 6.03
Additional Conditions to Credit Events 51       Article VII     Representations
and Warranties 51       Section 7.01 Organization; Powers 51       Section 7.02
Authority; Enforceability 51       Section 7.03 Approvals; No Conflicts 52      
Section 7.04 Financial Condition; No Material Adverse Change 52       Section
7.05 Litigation 52       Section 7.06 Environmental Matters 52       Section
7.07 Compliance with the Laws and Agreements; No Defaults 53       Section 7.08
Taxes 54       Section 7.09 Employee Benefit Arrangements 54       Section 7.10
Disclosure; No Material Misstatements 54       Section 7.11 Insurance 55      
Section 7.12 Restrictive Agreements 55       Section 7.13 Subsidiaries 55      
Section 7.14 Location of Business and Offices 55       Section 7.15 Properties;
Titles, Etc 56       Section 7.16 Maintenance of Properties 56       Section
7.17 Marketing of Production 57       Section 7.18 Swap Agreements 57      
Section 7.19 Use of Loans and Letters of Credit 57       Section 7.20 Solvency
58       Section 7.21 Material Documents 58       Section 7.22 Ranking 58      
Section 7.23 USA Patriot Act/Anti-Money Laundering 58       Section 7.24 OFAC 58
      Section 7.25 Foreign Exchange Special Regime 58       Article
VIII     Affirmative Covenants 59       Section 8.01 Financial Statements; Other
Information 59       Section 8.02 Notices of Material Events 62

 

ii

 

 

Table of Contents

(continued)

 

    Page       Section 8.03 Existence; Conduct of Business 63       Section 8.04
Payment of Obligations 63       Section 8.05 Performance of Obligations under
Loan Documents 63       Section 8.06 Operation and Maintenance of Properties 63
      Section 8.07 Insurance 64       Section 8.08 Books and Records; Inspection
Rights 64       Section 8.09 Compliance with Laws 64       Section 8.10
Environmental Matters 64       Section 8.11 Further Assurances 65       Section
8.12 Reserve Reports 65       Section 8.13 Title Defects 66       Section 8.14
Guaranty; Collateral 66       Section 8.15 Unrestricted Subsidiaries 68      
Article IX     Negative Covenants 68       Section 9.01 Financial Covenants 68  
    Section 9.02 Debt 69       Section 9.03 Liens 70       Section 9.04
Restricted Payments; Repayment of Senior Debt; Amendments to Terms of Senior
Debt 70       Section 9.05 Investments, Loans and Advances 71       Section 9.06
Nature of Business; Investments by Unrestricted Subsidiaries 72       Section
9.07 Limitation on Leases 73       Section 9.08 Proceeds of Notes 73      
Section 9.09 Sale or Discount of Receivables 73       Section 9.10 Mergers, Etc
73       Section 9.11 Disposition of Properties 73       Section 9.12
Environmental Matters 75       Section 9.13 Transactions with Affiliates 75    
  Section 9.14 Subsidiaries 75       Section 9.15 Restrictive Agreements 75    
  Section 9.16 Swap Agreements 76       Section 9.17 Material Documents 76      
Section 9.18 Marketing Activities 77

 

iii

 

 

Table of Contents

(continued)

 

    Page       Article X     Events of Default; Remedies 77       Section 10.01
Events of Default 77       Section 10.02 Remedies 79       Article XI     The
Agents 80       Section 11.01 Appointment; Powers 80       Section 11.02 Duties
and Obligations of Administrative Agent 80       Section 11.03 Action by
Administrative Agent 81       Section 11.04 Reliance by Administrative Agent 82
      Section 11.05 Subagents 82       Section 11.06 Resignation or Removal of
Administrative Agent 82       Section 11.07 Agents as Lenders 82       Section
11.08 No Reliance 83       Section 11.09 Administrative Agent May File Proofs of
Claim 83       Section 11.10 Withholding Tax 84       Section 11.11 Authority of
Administrative Agent to Release Collateral and Liens 84       Section 11.12
Colombian Security Documents 85       Section 11.13 The Global Coordinator, the
Arranger, the Syndication Agent and the Documentation Agent 85       Article
XII     Miscellaneous 85       Section 12.01 Notices 85       Section 12.02
Waivers; Amendments 86       Section 12.03 Expenses, Indemnity; Damage Waiver 87
      Section 12.04 Successors and Assigns 89       Section 12.05 Survival;
Revival; Reinstatement 91       Section 12.06 Counterparts; Integration;
Effectiveness 92       Section 12.07 Severability 92       Section 12.08 Right
of Setoff 92       Section 12.09 Governing law; Jurisdiction; Consent to Service
of Process 93       Section 12.10 Headings 94       Section 12.11
Confidentiality 94       Section 12.12 Interest Rate Limitation 94       Section
12.13 Judgment Currency 95       Section 12.14 EXCULPATION PROVISIONS 95

 

iv

 

 

Table of Contents

(continued)

 

    Page       Section 12.15 Collateral Matters; Secured Swap Agreements and
Specified Cash Management Agreements 96       Section 12.16 Collateral
Assignment of Swap Agreements 96       Section 12.17 No Third Party
Beneficiaries 96       Section 12.18 USA Patriot Act Notice 97       Section
12.19 English Language 97

 

ANNEXES, EXHIBITS AND SCHEDULES

 

Annex I List of Maximum Credit Amounts         Exhibit A Form of Note   Exhibit
B Form of Borrowing Request   Exhibit C Form of Interest Election Request  
Exhibit D Form of Compliance Certificate   Exhibit E Security Instruments  
Exhibit F Form of Assignment and Assumption         Schedule 1.02(a) Hydrocarbon
Properties/Concession Agreements   Schedule 1.02(b) Eligible Buyers   Schedule
1.02(c) Offtake Agreements   Schedule 7.05 Litigation   Schedule 7.06
Environmental Matters   Schedule 7.13 Subsidiaries   Schedule 7.18 Swap
Agreements   Schedule 9.02 Debt   Schedule 9.05 Investments  

 

v

 

 

THIS CREDIT AGREEMENT dated as of August 30, 2013, is among: GRAN TIERRA ENERGY
INTERNATIONAL HOLDINGS LTD., a company incorporated under the laws of the Cayman
Islands (the “Borrower”); GRAN TIERRA ENERGY INC., a corporation duly formed and
existing under the laws of the State of Nevada (the “Parent”); each of the
Lenders from time to time party hereto; WELLS FARGO BANK, NATIONAL ASSOCIATION
(in its individual capacity, “Wells Fargo”), as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the
“Administrative Agent”) and as global coordinator (in such capacity, together
with its successors in such capacity, the “Global Coordinator”); SOCIETE
GENERALE, as syndication agent for the Lenders (in such capacity, together with
its successors in such capacity, the “Syndication Agent”); and The Bank of Nova
Scotia, as documentation agent for the Lenders (in such capacity, together with
its successors in such capacity, the “Documentation Agent”).

 

RECITALS

 

A.           The Borrower and the Parent have requested that the Lenders provide
certain loans to and extensions of credit on behalf of the Borrower.

 

B.           The Lenders have agreed to make such loans and extensions of credit
subject to the terms and conditions of this Agreement.

 

C.           In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:

 

Article I

Definitions and Accounting Matters

 

Section 1.01         Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.

 

Section 1.02         Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Adjusted Consolidated Net Income” means, for any period, the sum of
Consolidated Net Income for such period plus the following expenses or charges
to the extent such expenses or charges reduced Consolidated Net Income for such
period: depreciation, depletion, amortization, exploration expenses and all
other noncash charges, minus all noncash income added to Consolidated Net
Income.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to the LIBO Rate for such Interest Period multiplied
by the Statutory Reserve Rate.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

“Affected Loans” has the meaning assigned such term in Section 5.05.

 

1

 

 

 

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

 

“Agents” means, collectively, the Administrative Agent, the Global Coordinator,
the Syndication Agent and the Documentation Agent; and “Agent” means either the
Administrative Agent, the Global Coordinator, the Syndication Agent or the
Documentation Agent, as the context requires.

 

“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06. On the Effective Date, the Aggregate Maximum Credit Amounts is
$300,000,000.

 

“Agreement” means this Credit Agreement, as the same may from time to time be
amended, modified, supplemented or restated.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus ½ of 1%, and (c) the Adjusted LIBO Rate for a
three month Interest Period on such day (or if such day is not a Business Day,
the immediately preceding Business Day) plus 1%; provided that, for the
avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the
rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to US
Dollar deposits in the London interbank market), rounded upwards, if necessary,
to the next 1/100 of 1% at which US Dollar deposits of $5,000,000 with a three
month maturity are offered at approximately 11:00 a.m., London time, on such day
(or the immediately preceding Business Days if such day is not a Business Day).
Any change in the Alternate Base Rate due to a change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from
and including the effective date of such change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate, respectively.

 

“ANH” means Agencia Nacional de Hidrocarburos.

 

“Applicable Margin” means, for any day, with respect to any ABR Loan or
Eurodollar Loan, as the case may be, the rate per annum set forth in the
Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization
Percentage then in effect:

 

Borrowing Base Utilization Grid Borrowing Base Utilization Percentage   <25% 
 ≥25%, but
<50%   ≥50%, but
<75%   ≥75%, but
<90%   ≥90% ABR Loan Margin   1.25%   1.50%   1.75%   2.00%   2.25% Eurodollar
Loan Margin   2.25%   2.50%   2.75%   3.00%   3.25%

 

Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change; provided, however, that if at any
time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a),
then the “Applicable Margin” means the rate per annum set forth on the grid when
the Borrowing Base Utilization Percentage is at its highest level.

 

2

 

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount; provided that if the Commitments have terminated or expired, the
Applicable Percentages shall be determined based upon the Commitments most
recently in effect, giving effect to any assignments.

 

“Approved Counterparty” means any Lender or any Affiliate of a Lender.

 

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

“Approved Petroleum Engineers” means (a) GLJ Petroleum Consultants Ltd. and (b)
any other independent petroleum engineers reasonably acceptable to the
Administrative Agent.

 

“Arranger” means Wells Fargo Securities, LLC, in its capacities as the sole lead
arranger and sole bookrunner hereunder.

 

“ASC” means the Financial Accounting Standards Board Accounting Standards
Codification, as in effect from time to time.

 

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 12.04(b)), and accepted by the Administrative Agent, in the form of
Exhibit F or any other form approved by the Administrative Agent.

 

“Availability Period” means the period from and including the Effective Date to
but excluding the Termination Date.

 

“Available Amount” means, at any date of determination, an amount, not less than
zero in the aggregate, determined on a cumulative basis equal to the sum of
(without duplication): (a) 50% of Adjusted Consolidated Net Income for the
period (taken as one accounting period) from April 1, 2013 to the end of the
fiscal quarter most recently ended in respect of which a compliance certificate
has been delivered as required pursuant to Section 8.01(c), or in the case such
Adjusted Consolidated Net Income for such period is a deficit, minus 100% of
such deficit; plus (b) the Net Cash Proceeds of any Permitted Equity Issuance
after the Effective Date; as such amount shall be reduced dollar for dollar from
time to time to the extent that all or a portion of the Available Amount is
applied prior to such date to make Investments to the extent permitted by
Section 9.05(l).

 

“Bankruptcy Event” means, with respect to any Person, such Person becomes the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with the reorganization or liquidation of
its business appointed for it, or, in the good faith determination of the
Administrative Agent, has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment;
provided that a Bankruptcy Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such Person
by a Governmental Authority or instrumentality thereof; provided, further, that
such ownership interest does not result in or provide such Person with immunity
from the jurisdiction of courts within the United States or from the enforcement
of judgments or writs of attachment on its assets or permit such Person (or such
Governmental Authority or instrumentality) to reject, repudiate, disavow or
disaffirm any contracts or agreements made by such Person.

 

3

 

  

“Bermuda Security Documents” means, collectively, each of the following
documents:

 

(a)          a deed of charge agreement executed and delivered by Gran Tierra
Energy Colombia, Ltd. to the Administrative Agent dated as of the Effective Date
(as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time), in form and substance satisfactory to the
Administrative Agent;

 

(b)          a deed of charge agreement executed and delivered by Petrolifera to
the Administrative Agent dated as of the Effective Date (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time), in form and substance satisfactory to the Administrative Agent;

 

(c)          the Deposit Account Control Agreement (Gran Tierra Energy Colombia)

 

(d)          the Deposit Account Control Agreement (Petroifera); and

 

(e)          any other documents reasonably required by the Administrative Agent
to be executed in connection with the creation, attachment and/or perfection
under the laws of Bermuda of the security interests to be granted pursuant to
the aforementioned security documents or any of the other Security Instruments.

 

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.

 

“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

 

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 2.07(e), Section 8.13 or Section 9.11(d).

 

“Borrowing Base Deficiency” occurs at any time the total Revolving Credit
Exposures exceeds the Borrowing Base then in effect.

 

“Borrowing Base Utilization Percentage” means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Revolving
Credit Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.

 

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

 

“Brazilian Security Documents” means, collectively, each of the following
documents:

 

(a)          a quota pledge agreement executed and delivered by Gran Tierra
Finance (Luxembourg) S.à.r.l., Gran Tierra Brazco (Luxembourg) S.à.r.l., Gran
Tierra Energy Brasil Ltda. and the Administrative Agent as intervening party,
respecting all of the issued and outstanding quotas (representing 100% of the
capital interest) of Gran Tierra Energy Brasil Ltda. (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time), in form and substance satisfactory to the Administrative Agent;

 

4

 

  

(b)          an agreement for fiduciary assignment of rights over bank accounts
executed and delivered by Gran Tierra Energy Brasil Ltda. in favor of the
Administrative Agent (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time), in form and substance
satisfactory to the Administrative Agent;

 

(c)          an Amendment to the Articles of Organization of Gran Tierra Energy
Brasil Ltda. to reflect the pledged quotas, in form and substance satisfactory
to the Administrative Agent, and which shall be registered with the competent
Board of Trade; and

 

(d)           any other documents reasonably required by the Administrative
Agent to be executed in connection with the creation, attachment and/or
perfection under the laws of Brazil of the security interests to be granted
pursuant to the aforementioned security documents or any of the other Security
Instruments.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City or Bogota, Colombia are authorized or
required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice
by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
banks are open for dealings in US Dollar deposits in the London interbank
market.

 

“Canadian Security Documents” means, collectively, each of the following
documents:

 

(a)          a general security agreement executed and delivered by each of the
Parent, Solana Resources Limited, Gran Tierra Exchangeco Inc. and Gran Tierra
Callco ULC in favour of the Administrative Agent (as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time), in
form and substance satisfactory to the Administrative Agent;

 

(b)          one or more securities pledge agreements executed and delivered by
Gran Tierra Exchangeco Inc. and Gran Tierra Callco ULC respecting all of the
issued and outstanding shares in Solana Resources Limited and Gran Tierra
Exchangeco Inc. (as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time), in form and substance satisfactory to the
Administrative Agent; and

 

(c)          any other documents reasonably required by the Administrative Agent
to be executed in connection with the creation, attachment and/or perfection
under the laws of Canada or any province thereof of the security interests to be
granted pursuant to the aforementioned security documents or any of the other
Security Instruments.

 

“Capital Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
on the balance sheet of the Person liable (whether contingent or otherwise) for
the payment of rent thereunder.

 

“Cash Collateral” has the meaning assigned such term in Section 2.08(i)(ii).

 

5

 

 

“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent (as a first priority, perfected security interest), for the
benefit of the Issuing Bank, cash in US Dollars, at a location and pursuant to
documentation in form and substance satisfactory to the Administrative Agent.
“Cash Collateralized” has a correlative meaning.

 

“Cash Equivalents” means any Investment of the types described in Section
9.05(c) through (f), and any other Investments of a similar nature approved by
the Administrative Agent in its sole discretion.

 

“Casualty Event” means any loss, casualty or other damage to, or any
nationalization, taking under power of eminent domain or by condemnation,
seizure, taking or similar proceeding of, any Property of any Credit Party.

 

“Cayman Security Documents” means, collectively, each of the following
documents:

 

(a)          equitable charges over the shares of the Borrower, Petrolifera, and
Gran Tierra Energy Cayman Islands Inc., together with all annexures thereto,
governed by the laws of the Cayman Islands (as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time), in
form and substance satisfactory to the Administrative Agent; and

 

(b)          any other documents reasonably required by the Administrative Agent
to be executed in connection with the creation, attachment and/or perfection
under the laws of Cayman Islands of the security interests to be granted
pursuant to the aforementioned security documents or any of the other Security
Instruments.

 

“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof), of Equity Interests representing
more than 40% of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests of the Parent, (b) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Parent by
Persons who were neither (i) nominated by the board of directors of the Parent
nor (ii) appointed by directors so nominated, (c) the failure of the Parent to
own, directly or indirectly, 100% of the issued and outstanding Equity Interests
of the Borrower, or (d) the Borrower shall cease to be Controlled by the Parent.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 5.01(b)), by any lending office of such Lender or by
such Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement; provided
that notwithstanding anything herein to the contrary (i) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith, or in implementation
thereof and (ii) all requests, rules, guidelines or directives concerning
capital adequacy promulgated by the Bank for International Settlements, the
Basel Committee on Banking Regulations and Supervisory Practices (or any
successor similar authority) or the United States or Canadian financial
regulatory authorities, in each case pursuant to Basel III, shall be deemed to
be a “Change in Law”, regardless of the date enacted, adopted, promulgated,
issued or implemented.

 

“Code” means the United States Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.

 

6

 

 

“Collateral” means all the “Collateral” and “Derechos”, in each case, as defined
in the applicable Security Instruments and all other Property, now owned or
hereafter acquired on which Liens have been granted (or are required to have
been granted) to the Administrative Agent, for the benefit of the Secured
Parties, or to each Secured Party, as applicable, to secure the Indebtedness.

 

“Collateral Account” has the meaning assigned such term in Section 2.08(i)(ii).

 

“Collection Account” means a deposit account approved by the Administrative
Agent, and maintained with Wells Fargo, as depositary (or its successors in such
capacity), or JPMorgan Chase Bank, N.A., HSBC Bank Bermuda Limited or one or
more other banks satisfactory to the Administrative Agent.

 

“Colombia” means The Republic of Colombia.

 

“Colombian Branches” means, collectively, (a) Petrolifera Petroleum (Colombia)
Limited, the Colombian branch office of Petrolifera, and (b) Gran Tierra Energy
Colombia, Ltd., the Colombian branch office of Gran Tierra Energy Colombia.

 

“Colombian Hydrocarbon Properties” means (a) as of the Effective Date, the
Hydrocarbon Interests set forth on Schedule 1.02(a); and (b) from time to time
and at any time after the Effective Date, all Hydrocarbon Interests in Colombia
in which the Borrower or any Subsidiary shall have an interest and that have
been included in the Borrowing Base.

 

“Colombian Notes” means the Colombian law pagarés with blank spaces and their
corresponding letters of instruction, issued by the Borrower and described in
Section 2.02(d), in form and substance satisfactory to the Administrative Agent,
together with all amendments, modifications, replacements, extensions and
rearrangements thereof.

 

“Colombian Pesos” refers to lawful money of Colombia.

 

“Colombian Peso Offtake Agreements” means, collectively, each of the Equion
Offtake Agreeement, the Kronos Offtake Agreement and Sierra Nevada Offtake
Agreement; provided that the foregoing Offtake Agreements shall only constitute
Colombian Peso Offtake Agreements for so long as the aggregate amount of all
payments made pursuant to such Offtake Agreements does not exceed the Colombian
Peso equivalent of $500,000 US Dollars during any 12 month period.

 

“Colombian Security Documents” means, collectively, each of the following
documents:

 

(a)          a pledge agreement over the economic rights of Petrolifera in
Colombia under each Concession Agreement to which it is a party in existence on
the Effective Date, governed by the laws of Colombia and dated on or about the
Effective Date (as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time), in form and substance satisfactory to the
Administrative Agent, granting in favor of the Administrative Agent and each
other Secured Party a first priority security interest in such rights;

 

(b)          a pledge agreement over the economic rights of Gran Tierra Energy
Colombia in Colombia under each Concession Agreement to which it is a party in
existence on the Effective Date, governed by the laws of Colombia and dated on
or about the Effective Date (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time), in form and substance
satisfactory to the Administrative Agent, granting in favor of the
Administrative Agent and each other Secured Party a first priority security
interest in such rights; and

 

7

 

 

(c)          any other documents 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 documents or any of the other Security Instruments.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b). The amount representing each Lender’s Commitment shall at any time be
the lesser of such Lender’s Maximum Credit Amount and such Lender’s Applicable
Percentage of the then effective Borrowing Base.

 

“Commitment Fee Rate” means a rate per annum equal to 0.875%.

 

“Commodity Hedging Agreement” means (a) any swap, forward, cap, floor, collar or
other similar transaction 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.

 

“Concession Agreements” means, collectively, (a) each Hydrocarbon concession,
license, participation, exploration and production contract, production sharing
agreement or other similar agreement entered into between any Credit Party and
any Governmental Authority or other Person listed on Schedule 1.02(a), and (b)
any other Hydrocarbon concession, license, participation, exploration and
production contract, production sharing agreement or other similar agreement
entered into between any Credit Party and any Governmental Authority or other
Person, as each such agreement may be amended, restated, supplemented, replaced
or otherwise modified in accordance with this Agreement.

 

“Consolidated Net Income” means with respect to the Parent and the Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Parent and the Consolidated Subsidiaries after allowances for Taxes for such
period determined on a consolidated basis in accordance with GAAP; provided that
there shall be excluded from such net income (to the extent otherwise included
therein) the following: (a) the net income of any Person in which the Parent or
any Consolidated Subsidiary has an interest (which interest does not cause the
net income of such other Person to be consolidated with the net income of the
Parent and the Consolidated Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in cash during
such period by such other Person to the Parent or to a Consolidated Subsidiary,
as the case may be; (b) the net income (but not loss) during such period of any
Consolidated Subsidiary to the extent that the declaration or payment of
dividends or similar distributions or transfers or loans by that Consolidated
Subsidiary is not at the time permitted by operation of the terms of its charter
or any agreement, instrument or Governmental Requirement applicable to such
Consolidated Subsidiary or is otherwise restricted or prohibited, in each case
determined in accordance with GAAP; (c) the net income (or deficit) of any
Person accrued prior to the date it becomes a Consolidated Subsidiary or is
merged into or consolidated with the Parent or any of its Consolidated
Subsidiaries; (d) any extraordinary non-cash gains or losses during such period
and (e) any gains or losses attributable to writeups or writedowns of assets,
including ceiling test writedowns; and provided, further, that if the Parent or
any Consolidated Subsidiary shall acquire or dispose of any Property during such
period, then Consolidated Net Income shall be calculated after giving pro forma
effect to such acquisition or disposition, as if such acquisition or disposition
had occurred on the first day of such period.

 

8

 

 

“Consolidated Subsidiaries” means each Subsidiary of the Parent (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Parent in accordance with GAAP.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to “control” such other Person. “Controlling” and
“Controlled” have meanings correlative thereto.

 

“Credit Parties” means, collectively, the Parent, the Borrower and each
Subsidiary Guarantor.

 

“Creditor Party” means the Administrative Agent, the Issuing Bank or any Lender.

 

“CT Corporation” means CT Corporation System, a Delaware corporation.

 

“Currency Exchange Agreement” means any agreement or arrangement providing for
the transfer or mitigation of risks of fluctuations in the exchange rate between
currencies either generally or under specific contingencies.

 

“Debt” means, for any Person, the sum of the following (without duplication):
(a) all obligations of such Person for borrowed money or evidenced by bonds,
bankers’ acceptances, debentures, notes or other similar instruments; (b) all
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services (other
than accounts payable and accrued expenses, liabilities or other obligations to
pay the deferred purchase price of Property or services, from time to time
incurred in the ordinary course of business which are not greater than ninety
(90) days past the date of invoice or delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP); (d) all obligations under Capital Leases;
(e) all obligations under Synthetic Leases; (f) all Debt (as defined in the
other clauses of this definition) of others secured by (or for which the holder
of such Debt has an existing right, contingent or otherwise, to be secured by) a
Lien on any Property of such Person, whether or not such Debt is assumed by such
Person; (g) all Debt (as defined in the other clauses of this definition) of
others guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the Debt (howsoever such assurance shall be made) to
the extent of the lesser of the amount of such Debt and the maximum stated
amount of such guarantee or assurance against loss; (h) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt or Property of others;
(i) obligations to deliver commodities, goods or services, including, without
limitation, Hydrocarbons, in consideration of one or more advance payments,
other than gas balancing arrangements in the ordinary course of business; (j)
obligations to pay for goods or services even if such goods or services are not
actually received or utilized by such Person; (k) any Debt of a partnership for
which such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l)
Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment. The Debt of any Person shall include all
obligations of such Person of the character described above to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is not included as a liability of such Person under GAAP.

 

9

 

 

“Dedicated Cash Receipts” means all cash received by or on behalf of any Credit
Party with respect to the following: (a) any amounts payable under or in
connection with any Material Document (including, without limitation, payments
or proceeds from Offtake Agreements and Swap Agreements); (b) cash representing
operating revenue earned or to be earned by any Credit Party; (c) proceeds from
Loans; and (d) any other cash received by any Credit Party from whatever source
other than (i) liability insurance proceeds required to be paid directly to
third parties, (ii) payments made to any Credit Party for the account of third
parties under or in connection with joint operating agreements or similar joint
development agreements and (iii) payments made in Colombian Pesos received
pursuant to the Colombian Peso Offtake Agreements.

 

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

 

“Defaulting Lender” means any Lender that (a) has failed, within two Business
Days of the date required to be funded or paid, to (i) fund any portion of its
Loans, (ii) fund any portion of its participations in Letters of Credit or (iii)
pay over to any Creditor Party any other amount required to be paid by it
hereunder, unless, in the case of clause (i) above, such Lender notifies the
Administrative Agent in writing that such failure is the result of such Lender’s
good faith determination that a condition precedent to funding (specifically
identified and including the particular default, if any) has not been satisfied,
(b) has notified the Borrower or any Creditor Party in writing, or has made a
public statement to the effect, that it does not intend or expect to comply with
any of its funding obligations under this Agreement (unless such writing or
public statement indicates that such position is based on such Lender’s good
faith determination that a condition precedent (specifically identified and
including the particular default, if any) to funding a loan under this Agreement
cannot be satisfied) or generally under other agreements in which it commits to
extend credit, (c) has failed, within three Business Days after request by a
Creditor Party, acting in good faith, to provide a certification in writing from
an authorized officer of such Lender that it will comply with its obligations
(and is financially able to meet such obligations) to fund prospective Loans and
participations in then outstanding Letters of Credit under this Agreement;
provided that such Lender shall cease to be a Defaulting Lender pursuant to this
clause (c) upon such Creditor Party’s receipt of such certification in form and
substance satisfactory to it and the Administrative Agent, or (d) has become the
subject of a Bankruptcy Event.

 

“Deposit Account Control Agreement” means a deposit account control agreement in
form and substance satisfactory to the Administrative Agent, as the same may be
amended, modified or supplemented from time to time.

 

“Deposit Account Control Agreement (Gran Tierra Energy Colombia)” means the
Deposit Account Control Agreement dated as of the Effective Date among the Gran
Tierra Energy Colombia, the Administrative Agent and HSBC Bank Bermuda Limited
(and its successors in such capacity), as the same may be amended, modified or
supplemented from time to time.

 

“Deposit Account Control Agreement (Petrolifera)” means the Deposit Account
Control Agreement dated as of the Effective Date among Petrolifera, the
Administrative Agent and HSBC Bank Bermuda Limited, as depositary (or its
successors in such capacity), as the same may be amended, modified or
supplemented from time to time.

 

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.

 

10

 

  

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income Taxes, depreciation,
depletion, amortization, exploration expenses and other similar noncash charges,
minus all noncash income added to Consolidated Net Income.

 

“Effective Date” means the date on which the conditions specified in Section
6.01 are satisfied (or waived in accordance with Section 12.02).

 

“Eligible Buyers” means (a) Ecopetrol S.A., (b) Petrobras Internacional
Braspetro B.V., (c) Petrobras Colombia Limited, (d) each of the Persons listed
on Schedule 1.02(b), (e) in the case of Colombian Hydrocarbon Properties not
operated by any Credit Party, any buyer approved by the operator thereof other
than an Affiliate of the Parent, and (f) any additional Persons that have been
approved in writing by the Administrative Agent and the Majority Lenders, acting
reasonably, at the time of the purchase of crude oil or other Hydrocarbons by
such Person from any Credit Party; provided that any such Person shall cease to
be an Eligible Buyer if:

 

(i)          any Credit Party 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 any Credit Party has at such time remained
unpaid for more than 30 days (measured from the due date specified in the
original invoice therefor).

 

“Engineering Reports” has the meaning assigned such term in Section 2.07(c)(i).

 

“Entitled Person” has the meaning assigned such term in Section 12.13.

 

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment, the preservation or reclamation of
natural resources, or the management, Release or threatened Release of any
Hazardous Materials, in effect in any and all jurisdictions in which the Parent
or any Subsidiary is conducting, or at any time has conducted, business, or
where any Property of the Parent or any Subsidiary is located.

 

“Environmental Permit” means any permit, registration, license, notice,
approval, consent, exemption, variance, or other authorization required under or
issued pursuant to applicable Environmental Laws.

 

“Equion Offtake Agreement” means that certain Agreement for the Purchase and
Sale of Gas under the Llanos - 22 Contract between Equion Energy Limited S.A and
Cepsa Colombia S.A. effective April 23, 2013, expiring October 22, 2013.

 

11

 

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned such term in Section 10.01.

 

“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’,
vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’,
workers’, materialmen’s, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) 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 which are
not delinquent or which are being contested in 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 Parent or any Subsidiary or materially impair the
value of such Property subject thereto; (e) 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 and no such deposit account is intended by
Parent or any of its Subsidiaries to provide collateral to the depository
institution; (f) easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any Property of the Parent or any
Subsidiary that do not secure any monetary obligations and which in the
aggregate do not materially impair the use of such Property for the purposes of
which such Property is held by the Parent or any Subsidiary or materially impair
the value of such Property subject thereto; (g) 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 and (h) 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; provided further that Liens described in
clauses (a) through (e) shall remain “Excepted Liens” only for so long as no
action to enforce such Lien has been commenced and no intention to subordinate
the first priority Lien granted in favor of the Administrative Agent and the
Lenders is to be hereby implied or expressed by the permitted existence of such
Excepted Liens.

 

12

 

  

“Excluded Swap Obligations” has the meaning assigned to such term in the
Guaranty Agreement.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of any Credit Party hereunder or under any other Loan
Document, (a) income or franchise taxes imposed on (or measured by) its net
income by the jurisdiction under the laws of which such recipient is organized
or in which its principal office is located or, in the case of any Lender, in
which its applicable lending office is located, (b) any branch profits Taxes or
similar Taxes imposed by any jurisdiction in which any Credit Party is located
and (c) any United States withholding Tax that is imposed under FATCA.

 

“Existing Credit Agreement” means that certain Credit Agreement dated as of July
30, 2010 among Solana Resources Limited, the Parent, Wells Fargo Bank, National
Association, as administrative agent, and the lenders party thereto (as
heretofore amended, modified, supplemented or restated).

 

“Fair Market Value” shall mean, with respect to any Property on any date of
determination, the value of the consideration obtainable in a sale of such
Property or at such date of determination assuming a sale by a willing seller to
a non-affiliated willing purchaser dealing at arm’s length and arranged in an
orderly manner over a reasonable period of time having regard to the nature and
characteristics of such Property.

 

“Farmout Concession Agreements” means, collectively, all of the following
agreements: (i) Concession Agreement for the Exploitation, Development and
Production of Oil and Natural Gas REC-T-155 No. 48610.001427/2008-39, executed
by and between Gran Tierra Brasil and ANP; (ii) Concession Agreement for the
Exploitation, Development and Production of Oil and Natural Gas REC-T-224 No.
48610.001426/2008-94, executed by and between Gran Tierra Brasil and ANP; (iii)
Concession Agreement for the Exploitation, Development and Production of Oil and
Natural Gas REC-T-129 No. 48610.001443/2008-21, executed by and between Gran
Tierra Brasil and ANP; and (iv) Concession Agreement for the Exploitation,
Development and Production of Oil and Natural Gas REC-T-142 No.
48610.001446/2008-65, executed by and between Gran Tierra Brasil and ANP.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement, and any regulations promulgated thereunder or official
interpretations thereof.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

“Fee Letter” means the Fee and Engagement Letter dated as of March 6, 2013,
among the Parent, Wells Fargo and the Arranger.

 

13

 

 

“Financial Officer” means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Parent.

  

“Financial Statements” means the financial statement or statements of the Parent
and its Consolidated Subsidiaries referred to in Section 7.04(a).

 

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction, and
Canada and each Province thereof shall be deemed to constitute a single
jurisdiction.

 

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in Section 1.05.

 

“Governmental Authority” means the government of the United States of America,
Canada, Colombia, the Cayman Islands, any other nation or any political
subdivision thereof, whether state, department, provincial or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, resolution, instruction, circular, certificate, license, rules of common
law, authorization or other directive or requirement, whether now or hereinafter
in effect, of any Governmental Authority.

 

“Gran Tierra Brazco ULC” means Gran Tierra Brazco ULC, an unlimited liability
corporation organized under the laws of the Province of Alberta, Canada.

 

“Gran Tierra Callco ULC” means Gran Tierra Callco ULC, an unlimited liability
corporation organized under the laws of the Province of Alberta, Canada.

 

“Gran Tierra Energy Brasil Ltda.” means Gran Tierra Energy Brasil Ltda., a
company organized under the laws of Brazil.

 

“Gran Tierra Energy Colombia” means Gran Tierra Energy Colombia, Ltd., a limited
partnership organized under the laws of Utah.

 

“Gran Tierra Exchangeco Inc.” means Gran Tierra Exchangeco Inc., a corporation
organized under the laws of the Province of Alberta.

 

“Guarantor” means (a) the Parent and (b) each Subsidiary that guarantees or is
required to guarantee the Indebtedness hereunder (including pursuant to Section
6.01 and Section 8.14(a)). On the Effective Date, the following Subsidiaries are
Guarantors:

 

(a)Gran Tierra Exchangeco Inc.;

 

(b)Gran Tierra Energy Brasil Ltda;

 

(c)Solana Resources Limited;

 

14

 

 

(d)Petrolifera Petroleum (Colombia) Limited;

 

(e)Gran Tierra Callco ULC;

 

(f)Gran Tierra Energy Cayman Islands Inc.;

 

(g)Argosy Energy LLC;

 

(h)Gran Tierra Energy Colombia, Ltd.;

 

(i)Gran Tierra Finance (Luxembourg) S.á.r.l.;

 

(j)Gran Tierra Luxembourg Holdings S.á.r.l.; and

 

(k)Gran Tierra Brazco (Luxembourg) S.á.r.l..

 

“Guaranty Agreement” means an agreement executed by the Guarantors in form and
substance satisfactory to the Administrative Agent, unconditionally guarantying
on a joint and several basis, payment of the Indebtedness, as the same may be
amended, modified or supplemented from time to time.

 

“Hazardous Material” means any substance regulated or as to which liability
might arise under any applicable Environmental Law including: (a) any chemical,
compound, material, product, byproduct, substance or waste defined as or
included in the definition or meaning of “hazardous substance,” “hazardous
material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous
substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar
meaning or import found in any applicable Environmental Law; (b) Hydrocarbons,
petroleum products, petroleum substances, natural gas, oil, oil and gas waste,
crude oil, and any components, fractions, or derivatives thereof; and (c)
radioactive materials, explosives, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon, infectious or medical wastes.

 

“Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes, the Colombian
Notes or on other Indebtedness under laws applicable to such Lender which are
presently in effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum nonusurious
interest rate than applicable laws allow as of the date hereof.

 

“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to (a) Hydrocarbon reserves from which Hydrocarbons
may or may potentially be severed or extracted, whether directly or indirectly,
including, without limitation, by virtue of any Concession Agreement, similar
arrangement or otherwise and (b) any Concession Agreement, oil and gas leases,
oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases,
mineral fee interests, overriding royalty and royalty interests, net profit
interests and production payment interests, including any reserved or residual
interests of whatever nature.

 

“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom.

 

15

 

 

“Indebtedness” ” means the collective reference to (a) all obligations,
liabilities and amounts owing or to be owing by any Credit Party or any other
obligor (whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
or incurred), to the Administrative Agent, the Global Coordinator, the Arranger,
the Issuing Bank or any Lender, which may arise under, out of, in, or in
connection with this Agreement or any other Loan Document, including, without
limitation, the unpaid principal of and interest on the Loans and reimbursement
obligations in respect of Letters of Credit (including, without limitation,
interest accruing at the then applicable rate provided in this Agreement after
the maturity of the Loans and LC Exposure and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, liquidation, reorganization
or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding); (b) all
Secured Swap Obligations (other than Excluded Swap Obligations); (c) all
Specified Cash Management Obligations; and (d) all renewals, extensions and/or
rearrangements of any of the above; in each case, whether on account of
principal, interest, premium, reimbursement obligations, guaranty obligations,
payments in respect of an early termination date, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Secured Parties that are required to be paid by the Borrower,
any other Credit Party or any obligor pursuant to the terms of this Agreement,
any other Loan Document or any Specified Cash Management Agreement or any
Secured Swap Agreement).

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Initial Reserve Report” means the report of GLJ Petroleum Consultants Ltd.
dated as of December 31, 2012, with respect to the Colombian Hydrocarbon
Properties as of December 31, 2012.

 

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

 

“Interest Rate Protection Agreement” means any interest rate swap, cap or collar
agreement or similar arrangement providing for the transfer or mitigation of
interest risks, either generally or under specific contingencies.

 

“Interim Redetermination” has the meaning assigned such term in Section 2.07(b).

 

16

 

 

“Interim Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to an Interim Redetermination becomes effective as
provided in Section 2.07(d).

 

“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests 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 capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, 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 advance, loan or extension of credit having
a term not exceeding ninety (90) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
(c) the purchase or acquisition (in one or a series of transactions) of Property
of another Person that constitutes a business unit; or (d) the entering into of
any guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.

 

“Issuing Bank” means Wells Fargo, in its capacity as the issuer of Letters of
Credit hereunder, and its successors in such capacity. The Issuing Bank may, in
its discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.

 

“Kronos Offtake Agreement” means that certain Agreement for the Purchase and
Sale of Gas under the Llanos 22 Contract between Gran Tierra Energy Colombia and
Kronos Energy S.A. ESP, executed April 23, 2013, expiring October 22, 2013.

 

“LC Commitment” at any time means $30,000,000.

 

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

 

“Lender Parent” means, with respect to any Lender, any Person as to which such
Lender is, directly or indirectly, a subsidiary.

 

“Lenders” means the Persons listed on Annex I and any Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

“Letter of Credit Agreements” means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto)
submitted by the Borrower, or entered into by the Borrower, with the Issuing
Bank relating to any Letter of Credit.

 

17

 

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor
or substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to US
Dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for US Dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate (rounded upwards, if necessary, to the
next 1/100 of 1%) at which US Dollar deposits of an amount comparable to such
Eurodollar Borrowing and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

 

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, hypothecation,
antichresis, usufruct, security agreement, conditional sale, deed of trust,
assignment in trust, or trust receipt or a lease, consignment or bailment for
security purposes or (b) production payments and the like payable out of Oil and
Gas Properties. The term “Lien” shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Parent and each Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.

 

“Liquidate” means, with respect to any Swap Agreement, the sale, assignment,
novation, unwind or termination of all or any part of such Swap Agreement or the
creation of an offsetting position against all or any part of such Swap
Agreement. The terms “Liquidated” and “Liquidation” have correlative meanings
thereto.

 

“Loan Documents” means this Agreement, the Notes, the Colombian Notes, the
Letter of Credit Agreements, the Letters of Credit, the Security Instruments and
the Fee Letter.

 

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.

 

“Majority Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having more than fifty percent (50%) of the Aggregate
Maximum Credit Amounts of all Lenders; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding more than fifty percent (50%) of the
outstanding aggregate principal amount of the Loans and participation interests
in Letters of Credit of all Lenders (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)); provided that the Maximum
Credit Amounts and the principal amount of the Loans and participation interests
in Letters of Credit of the Defaulting Lenders (if any) shall be excluded from
the determination of Majority Lenders.

 

“Material Adverse Effect” means a material adverse change in, or material
adverse effect on (a) the business, operations, Property or condition (financial
or otherwise) of the Credit Parties taken as a whole, (b) the ability of any
Credit Party to perform any of its obligations under any Loan Document, (c) the
validity or enforceability of any Loan Document or (d) the rights and remedies
of or benefits available to the Administrative Agent, any other Agent, the
Issuing Bank or any Lender under any Loan Document.

 

18

 

 

“Material Documents” means, collectively, each Offtake Agreement, each
Concession Agreement, and each Swap Agreement to which any Credit Party is a
party.

 

“Material Indebtedness” means Debt (other than the Loans and Letters of Credit),
or obligations in respect of one or more Swap Agreements, of any one or more of
the Credit Parties in an aggregate principal amount exceeding $10,000,000. For
purposes of determining Material Indebtedness, the “principal amount” of the
obligations of any Credit Party in respect of any Swap Agreement at any time
shall be the Swap Termination Value.

 

“Material Subsidiary” means (a) Petrolifera, (b) Gran Tierra Energy Colombia,
(c) as of any date of determination, any Subsidiary that (i) owns or has an
interest in any Property assigned value in the Borrowing Base then in effect, as
determined by the Administrative Agent, or (ii) does business in Colombia, and
(d) any Subsidiary that at any time owns or has an interest in Oil and Gas
Properties that have produced Hydrocarbons at any time (even if such Subsidiary
subsequently ceases to own or have an interest in such Oil and Gas Properties or
such production subsequently ceases); provided that the term “Material
Subsidiary” shall not include (i) the Borrower or (ii) any Subsidiary that would
constitute a “Material Subsidiary” under clause (d) above solely as a result of
the ownership of or interest in Oil and Gas Properties located in Argentina or
Peru.

 

“Maturity Date” means August 30, 2016.

 

“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the
same may be (a) reduced or terminated from time to time in connection with a
reduction or termination of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b) or (b) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that
is a nationally recognized rating agency.

 

“Mortgaged Property” means any Property owned by any Credit Party which is
subject to the Liens existing and to exist under the terms of the Security
Instruments.

 

“Net Cash Proceeds” means with respect to any Permitted Equity Issuance, the
cash proceeds thereof, net of customary fees, commissions, costs and other
expenses incurred in connection therewith.

 

“New Borrowing Base Notice” has the meaning assigned such term in Section
2.07(d).

 

“Non-Defaulting Lenders” means, at any time, each Lender that is not a
Defaulting Lender at such time.

 

“Notes” means the promissory notes of the Borrower described in Section 2.02(d)
and being substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.

 

“Offtaker” means each Eligible Buyer.

 

“Offtake Agreements” means, collectively, (a) each agreement entered into
between any Credit Party and an Offtaker that is listed on Schedule 1.02(c); and
(b) any other purchase agreement entered into between any Credit Party and an
Offtaker that (i) provides for the purchase by such Offtaker of Hydrocarbons
from such Credit Party, (ii) is in form and substance reasonably satisfactory to
the Administrative Agent and (iii) further provides, to the Administrative
Agent’s satisfaction, that 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.

 

19

 

 

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now
or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; (d) all operating
agreements, contracts and other agreements, including production sharing
contracts and agreements, which relate to any of the Hydrocarbon Interests or
the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests (including, without limitation, all
Concession Agreements and Offtake Agreements); (e) all Hydrocarbons in and under
and which may be produced and saved or attributable to the Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Hydrocarbon
Interests; (f) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests; and (g) all Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment, rental equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.

 

“Other Taxes” means 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 hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement and any other Loan Document.

 

“Participant” has the meaning set forth in Section 12.04(c)(i).

 

“Participant Register” has the meaning set forth in Section 12.04(c)(ii).

 

“Permitted Acquisition” means any acquisition by any Credit Party in the form of
acquisitions of all or substantially all of the business or a line of business
(whether by the acquisition of Equity Interests, assets or any combination
thereof) of any other Person to the extent such acquisition is permitted by
Section 9.05.

 

“Permitted Equity Issuance” means any sale or issuance of any Equity Interests
(other than Disqualified Capital Stock) of the Parent.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Petrolifera” means Petrolifera Petroleum (Colombia) Limited, an exempted
company incorporated with limited liability under the laws of the Cayman Islands
with registration number 271065.

 

20

 

 

“Petrolifera Excluded Concession Agreements” means, collectively, each of the
following agreements:

 

Concession Agreements  Working
Interest  Exploration and Production Contract No. 18 of 2008 for the Turpial
Sector dated June 26, 2008   50% Exploration and Production Contract No. 07 of
2007 for the Sierra Nevada Sector dated April 11, 2007   100% Exploration and
Production Contract No. 55 of 2009 for the Magdalena Sector dated September 19,
2009   100%

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by Wells Fargo Bank, National Association as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective. Such rate is set by the Administrative Agent as a general reference
rate of interest, taking into account such factors as the Administrative Agent
may deem appropriate; it being understood that many of the Administrative
Agent’s commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any customer and
that the Administrative Agent may make various commercial or other loans at
rates of interest having no relationship to such rate.

 

“Pro Forma Compliance” means, for any date of determination, that the Parent is
in pro forma compliance with the financial covenant set forth in Section
9.01(a); provided that such ratio may not exceed 2.75 to 1.0, as such ratio is
recomputed using (a) Total Debt as of such date and (b) EBITDAX for the period
of four fiscal quarters ending on the last day of the fiscal quarter immediately
preceding the date of determination for which financial statements are
available.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

 

“Proposed Borrowing Base” has the meaning assigned to such term in Section
2.07(c)(i).

 

“Proposed Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(c)(ii).

 

“Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt. “Redeem” has the correlative meaning thereto.

 

“Redetermination Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).

 

“Register” has the meaning assigned such term in Section 12.04(b)(iv).

 

“Regulation D” means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.

 

21

 

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors (including attorneys, accountants and experts) of such Person and such
Person’s Affiliates.

 

“Release” means any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting,
escaping, leaching, dumping, or disposing.

 

“Remedial Work” has the meaning assigned such term in Section 8.10(a).

 

“Required Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Maximum Credit Amounts of all Lenders; and at any time while
any Loans or LC Exposure is outstanding, Lenders holding at least sixty-six and
two-thirds percent (66-2/3%) of the outstanding aggregate principal amount of
the Loans and participation interests in Letters of Credit of all Lenders
(without regard to any sale by a Lender of a participation in any Loan under
Section 12.04(c)); provided that the Maximum Credit Amounts and the principal
amount of the Loans and participation interests in Letters of Credit of the
Defaulting Lenders (if any) shall be excluded from the determination of Required
Lenders.

 

“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, as of each December 31 or July 1 (or
such other date in the event of an Interim Redetermination) the oil and gas
reserves attributable to the Oil and Gas Properties of the Credit Parties,
together with a projection of the rate of production and future net income,
taxes, royalties, operating expenses, production sharing volumes and capital
expenditures with respect thereto as of such date, based upon the economic
assumptions consistent with the Administrative Agent’s lending requirements at
the time.

 

“Responsible Officer” means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such Person. Unless
otherwise specified, all references to a Responsible Officer herein means a
Responsible Officer of the Parent.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in any Credit
Party, or any payment (whether in cash, securities or other Property), including
any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such Equity
Interests in any Credit Party or any option, warrant or other right to acquire
any such Equity Interests in any Credit Party.

 

“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Loans and its LC
Exposure at such time.

 

“Scheduled Redetermination” has the meaning assigned such term in Section
2.07(b).

 

“Scheduled Redetermination Date” means the date on which a Borrowing Base that
has been redetermined pursuant to a Scheduled Redetermination becomes effective
as provided in Section 2.07(d).

 

“SEC” means the Securities and Exchange Commission or any successor Governmental
Authority.

 

“Secured Cash Management Party” means any Lender or Affiliate of any Lender
party to a Specified Cash Management Agreement.

 

22

 

 

“Secured Parties” means each Lender, the Issuing Bank, the Arranger, the
Administrative Agent, the Global Coordinator, each Secured Cash Management
Party, and each Secured Swap Party.

 

“Secured Swap Agreement” means any Swap Agreement between the Parent or any
Subsidiary and any Person that is entered into prior to the time, or during the
time, that such Person was, a Lender or an Affiliate of a Lender (including any
such Swap Agreement in existence prior to the date hereof), even if such Person
subsequently ceases to be a Lender (or an Affiliate of a Lender) for any reason
(any such Person, a “Secured Swap Party”); provided that, for the avoidance of
doubt, the term “Secured Swap Agreement” shall not include any transactions
entered into after the time that such Secured Swap Party ceases to be a Lender
or an Affiliate of a Lender.

 

“Secured Swap Obligations” means all amounts and other obligations (other than
any Excluded Swap Obligations) owing to any Secured Swap Party under any Secured
Swap Agreement.

 

“Secured Swap Party” has the meaning assigned to such term in the definition of
Secured Swap Agreement.

 

“Security Instruments” means, collectively, the Guaranty Agreement, the Bermuda
Security Documents, the Colombian Security Documents, the Cayman Security
Documents, the Canadian Security Documents, the Brazilian Security Documents,
mortgages, deeds of trust and other agreements, instruments or certificates
described or referred to in Exhibit E, and any and all other agreements,
documents, pledges, instruments, Deposit Account Control Agreements, consents or
certificates now or hereafter executed and delivered by any Credit Party or any
other Person (other than Secured Swap Agreements or participation or similar
agreements between any Lender and any other lender or creditor with respect to
any Indebtedness pursuant to this Agreement) in connection with, or as security
for the payment or performance of the Indebtedness, the Notes, the Colombian
Notes, this Agreement, or reimbursement obligations under the Letters of Credit,
as such agreements may be amended, modified, supplemented or restated from time
to time.

 

“Senior Debt” means any unsecured Debt securities (whether registered or
privately placed) issued or incurred by the Parent or any other Credit Party
pursuant to one or more Senior Debt Documents.

 

“Senior Debt Documents” means any indenture or other agreement among the Parent
or any other Credit Party, as issuer, the subsidiary guarantors party thereto
and others either as agent, trustee or holders, which governs any Senior Debt,
or pursuant to which any Senior Debt is issued or incurred, as the same may be
amended, modified or supplemented in accordance with Section 9.04(b).

 

“Sierra Nevada Offtake Agreement” means that certain Agreement for the Purchase
and Sale of Gas under the Sierra Nevada contract, for the Brillante Sureste 1X
well, Contract between Comercializadora de Energía, GAS y servicio S.A ESP
GEACOM and Petrolifera Petroleum (Colombia) Limited effective November 9, 2010,
started on August 23, 2011 and expiring August 23, 2014.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.

 

“Solana Resources Limited” means Solana Resources Limited, a corporation formed
under the laws of the Province of Alberta, Canada.

 

“Specified Cash Management Agreement” means any agreement that is entered into
by and between the Parent or any Subsidiary and any Secured Cash Management
Party to provide cash management services, including treasury, depository,
overdraft, credit or debit card, electronic funds transfer and other cash
management arrangements.

 

23

 

  

“Specified Cash Management Obligations” means all amounts and other obligations
owing to any Secured Cash Management Party under any Specified Cash Management
Agreement.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
other Person the accounts of which would be consolidated with those of the
parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other Person (a) of which Equity Interests representing more than 50% of the
equity or more than 50% of the ordinary voting power (irrespective of whether or
not at the time Equity Interests of any other class or classes of such Person
shall have or might have voting power by reason of the happening of any
contingency) or, in the case of a partnership, any general partnership interests
are, as of such date, owned, controlled or held, or (b) that is, as of such
date, otherwise Controlled, by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any subsidiary of the Parent (including the Borrower);
provided that (a) each Colombian Branch shall be deemed to be a Subsidiary for
all purposes hereof; and (b) as used herein, the phrase “Subsidiary of the
Borrower” shall refer to a subsidiary of the Borrower.

 

“Subsidiary Guarantor” means each Guarantor other than the Parent.

 

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement, whether exchange
traded, “over-the-counter” or otherwise, involving, or settled by reference to,
one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions, including, without limitation, any Interest Rate
Protection Agreement, Commodity Hedging Agreement or Currency Exchange
Agreement; provided that no phantom stock or similar plan providing for payments
only on account of services provided by current or former directors, officers,
employees or consultants of any Credit Party shall be a Swap Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Agreements, (a) for any date on or after the
date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Agreements, as determined by the
counterparties to such Swap Agreements.

 

24

 

 

“Synthetic Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, treated as operating leases
on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority,
including, without limitation, any and all withholding taxes imposed by any
Governmental Authority of Canada.

 

“Termination Date” means the earlier of the Maturity Date and the date of
termination of the Commitments.

 

“Total Debt” means, at any date, all Debt of the Parent and the Consolidated
Subsidiaries on a consolidated basis.

 

“Transactions” means, with respect to (a) the Borrower, the execution, delivery
and performance by the Borrower of this Agreement, each other Loan Document and
each Material Document to which it is a party, the borrowing of Loans, the use
of the proceeds thereof and the issuance of Letters of Credit hereunder, and the
grant of Liens by the Borrower on Mortgaged Properties and other Properties
pursuant to the Security Instruments; and (b) each Guarantor, the execution,
delivery and performance by such Guarantor of each Loan Document and each
Material Document to which it is a party, the guaranteeing of the Indebtedness
and the other obligations under the Guaranty Agreement by such Guarantor and
such Guarantor’s grant of the security interests and provision of Collateral
under the Security Instruments, and the grant of Liens by such Guarantor on
Mortgaged Properties and other Properties pursuant to the Security Instruments.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

 

“Unrestricted Subsidiary” means any Subsidiary (other than the Borrower) that is
not a Subsidiary Guarantor.

 

“US Dollars” or “$” refers to lawful money of the United States of America.

 

“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. 107-56, signed into law October 26, 2001, as amended from time to time.

 

“Wholly-Owned Subsidiary” means (a) any Subsidiary of which all of the
outstanding Equity Interests (other than any directors’ qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Parent
or one or more of the Wholly-Owned Subsidiaries or are owned by the Parent and
one or more of the Wholly-Owned Subsidiaries or (b) any Subsidiary that is
organized in a foreign jurisdiction and is required by the applicable laws and
regulations of such foreign jurisdiction to be partially owned by the government
of such foreign jurisdiction or individual or corporate citizens of such foreign
jurisdiction; provided that the Parent, directly or indirectly, owns the
remaining Equity Interests in such Subsidiary and, by contract or otherwise,
controls the management and business of such Subsidiary and derives economic
benefits of ownership of such Subsidiary to substantially the same extent as if
such Subsidiary were a Wholly-Owned Subsidiary.

 

25

 

 

Section 1.03         Types of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).

 

Section 1.04         Terms Generally; Rules of Construction. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” as used in this Agreement shall be deemed to be
followed by the phrase “without limitation”. The word “will” shall be construed
to have the same meaning and effect as the word “shall”. Unless the context
requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in the Loan Documents), (b)
any reference herein to any law shall be construed as referring to such law as
amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person’s successors and assigns (subject to the restrictions
contained in the Loan Documents), (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) with
respect to the determination of any time period, the word “from” means “from and
including” and the word “to” means “to and including” and (f) any reference
herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to,
this Agreement. No provision of this Agreement or any other Loan Document shall
be interpreted or construed against any Person solely because such Person or its
legal representative drafted such provision.

 

Section 1.05         Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which the Parent’s independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Majority Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.

 

Section 1.06         Oil and Gas Definitions. For purposes of this Agreement and
the other Loan Documents, the terms “proved reserves” and “proved undeveloped
reserves” have the meaning given such terms from time to time and at the time in
question by the Society of Petroleum Engineers of the American Institute of
Mining Engineers.

 

Article II

The Credits

 

Section 2.01         Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the
total Revolving Credit Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow the Loans.

 

26

 

 

Section 2.02         Loans and Borrowings.

 

(a)          Borrowings; Several Obligations. Each Loan shall be made as part of
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

(b)          Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.

 

(c)          Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $1,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000; provided that,
notwithstanding the foregoing, an ABR Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.08(e). Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of four (4)
Eurodollar Borrowings outstanding. Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to elect to convert
or continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.

 

(d)          Notes and Colombian Notes. The Loans made by each Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit A, and a single Colombian Note of the Borrower in form and substance
satisfactory to the Administrative Agent, dated, in the case of (i) any Lender
party hereto as of the date of this Agreement, as of the date of this Agreement,
or (ii) any Lender that becomes a party hereto pursuant to an Assignment and
Assumption, as of the effective date of the Assignment and Assumption, payable
to the order of such Lender in a principal amount equal to its Maximum Credit
Amount as in effect on such date, and otherwise duly completed. In the event
that any Lender’s Maximum Credit Amount increases or decreases for any reason
(whether pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower
shall deliver or cause to be delivered on the effective date of such increase or
decrease, a new Note payable to the order of such Lender in a principal amount
equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed. The date, amount, Type, interest rate
and, if applicable, Interest Period of each Loan made by each Lender, and all
payments made on account of the principal thereof, shall be recorded by such
Lender on its books for its Note, and, prior to any transfer, may be endorsed by
such Lender on a schedule attached to such Note, or any continuation thereof or
on any separate record maintained by such Lender. Failure to make any such
notation or to attach a schedule shall not affect any Lender’s or the Borrower’s
rights or obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Note.

 

27

 

 

Section 2.03         Requests for Borrowings. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 12:00 noon, New York City time, one
Business Day before the date of the proposed Borrowing; provided that no such
notice shall be required for any deemed request of an ABR Borrowing to finance
the reimbursement of an LC Disbursement as provided in Section 2.08(e). Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in substantially the form of Exhibit B, and signed by the
Borrower. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.02:

 

(i)          the aggregate amount of the requested Borrowing;

 

(ii)         the date of such Borrowing, which shall be a Business Day;

 

(iii)        whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

 

(iv)        in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the definition
of the term “Interest Period”;

 

(v)         the amount of the then effective Borrowing Base, the current total
Revolving Credit Exposures (without regard to the requested Borrowing) and the
pro forma total Revolving Credit Exposures (giving effect to the requested
Borrowing); and

 

(vi)        the location and number of the Borrower’s account to which funds are
to be disbursed, which shall comply with the requirements of Section 2.05.

 

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Revolving Credit Exposures to exceed the
total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and
the then effective Borrowing Base).

 

Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing.

 

Section 2.04         Interest Elections.

 

(a)          Conversion and Continuance. Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

 

28

 

 

(b)          Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in substantially the form of Exhibit C and
signed by the Borrower.

 

(c)          Information in Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:

 

(i)          the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to Section 2.04(c)(ii) and
(iii) shall be specified for each resulting Borrowing);

 

(ii)         the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

 

(iii)        whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and

 

(iv)        if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

 

(d)          Notice to Lenders by the Administrative Agent. Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.

 

(e)          Effect of Failure to Deliver Timely Interest Election Request and
Events of Default and Borrowing Base Deficiencies on Interest Election. If the
Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto,
then, unless such Borrowing is repaid as provided herein, at the end of such
Interest Period such Borrowing shall be converted to an ABR Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default or a
Borrowing Base Deficiency has occurred and is continuing: (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing (and any
Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective)
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.

 

Section 2.05         Funding of Borrowings.

 

(a)          Funding by Lenders. Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:00 p.m., New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York,
New York and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to
the Issuing Bank. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for its Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
its Loan in any particular place or manner.

 

29

 

  

(b)          Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.

 

Section 2.06         Termination and Reduction of Aggregate Maximum Credit
Amounts.

 

(a)          Scheduled Termination of Commitments. Unless previously terminated,
the Commitments shall terminate on the Maturity Date. If at any time the
Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or reduced
to zero, then the Commitments shall terminate on the effective date of such
termination or reduction.

 

(b)          Optional Termination and Reduction of Aggregate Credit Amounts.

 

(i)          The Borrower may at any time terminate, or from time to time
reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction
of the Aggregate Maximum Credit Amounts shall be in an amount that is an
integral multiple of $250,000 and not less than $2,000,000 and (B) the Borrower
shall not terminate or reduce the Aggregate Maximum Credit Amounts if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c)(i), the total Revolving Credit Exposures would exceed the total
Commitments.

 

(ii)         The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Aggregate Maximum Credit Amounts under Section
2.06(b)(i) 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 Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent and may not be reinstated. Each reduction of the Aggregate Maximum
Credit Amounts shall be made ratably among the Lenders in accordance with each
Lender’s Applicable Percentage.

 

30

 

 

Section 2.07         Borrowing Base.

 

(a)          Initial Borrowing Base. For the period from and including the
Effective Date to but excluding the first Redetermination Date, the amount of
the Borrowing Base shall be $150,000,000. Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to Section 2.07(e), Section 8.13 or Section 9.11(d).

 

(b)          Scheduled and Interim Redeterminations. The Borrowing Base shall be
redetermined semi-annually in accordance with this Section 2.07 (a “Scheduled
Redetermination”), and, subject to Section 2.07(d), such redetermined Borrowing
Base shall become effective and applicable to the Borrower, the Agents, the
Issuing Bank and the Lenders on April 1st and October 1st of each year,
commencing October 1, 2013. In addition, the Borrower may, by notifying the
Administrative Agent thereof, and the Administrative Agent may, at the direction
of the Majority Lenders, by notifying the Borrower thereof, one time during any
12 month period, each elect to cause the Borrowing Base to be redetermined
between Scheduled Redeterminations (an “Interim Redetermination”) in accordance
with this Section 2.07.

 

(c)          Scheduled and Interim Redetermination Procedure.

 

(i)          Each Scheduled Redetermination and each Interim Redetermination
shall be effectuated as follows: Upon receipt by the Administrative Agent of (A)
the Reserve Report and the certificate required to be delivered by the Borrower
to the Administrative Agent, in the case of a Scheduled Redetermination,
pursuant to Section 8.12(a) and (c), and, in the case of an Interim
Redetermination, pursuant to Section 8.12(b) and (c), and (B) such other
reports, data and supplemental information, including, without limitation, the
information provided pursuant to Section 8.12(c), as may, from time to time, be
reasonably requested by the Majority Lenders (the Reserve Report, such
certificate and such other reports, data and supplemental information being the
“Engineering Reports”), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in good faith, propose a new
Borrowing Base (the “Proposed Borrowing Base”) based upon such information and
such other information (including, without limitation, the status of title
information with respect to the Oil and Gas Properties as described in the
Engineering Reports and the existence of any other Debt) as the Administrative
Agent deems appropriate in its sole discretion and consistent with its normal
oil and gas lending criteria as it exists at the particular time. In no event
shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amounts.

 

(ii)         The Administrative Agent shall notify the Borrower and the Lenders
of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):

 

(A)         in the case of a Scheduled Redetermination (1) if the Administrative
Agent shall have received the Engineering Reports required to be delivered by
the Borrower pursuant to Sections 8.12(a) and (c) in a timely and complete
manner, then on or before the March 15th and September 15th of such year
following the date of delivery or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Sections 8.12(a) and (c) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i); and

 

(B)         in the case of an Interim Redetermination, promptly, and in any
event, within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports.

 

31

 

 

(iii)        Any Proposed Borrowing Base that would increase the Borrowing Base
then in effect must be approved or deemed to have been approved by all of the
Lenders as provided in this Section 2.07(c)(iii); and any Proposed Borrowing
Base that would decrease or maintain the Borrowing Base then in effect must be
approved or be deemed to have been approved by the Required Lenders as provided
in this Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base
Notice, each Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base. If at the end of such fifteen (15) days, any Lender
has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Required Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in Section 2.07(d). If, however, at the end of such 15-day
period, all of the Lenders or the Required Lenders, as applicable, have not
approved or deemed to have approved, as aforesaid, then the Administrative Agent
shall poll the Lenders to ascertain the highest Borrowing Base then acceptable
to a number of Lenders sufficient to constitute the Required Lenders and, so
long as such amount does not increase the Borrowing Base then in effect, such
amount shall become the new Borrowing Base, effective on the date specified in
Section 2.07(d).

 

(d)          Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Required Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders
of the amount of the redetermined Borrowing Base (the “New Borrowing Base
Notice”), and such amount shall become the new Borrowing Base, effective and
applicable to the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders:

 

(i)          in the case of a Scheduled Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Sections 8.12(a) and (c) in a timely and
complete manner, then on April 1st or October 1st, as applicable, following such
notice, or (B) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to
Sections 8.12(a) and (c) in a timely and complete manner, then on the Business
Day next succeeding delivery of such notice; and

 

(ii)         in the case of an Interim Redetermination, on the Business Day next
succeeding delivery of such notice.

 

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 2.07(e), Section 8.13 or Section
9.11(d), whichever occurs first. Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.

 

(e)          Reduction of Borrowing Base Related to Swap Agreements. If any Swap
Agreement in respect of commodities to which the Parent or any Subsidiary is a
party is Liquidated, then contemporaneously therewith, the Borrowing Base then
in effect shall be reduced by an amount equal to the value, if any, assigned to
the Liquidated portion of such Swap Agreement in the then effective Borrowing
Base, as determined by the Administrative Agent and approved by the by the
Majority Lenders.

 

32

 

 

(f)          Determinations; Adjustments. 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 Lenders or the Required Lenders in connection therewith, or in
connection with the provisions of Section 2.07(e), Section 8.13 or Section
9.11(d), 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 Report or the determination or
redetermination of the Borrowing Base) shall be made by any such Person as it
deems appropriate in its sole discretion and consistent with its normal oil and
gas lending criteria as it exists at the particular time, and any such
determination, redetermination or adjustment shall consider any other relevant
information or factors, including without limitation, any additional Debt or
other obligations that have been incurred or that the Parent and the
Subsidiaries intend or expect to incur that such Person may deem appropriate in
its sole discretion.

 

Section 2.08         Letters of Credit.

 

(a)          General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of US Dollar denominated Letters of Credit for
its own account or for the account of any of its Subsidiaries, in a form
reasonably acceptable to the Administrative Agent and the Issuing Bank, at any
time and from time to time during the Availability Period; provided that the
Borrower may not request the issuance, amendment, renewal or extension of
Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time
or would exist as a result thereof. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.

 

(b)          Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (not less than five (5) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice:

 

(i)          requesting the issuance of a Letter of Credit or identifying the
Letter of Credit to be amended, renewed or extended;

 

(ii)         specifying the date of issuance, amendment, renewal or extension
(which shall be a Business Day);

 

(iii)        specifying the date on which such Letter of Credit is to expire
(which shall comply with Section 2.08(c));

 

(iv)        specifying the amount of such Letter of Credit;

 

(v)         specifying the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit; and

 

(vi)        specifying the amount of the then effective Borrowing Base and
whether a Borrowing Base Deficiency exists at such time, the current total
Revolving Credit Exposures (without regard to the requested Letter of Credit or
the requested amendment, renewal or extension of an outstanding Letter of
Credit) and the pro forma total Revolving Credit Exposures (giving effect to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit).

 

33

 

 

A Letter of Credit shall be issued, amended, renewed or extended only if (and
each notice shall constitute a representation and warranty by the Borrower
that), after giving effect to the requested issuance, amendment, renewal or
extension, as applicable, (i) the LC Exposure shall not exceed the LC Commitment
and (ii) the total Revolving Credit Exposures shall not exceed the total
Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the
then effective Borrowing Base).

 

If requested by the Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank’s standard form in connection with any
request for a Letter of Credit.

 

(c)          Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.

 

(d)          Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in Section 2.08(e), or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
Section 2.08(d) in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default, the existence of a Borrowing Base Deficiency or
reduction or termination of the Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.

 

(e)          Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
if such LC Disbursement is not less than $1,000,000, the Borrower shall, subject
to the conditions to Borrowing set forth herein, be deemed to have requested,
and the Borrower does hereby request under such circumstances, that such payment
be financed with an ABR Borrowing in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.05 with respect to Loans made by such Lender
(and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the Issuing
Bank the amounts so received by it from the Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
Section 2.08(e), the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
Section 2.08(e) to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.

 

34

 

  

(f)          Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit or any Letter of Credit
Agreement, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 2.08(f), constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower’s obligations hereunder. Neither the
Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank; provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised all requisite care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.

 

(g)          Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.

 

(h)          Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.

 

35

 

 

(i)          Cash Collateralization.

 

(i)          If (A) any Event of Default shall occur and be continuing and the
Borrower receives notice from the Administrative Agent or the Majority Lenders
demanding that the Borrower Cash Collateralize the outstanding LC Exposure
pursuant to this Section 2.08(i), (B) the Borrower is required to Cash
Collateralize the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), or (D) the Borrower is required to Cash
Collateralize a Defaulting Lender’s LC Exposure pursuant to Section
4.03(c)(iii)(B), then the Borrower shall Cash Collateralize such LC Exposure or
the excess attributable to such LC Exposure, as the case may be, as of such date
plus any accrued and unpaid interest thereon; provided that the obligation to
Cash Collateralize pursuant to this Section 2.08(i) shall become effective
immediately, and the Borrower’s obligation to Cash Collateralize shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default described in Section 10.01(h) or Section
10.01(i).

 

(ii)         The Borrower hereby grants to the Administrative Agent, for the
benefit of the Issuing Bank and the Lenders, an exclusive first priority and
continuing perfected security interest in and Lien on each account (a
“Collateral Account”) in which the Borrower has Cash Collateralized any
obligation hereunder and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in such account, all deposits or
wire transfers made thereto, any and all investments purchased with funds
deposited in such account, all interest, dividends, cash, instruments, financial
assets and other Property from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor (collectively, the “Cash
Collateral”).

 

(iii)        The Borrower’s obligation to Cash Collateralize pursuant to this
Section 2.08(i) shall be absolute and unconditional, without regard to whether
any beneficiary of any Letter of Credit has attempted to draw down all or a
portion of such amount under the terms of a Letter of Credit, and, to the
fullest extent permitted by applicable law, shall not be subject to any defense
or be affected by a right of set-off, counterclaim or recoupment which any
Credit Party may now or hereafter have against any such beneficiary, the Issuing
Bank, the Administrative Agent, the Lenders or any other Person for any reason
whatsoever.

 

(iv)        Each Collateral Account and all Cash Collateral shall secure the
payment and performance of the Credit Parties’ obligations under this Agreement
and the other Loan Documents. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over each
Collateral Account and the Cash Collateral. Other than any interest earned on
the investment of such deposits, which investments shall be made at the option
and sole discretion of the Administrative Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in each Collateral Account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated, be applied to satisfy other obligations of
the Credit Parties under this Agreement or the other Loan Documents. If the
Borrower is required to Cash Collateralize hereunder as a result of the
occurrence of an Event of Default, and the Borrower is not otherwise required to
pay to the Administrative Agent the excess attributable to an LC Exposure in
connection with any prepayment pursuant to Section 3.04(c) or Cash Collateralize
a Defaulting Lender’s LC Exposure pursuant to Section 4.03(c)(iii)(B), then such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.

 

36

 

 

Article III

Payments of Principal and Interest; Prepayments; Fees

 

Section 3.01         Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.

 

Section 3.02         Interest.

 

(a)          ABR Loans. The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.

 

(b)          Eurodollar Loans. The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.

 

(c)          Post-Default Rate. Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing, or if any principal of or interest on
any Loan or any fee or other amount payable by any Credit Party hereunder or
under any other Loan Document is not paid when due, whether at stated maturity,
upon acceleration or otherwise, and including any payments in respect of a
Borrowing Base Deficiency under Section 3.04(c), then, upon notice thereof to
the Borrower from the Administrative Agent, all Loans outstanding, in the case
of an Event of Default, and such overdue amount, in the case of a failure to pay
amounts when due, shall bear interest, after as well as before judgment, at a
rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans
as provided in Section 3.02(a), but in no event to exceed the Highest Lawful
Rate.

 

(d)          Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c)
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than an optional prepayment of an ABR Loan prior to the
Termination Date), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

 

(e)          Interest Rate Computations. All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.

 

37

 

 

Section 3.03         Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:

 

(a)          the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest
Period; or

 

(b)          the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made either as an ABR Borrowing or at an alternate rate of
interest determined by the Majority Lenders as their cost of funds.

 

Section 3.04         Prepayments.

 

(a)          Optional Prepayments. The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, subject to
prior notice in accordance with Section 3.04(b).

 

(b)          Notice and Terms of Optional Prepayment. The Borrower shall notify
the Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 12:00 noon, New York City time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, New York City time, one Business Day before the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02 and any
payments to the extent required by Section 5.02.

 

(c)          Mandatory Prepayments.

 

(i)          If, after giving effect to any termination or reduction of the
Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower
shall (A) prepay the Borrowings on the date of such termination or reduction in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure,
Cash Collateralize such excess as provided in Section 2.08(i).

 

38

 

 

(ii)         Upon any redetermination of or adjustment to the amount of the
Borrowing Base in accordance with Section 2.07 (other than pursuant to Section
2.07(e)) or Section 8.13, if the total Revolving Credit Exposures exceeds the
redetermined or adjusted Borrowing Base, then the Borrower shall (A) prepay the
Borrowings in an aggregate principal amount equal to such excess, and (B) if any
excess remains after prepaying all of the Borrowings as a result of an LC
Exposure, Cash Collateralize such excess as provided in Section 2.08(i). The
Borrower shall be obligated to make such prepayment and/or Cash Collateralize
such excess (A) in the case of a redetermination pursuant to Section 2.07 (other
than pursuant to Section 2.07(e)), no later than the date that is 90 days
following the date it receives the New Borrowing Base Notice in accordance with
Section 2.07(d); and (B) in the case of adjustment pursuant to Section 8.13, on
the date the adjustment occurs; provided that all payments required to be made
pursuant to this Section 3.04(c)(ii) must be made on or prior to the Termination
Date.

 

(iii)        Upon any adjustments to the Borrowing Base pursuant to Section
2.07(e) or Section 9.11(d), if the total Revolving Credit Exposures exceeds the
Borrowing Base as adjusted, then the Borrower shall (A) prepay the Borrowings in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure,
Cash Collateralize such excess as provided in Section 2.08(i). The Borrower
shall be obligated to make such prepayment and/or Cash Collateralize such excess
(A) in the case of an adjustment to the Borrowing Base pursuant to Section
2.07(e), on the date the adjustment occurs and (B) in the case of an adjustment
to the Borrowing Base pursuant to Section 9.11(d), on the date that the relevant
sale or other disposition occurs; provided that all payments required to be made
pursuant to this Section 3.04(c)(iii) must be made on or prior to the
Termination Date.

 

(iv)        Each prepayment of Borrowings pursuant to this Section 3.04(c) shall
be applied, first, ratably to any ABR Borrowings then outstanding, and, second,
to any Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.

 

(v)         Each prepayment of Borrowings pursuant to this Section 3.04(c) shall
be applied ratably to the Loans included in the prepaid Borrowings. Prepayments
pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the
extent required by Section 3.02.

 

(d)          No Premium or Penalty. Prepayments permitted or required under this
Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.

 

Section 3.05         Fees.

 

(a)          Commitment Fees. Subject to Section 4.03(c)(i), the Borrower agrees
to pay to the Administrative Agent for the account of each Lender a commitment
fee, which shall accrue at the Commitment Fee Rate on the average daily amount
of the unused amount of the Commitment of such Lender during the period from and
including the date of this Agreement to but excluding the Termination Date.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the Termination Date,
commencing on the first such date to occur after the Effective Date. All
commitment fees shall be computed on the basis of a year of 360 days, unless
such computation would exceed the Highest Lawful Rate, in which case such
commitment fees shall be computed on the basis of a year of 365 days (or 366
days in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

 

39

 

 

(b)          Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender’s Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.250% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure; provided
that in no event shall such fee be less than $500 during any quarter, and (iii)
to the Issuing Bank, for its own account, its standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the date of this Agreement; provided that all
such fees shall be payable on the Termination Date and any such fees accruing
after the Termination Date shall be payable on demand. Upon notice thereof to
the Borrower from the Administrative Agent, during the continuation of an Event
of Default, the fees payable pursuant to this Section 3.05(b) shall increase by
2.00% per annum over the then-applicable rate. Any other fees payable to the
Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10 days
after demand. All participation and fronting fees shall be computed on the basis
of a year of 360 days, unless such computation would exceed the Highest Lawful
Rate, in which case such fees shall be computed on the basis of a year of 365
days (or 366 days in a leap year), and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

 

(c)          Fee Letter. The Borrower agrees to pay to the Administrative Agent,
for the account of each Person therein specified, the fees payable in the
amounts and at the times stated therein.

 

Article IV

Payments; Pro Rata Treatment; Sharing of Set-offs

 

Section 4.01         Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.

 

(a)          Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without defense,
deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully
earned and shall not be refundable under any circumstances. Any amounts received
after such time on any date may, in the discretion of the Administrative Agent,
be deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, except payments
to be made directly to the Issuing Bank as expressly provided herein and except
that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section
12.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in US Dollars.

 

(b)          Application of Insufficient Payments. If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

40

 

  

(c)          Sharing of Payments by Lenders. If any Lender shall, by exercising
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and participations in LC Disbursements and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans and participations in LC Disbursements of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans and
participations in LC Disbursements; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

Section 4.02         Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

 

Section 4.03         Defaulting Lenders.

 

(a)          If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.05(b), Section 2.08(d), Section 2.08(e), Section 4.02,
Section 5.03(f) or Section 12.03(c), then the Administrative Agent may, in its
sole discretion (notwithstanding any contrary provision hereof), (i) apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender for the benefit of the Administrative Agent or the Issuing Bank to
satisfy such Lender’s obligations to it under such Sections until all such
unsatisfied obligations are fully paid in cash, and/or (ii) hold any such
amounts in a segregated account as cash collateral for, and application to, any
future funding obligations of such Lender under any such Section, in the case of
each of clauses (i) and (ii) above, in any order as determined by the
Administrative Agent in its sole discretion.

 

41

 

 

(b)          If a Defaulting Lender (or a Lender who would be a Defaulting
Lender but for the expiration of the relevant grace period) as a result of the
exercise of a set-off shall have received a payment in respect of its Revolving
Credit Exposure which results in its Revolving Credit Exposure being less than
its Applicable Percentage of the aggregate Revolving Credit Exposures, then no
payments will be made to such Defaulting Lender until such time as such
Defaulting Lender shall have complied with Section 4.03(c) and all amounts due
and owing to the Lenders have been equalized in accordance with each Lender’s
respective pro rata share of the Indebtedness. Further, if at any time prior to
the acceleration or maturity of the Loans, the Administrative Agent shall
receive any payment in respect of principal of a Loan or a reimbursement of an
LC Disbursement while one or more Defaulting Lenders shall be party to this
Agreement, the Administrative Agent shall apply such payment first to the
Borrowing(s) for which such Defaulting Lender(s) shall have failed to fund its
pro rata share until such time as such Borrowing(s) are paid in full or each
Lender (including each Defaulting Lender) is owed its Applicable Percentage of
all Loans then outstanding. After acceleration or maturity of the Loans, subject
to the first sentence of this Section 4.03(b), all principal will be paid
ratably as provided in Section 10.02(c).

 

(c)          Notwithstanding any provision of this Agreement to the contrary, if
any Lender becomes a Defaulting Lender, then the following provisions shall
apply for so long as such Lender is a Defaulting Lender:

 

(i)          Fees shall cease to accrue on the unfunded portion of the
Commitment of such Defaulting Lender pursuant to Section 3.05.

 

(ii)         The Commitment, the Maximum Credit Amount and the Revolving Credit
Exposure of such Defaulting Lender shall not be included in determining whether
all Lenders, the Required Lenders or the Majority Lenders have taken or may take
any action hereunder (including any consent to any amendment or waiver pursuant
to Section 12.02); provided that (A) any waiver, amendment or modification
requiring the consent of each Lender or each affected Lender pursuant to Section
12.02 (other than Section 12.02(b)(ii)), shall require the consent of such
Defaulting Lender and (B) any redetermination, whether an increase, decrease or
affirmation, of the Borrowing Base shall occur without the participation of such
Defaulting Lender, but the Commitment (i.e., such Defaulting Lender’s Applicable
Percentage of the Borrowing Base) of such Defaulting Lender may not be increased
without the consent of such Defaulting Lender.

 

(iii)        If any LC Exposure exists at the time a Lender becomes a Defaulting
Lender then:

 

(A)         all or any part of the LC Exposure of such Defaulting Lender shall
be reallocated among the Non-Defaulting Lenders in accordance with their
respective Applicable Percentages (for the purposes of such reallocation the
Defaulting Lender’s Commitment shall be disregarded in determining the
Non-Defaulting Lender’s Applicable Percentage) but only to the extent (x) the
sum of all Non-Defaulting Lenders’ Revolving Credit Exposures plus such
Defaulting Lender’s LC Exposure does not exceed the total of all Non-Defaulting
Lenders’ Commitments, (y) the conditions set forth in Section 6.02 are satisfied
at such time, and (z) the sum of each Non-Defaulting Lender’s Revolving Credit
Exposure plus its reallocated share of such Defaulting Lender’s LC Exposure does
not exceed such Non-Defaulting Lender’s Commitment; provided that no such
reallocation will constitute a waiver or release of any claim the Borrower, the
Administrative Agent, the Issuing Bank or any Lender may have against such
Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender;

 

42

 

 

(B)         if the reallocation described in Section 4.03(c)(iii)(A) cannot, or
can only partially, be effected, then the Borrower shall within one Business Day
following notice by the Administrative Agent Cash Collateralize for the benefit
of the Issuing Bank only the Borrower’s obligations corresponding to such
Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation
pursuant to Section 4.03(c)(iii)(A)) pursuant to Section 2.08(i) for so long as
such LC Exposure is outstanding;

 

(C)         if the Borrower Cash Collateralizes any portion of such Defaulting
Lender’s LC Exposure pursuant to Section 4.03(c)(iii)(B), then the Borrower
shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure during the
period such Defaulting Lender’s LC Exposure is Cash Collateralized;

 

(D)         if the LC Exposure of the Non-Defaulting Lenders is reallocated
pursuant to Section 4.03(c)(iii)(A), then the fees payable to the Lenders
pursuant to Section 3.05(a) and Section 3.05(b) shall be adjusted in accordance
with such Non-Defaulting Lenders’ Applicable Percentages; and

 

(E)         if all or any portion of such Defaulting Lender’s LC Exposure is
neither Cash Collateralized nor reallocated pursuant to Section 4.03(c)(iii),
then, without prejudice to any rights or remedies of the Issuing Bank or any
Lender hereunder, all commitment fees that otherwise would have been payable to
such Defaulting Lender (solely with respect to the portion of such Defaulting
Lender’s Commitment that was utilized by such LC Exposure) and all letter of
credit fees payable under Section 3.05(b) with respect to such Defaulting
Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure
is Cash Collateralized and/or reallocated.

 

If (i) a Bankruptcy Event with respect to a Lender Parent of any Lender shall
occur following the date hereof and for so long as such event shall continue or
(ii) the Issuing Bank has a good faith belief that any Lender has defaulted in
fulfilling its obligations under one or more other agreements in which such
Lender commits to extend credit, the Issuing Bank shall not be required to
issue, amend or increase any Letter of Credit, unless the Issuing Bank shall
have entered into arrangements with the Borrower or such Lender, satisfactory to
the Issuing Bank, as the case may be, to defease any risk to it in respect of
such Lender hereunder.

 

(d)          In the event that the Administrative Agent, the Borrower and the
Issuing Bank each agrees that a Defaulting Lender has adequately remedied all
matters that caused such Lender to be a Defaulting Lender and such Lender is no
longer a Defaulting Lender, then the LC Exposure of the Lenders shall be
readjusted to reflect the inclusion of such Lender’s Commitment and on such
date, if necessary, such Lender shall purchase at par such of the Loans and/or
participations in Letters of Credit of the other Lenders as the Administrative
Agent shall determine may be necessary in order for such Lender to hold such
Loans in accordance with its Applicable Percentage; provided that no adjustments
will be made retroactively with respect to fees accrued while such Lender was a
Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Non-Defaulting Lender will constitute a waiver or release of any claim
of any party hereunder arising from such Lender having been a Defaulting Lender.

 

43

 

 

Article V

Increased Costs; Break Funding Payments; Taxes; Illegality

 

Section 5.01         Increased Costs.

 

(a)          Eurodollar Changes in Law. If any Change in Law shall:

 

(i)          impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or

 

(ii)         impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise) other
than as a result of increased Taxes, which is governed by Section 5.03, then the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)          Capital Requirements. If any Lender or the Issuing Bank determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or the Issuing Bank’s
capital or on the capital of such Lender’s or the Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the
Issuing Bank’s holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.

 

(c)          Certificates. A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in Section 5.01(a)
or (b) shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.

 

(d)          Effect of Failure or Delay in Requesting Compensation. Failure or
delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or
the Issuing Bank’s right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or the Issuing Bank pursuant to
this Section 5.01 for any increased costs or reductions incurred more than 365
days prior to the date that such Lender or the Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 365-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

 

44

 

 

Section 5.02         Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 5.04, then, in any such event,
the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for US Dollar deposits of a comparable amount and
period from other banks in the eurodollar market.

 

A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

 

Section 5.03         Taxes.

 

(a)          Payments Free of Taxes. Any and all payments by or on account of
any obligation of any Credit Party under any Loan Document shall be made free
and clear of and without deduction for any Taxes, except as required by
applicable law; provided that if any Credit Party shall be required to deduct
any Taxes from such payments, then (i) in the case of Indemnified Taxes or Other
Taxes, the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 5.03(a)), the Administrative Agent, Lender or Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Credit Party shall make such
deductions and (iii) such Credit Party shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.

 

(b)          Payment of Other Taxes by the Borrower. The Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.

 

(c)          Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower or any other Credit Party hereunder or in connection
with any Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.03) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate of the Administrative Agent, a Lender or the Issuing Bank as to the
amount of such payment or liability under this Section 5.03 shall be delivered
to the Borrower and shall be conclusive absent manifest error.

 

(d)          Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by any Credit Party to a Governmental
Authority, the Borrower 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.

 

45

 

 

(e)          Tax Documentation. Any Lender that is entitled to an exemption from
or reduction of withholding tax with respect to payments under this Agreement or
any other Loan Document shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate. Each Lender agrees that if any form or
certification it previously delivered expires or becomes obsolete or inaccurate
in any respect, it shall update such form or certification or promptly notify
the Borrower and the Administrative Agent in writing of its legal inability to
do so. Notwithstanding anything to the contrary in the preceding two sentences,
the completion, execution and submission of such documentation (other than such
documentation set forth in the immediately succeeding sentence below) shall not
be required if in the Lender’s judgment such completion, execution or submission
would subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender. Without
limiting the generality of the foregoing, if a payment made to a Lender under
any Loan Document would be subject to U.S. federal withholding Tax imposed by
FATCA if such Lender were to fail to comply with the applicable reporting
requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Code, as applicable), such Lender shall deliver to the Borrower and the
Administrative Agent at the time or times prescribed by law and at such time or
times reasonably requested by the Borrower or the Administrative Agent such
documentation prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably
requested by the Borrower or the Administrative Agent as may be necessary for
the Borrower and the Administrative Agent to comply with their obligations under
FATCA and to determine that such Lender has complied with such Lender’s
obligations under FATCA or to determine the amount to deduct and withhold from
such payment. Solely for purposes of this Section 5.03(e), “FATCA” shall include
any amendments made to FATCA after the date of this Agreement. Each Lender
agrees that if any form or certification it previously delivered expires or
becomes obsolete or inaccurate in any respect, it shall update such form or
certification or promptly notify the Borrower and the Administrative Agent in
writing of its legal inability to do so.

 

(f)          Indemnification by the Lenders. Each Lender shall severally
indemnify the Administrative Agent, within 10 days after demand therefor, for
(i) any Indemnified Taxes attributable to such Lender (but only to the extent
that the Borrower has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Borrower to do so),
(ii) any Taxes attributable to such Lender's failure to comply with the
provisions of Section 12.04(c)(ii) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such 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 any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this Section 5.03(f).

 

(g)          Tax Refunds. If the Administrative Agent or a Lender determines, in
its sole discretion, that it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by the Borrower or with respect
to which the Borrower has paid additional amounts pursuant to this Section 5.03,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 5.03 with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all reasonable out-of-pocket expenses of the Administrative
Agent or such Lender incurred as a result of receiving such refund or in
connection with paying over such refund and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided that the Borrower, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section 5.03 shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

 

46

 

 

Section 5.04         Designation of Different Lending Office. If any Lender
requests compensation under Section 5.01, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (a) would eliminate or reduce amounts
payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the
future and (b) would not subject such Lender to any unreimbursed cost or expense
and would not otherwise be materially disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

 

Section 5.05         Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender’s obligation to make such Eurodollar Loans shall be
suspended (the “Affected Loans”) until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender’s Affected Loans shall be applied instead to its ABR Loans.

 

Article VI

Conditions Precedent

 

Section 6.01         Effective Date. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 12.02):

 

(a)          The Administrative Agent, the Global Coordinator, the Arranger and
the Lenders shall have received all upfront, commitment, arrangement and agency
fees and all other fees and amounts due and payable on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder (including, without limitation, the fees and expenses of Paul Hastings
LLP, Posse, Herrera & Ruiz S.A., Norton Rose Fulbright Canada LLP, Appleby, and
Demarest e Almeida, counsel to the Administrative Agent).

 

47

 

 

(b)          The Administrative Agent shall have received a certificate of the
Secretary or an Assistant Secretary of each Credit Party setting forth (i)
resolutions of its board of directors or other applicable governing body with
respect to the authorization of such Credit Party to execute and deliver the
Loan Documents to which it is a party and to enter into the transactions
contemplated in those documents, (ii) the officers of such Credit Party (y) who
are authorized to sign the Loan Documents to which such Credit Party is a party
and (z) who will, until replaced by another officer or officers duly authorized
for that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection with this
Agreement and the transactions contemplated hereby, (iii) specimen signatures of
such authorized officers, and (iv) the articles or certificate of incorporation
and bylaws (or other organizational documents) of such Credit Party, certified
as being true and complete. The Administrative Agent and the Lenders may
conclusively rely on such certificate until the Administrative Agent receives
notice in writing from the Borrower to the contrary.

 

(c)          The Administrative Agent shall have received certificates of the
appropriate Governmental Authorities with respect to the existence,
qualification and good standing of each Credit Party.

 

(d)          The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer and dated as of the Effective Date.

 

(e)          The Administrative Agent shall have received from each party hereto
counterparts (in such number as may be requested by the Administrative Agent) of
this Agreement signed on behalf of such party.

 

(f)          The Administrative Agent shall have received duly executed Notes
and the Colombian Notes payable to the order of each Lender in a principal
amount equal to its Maximum Credit Amount dated as of the Effective Date.

 

(g)          The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments, including the Guaranty
Agreement, the Bermuda Security Documents, the Colombian Security Documents, the
Cayman Security Documents, the Canadian Security Documents, the Brazilian
Security Documents, and the other Security Instruments described on Exhibit E,
together with share certificates, share transfer instruments, registers,
direction letters, acknowledgement notices, memoranda and any other documents in
connection with the Liens created thereby as the Administrative Agent may
reasonably require, and in the case of the Colombian Security Documents, duly
filed and (if applicable) recorded before the competent Chamber of Commerce. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall have received:

 

(i)          appropriate governmental or third party search certificates
(including, if applicable, UCC search certificates) as it may require reflecting
no prior Liens encumbering the Properties of the Credit Parties for each of the
following jurisdictions: Colombia, the Cayman Islands, Canada, Delaware,
District of Columbia, Nevada, Utah, and any other jurisdiction requested by the
Administrative Agent; other than those being assigned or released on or prior to
the Effective Date or Liens permitted by Section 9.03.

 

(ii)         evidence satisfactory to it that all loans and other amounts owing
under the Existing Credit Agreement have been (or contemporaneously herewith are
being) repaid in full and all commitments thereunder have been terminated or
cancelled and that all Liens on the Properties of the Credit Parties associated
with the Existing Credit Agreement have been released or terminated or assigned
to the Administrative Agent, subject only to the filing of applicable
terminations, releases or assignments.

 

48

 

 

(iii)        evidence satisfactory to the Administrative Agent that the ANH has
recognized each Colombian Branch as the operator of record of the entire right,
title, estate and interest in each Concession Agreement to which it is a party.

 

(iv)        evidence satisfactory to it that (A) each Guarantor has guaranteed
the Indebtedness pursuant to the Guaranty Agreement and (B) the Security
Instruments create first priority, perfected Liens on all of the economic rights
of Petrolifera and Gran Tierra Energy Colombia under each Concession Agreement
to which each is a party;

 

(v)         a duly executed agreement of the Offtaker under each Offtake
Agreement (other than the Colombian Peso Offtake Agreements) to which any Credit
Party is a party, in form and substance satisfactory to the Administrative
Agent, pursuant to which such Person (and any other Person obligated to make
payments thereunder) shall agree to make all payments under such Offtake
Agreement to the relevant Collection Account.

 

(vi)        evidence satisfactory to it that all of the Equity Interests in each
Credit Party (other than the Parent) has been pledged to the Administrative
Agent for the benefit of the Secured Parties pursuant to the Security
Instruments, and to the extent applicable, the Administrative Agent shall have
received certificates, together with undated, blank stock powers for each such
certificate, representing all of the issued and outstanding Equity Interests of
such Credit Party.

 

(vii)       evidence satisfactory to it that all filings, registrations and
recordings have been made in the appropriate governmental offices, and all other
actions have been taken, which shall be necessary or advisable to create, first
priority, perfected Liens on the Collateral pursuant to the Security
Instruments; and

 

(viii)      evidence satisfactory to the Administrative Agent (with sufficient
copies for each Lender) that each Colombian Security Document has been (A) duly
subscribed and delivered and (B) duly filed and recorded before the competent
Chamber of Commerce.

 

(h)          The Administrative Agent shall have received an opinion of (i)
Cooley LLP, special New York counsel to the Parent and the Borrower, in form and
substance satisfactory to the Administrative Agent, (ii) Gamboa & Chalela,
special Colombian counsel to the Parent and the Borrower, in form and substance
satisfactory to the Administrative Agent, (iii) Maples and Calder, special
Cayman Islands counsel to the Parent and the Borrower, in form and substance
satisfactory to the Administrative Agent, (iv) Veirano Advogados, special
Brazilian counsel to the Parent and the Borrower, and (v), Blake, Cassels &
Graydon LLP, special Canadian counsel to the Parent and the Borrower, in form
and substance satisfactory to the Administrative Agent.

 

(i)          The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.11.

 

(j)          The Administrative Agent shall have received evidence satisfactory
to it that all Governmental Requirements and third-party consents and approvals
necessary or advisable in connection with the Transactions have been obtained
(without the imposition of any conditions not already satisfied) and are in full
force and effect; and all applicable waiting periods have expired without any
action being taken by any competent authority; and no law or regulation is
applicable that restrains, prevents or imposes materially adverse conditions
upon the Transactions.

 

49

 

 

(k)          The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.

 

(l)          The Administrative Agent shall have received the Financial
Statements and the Initial Reserve Report accompanied by a certificate covering
the matters described in Section 8.12(c).

 

(m)          The Administrative Agent shall be satisfied with the terms and
conditions of each Material Document to which any Credit Party is a party.

 

(n)          The Administrative Agent shall have received a copy, certified by a
Responsible Officer as true and complete (in each case, together with all
amendments thereto, if any), of (i) each Concession Agreement listed on Schedule
1.02(a), together with all amendments thereto, if any, and all participation
agreements, farm-ins, royalty agreements or similar agreements that establish
any obligation or interest in favor of a third party derived from the Concession
Agreements, (ii) each Offtake Agreement listed on Schedule 1.02(c) and (iii)
each Swap Agreement listed on Schedule 7.18.

 

(o)          The Administrative Agent and the Lenders 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.

 

(p)          The Administrative Agent shall have received such other documents
as the Administrative Agent or special counsel to the Administrative Agent may
reasonably request.

 

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 2:00 p.m., New York City time, on August 30, 2013 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).

 

Section 6.02         Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:

 

(a)          At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.

 

(b)          At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no event, development or circumstance has occurred or
shall then exist that has resulted in, or could reasonably be expected to have,
a Material Adverse Effect.

 

(c)          The representations and warranties of the Credit Parties set forth
in this Agreement and in the other Loan Documents shall be true and correct in
all material respects on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct in all material respects as of such specified
earlier date.

 

50

 

 

(d)          The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or the Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

 

(e)          The receipt by the Administrative Agent of a Borrowing Request in
accordance with Section 2.03 or a request for a Letter of Credit in accordance
with Section 2.08(b), as applicable.

 

Each request for a Borrowing and each request for the issuance, amendment,
renewal or extension of any Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in Section 6.02(a) through (d).

 

Section 6.03         Additional Conditions to Credit Events. In addition to the
conditions precedent set forth in Section 6.02, so long as any Lender is a
Defaulting Lender, the Issuing Bank shall not be required to issue, amend or
increase any Letter of Credit, unless it is satisfied that the LC Exposure will
be 100% covered by the Commitments of the Non-Defaulting Lenders and/or the
Borrower will Cash Collateralize the LC Exposure in accordance with Section
4.03(c)(iii), and participating interests in any such newly issued or increased
Letter of Credit shall be allocated among Non-Defaulting Lenders in accordance
with Section 4.03(c)(iii)(A) (and Defaulting Lenders shall not participate
therein).

 

Article VII

Representations and Warranties

 

The Parent and the Borrower each represents and warrants to the Lenders that:

 

Section 7.01         Organization; Powers. Each Credit Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization (and in the case of the Colombia Branch, has been duly formed and
validly existing as a branch of an oil exploration production related company in
good standing (where applicable) under the laws of Colombia), has all requisite
power and authority, and has all material governmental licenses, authorizations,
consents and approvals necessary, to own its assets and to carry on its business
as now conducted, and is qualified to do business in, and is in good standing
in, every jurisdiction where such qualification is required, except where
failure to have such power, authority, licenses, authorizations, consents,
approvals and qualifications could not reasonably be expected to have a Material
Adverse Effect.

 

Section 7.02         Authority; Enforceability. The Transactions are within each
Credit Party’s corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action (including, without limitation,
any action required to be taken by any class of directors of the Borrower or any
other Person, whether interested or disinterested, in order to ensure the due
authorization of the Transactions). Each Loan Document and Material Document to
which each Credit Party is a party has been duly executed and delivered by such
Credit Party and constitutes a legal, valid and binding obligation of such
Credit Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

 

51

 

 

Section 7.03         Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority or any other third Person (including
shareholders or any class of directors, whether interested or disinterested, of
the Parent, the Borrower or any other Person), nor is any such consent,
approval, registration, filing or other action necessary for the validity or
enforceability of any Loan Document or any Material Document or the consummation
of the Transactions, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security
Instruments as required by this Agreement and (ii) those third party approvals
or consents which, if not made or obtained, would not cause a Default hereunder,
could not reasonably be expected to have a Material Adverse Effect or do not
have an adverse effect on the enforceability of the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Credit Party or any order of any Governmental
Authority, (c) will not violate or result in a default under any Material
Document or any indenture, agreement or other instrument binding upon any Credit
Party or its Properties, or give rise to a right thereunder to require any
payment to be made by any Credit Party and (d) will not result in the creation
or imposition of any Lien on any Property of any Credit Party (other than the
Liens created by the Loan Documents).

 

Section 7.04         Financial Condition; No Material Adverse Change.

 

(a)          The Parent has heretofore furnished to the Lenders its consolidated
balance sheet and statements of income, stockholders equity and cash flows as of
and for the fiscal year ended December 31, 2012, reported on by Deloitte &
Touche LLP, independent public accountants. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Parent and its Consolidated Subsidiaries as of
such date and for such period in accordance with GAAP.

 

(b)          Since December 31, 2012, there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect.

 

(c)          Neither the Parent nor any Subsidiary has on the date hereof any
material Debt (including Disqualified Capital Stock) or any contingent
liabilities, off-balance sheet liabilities or partnerships or liabilities for
Taxes, except as referred to or reflected or provided for in the Financial
Statements.

 

Section 7.05         Litigation.

 

(a)          Except as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Parent or the Borrower,
threatened against or affecting any Credit Party or involving any Material
Document (i) as to which there is a reasonable possibility of an adverse
determination that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or (ii)
that involve any Loan Document or the Transactions.

 

(b)          Since the date of this Agreement, there has been no change in the
status of the matters disclosed in Schedule 7.05 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.

 

Section 7.06         Environmental Matters. Except for such matters as set forth
on Schedule 7.06 or that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect:

 

52

 

 

(a)          the Parent and the Subsidiaries and each of their respective
Properties and operations thereon are, and within all applicable statute of
limitation periods have been, in compliance with all applicable Environmental
Laws.

 

(b)          the Parent and the Subsidiaries have obtained all Environmental
Permits required for their respective operations and each of their Properties,
with all such Environmental Permits being currently in full force and effect,
and none of the Parent or the Subsidiaries has received any written notice or
otherwise has knowledge that any such existing Environmental Permit will be
revoked or that any application for any new Environmental Permit or renewal of
any existing Environmental Permit will be protested or denied.

 

(c)          there are no claims, demands, suits, orders, inquiries, or
proceedings concerning any violation of, or any liability (including as a
potentially responsible party) under, any applicable Environmental Laws that is
pending or, to the Parent’s or the Borrower’s knowledge, threatened against the
Parent or any Subsidiary or any of their respective Properties or as a result of
any operations at such Properties.

 

(d)          none of the Properties of the Parent or any Subsidiary contain or
have contained any: (i) underground storage tanks; (ii) asbestos-containing
materials; (iii) landfills or dumps; or (iv) hazardous waste management units.

 

(e)          there has been no Release or, to the Parent’s knowledge, threatened
Release, of Hazardous Materials at, on, under or from the Parent’s or any
Subsidiary’s Properties, there are no investigations, remediations, abatements,
removals, or monitorings of Hazardous Materials required under applicable
Environmental Laws at such Properties and, to the knowledge of the Parent, none
of such Properties are adversely affected by any Release or threatened Release
of a Hazardous Material originating or emanating from any other real property.

 

(f)          neither the Parent nor any Subsidiary has received any written
notice asserting an alleged liability or obligation under any applicable
Environmental Laws with respect to the investigation, remediation, abatement,
removal, or monitoring of any Hazardous Materials at, under, or Released or
threatened to be Released from any real properties offsite the Parent’s or any
Subsidiary’s Properties and, to the Parent’s or the Borrower’s knowledge, there
are no conditions or circumstances that could reasonably be expected to result
in the receipt of such written notice.

 

(g)          there has been no exposure of any Person or Property to any
Hazardous Materials as a result of or in connection with the operations and
businesses of any of the Parent’s or the Subsidiaries’ Properties that could
reasonably be expected to form the basis for a claim for damages or
compensation.

 

(h)          The Parent and the Subsidiaries have provided to the Lenders
complete and correct copies of all environmental site assessment reports,
investigations, studies, analyses, and correspondence on environmental matters
(including matters relating to any alleged non-compliance with or liability
under Environmental Laws) that are in any of the Parent’s or the Subsidiaries’
possession or control and relating to their respective Properties or operations
thereon.

 

Section 7.07         Compliance with the Laws and Agreements; No Defaults.

 

(a)          Each Credit Party is in compliance with all Governmental
Requirements applicable to it or its Property and all agreements and other
instruments binding upon it or its Property, and possesses all licenses,
permits, franchises, exemptions, approvals and other governmental authorizations
necessary for the ownership of its Property and the conduct of its business,
except (other than with respect to bribery and anti-corruption Governmental
Requirements) where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

53

 

 

(b)          No Credit Party is in default nor has any event or circumstance
occurred which, but for the expiration of any applicable grace period or the
giving of notice, or both, would constitute a default or would require such
Credit Party to Redeem or make any offer to Redeem under any indenture, note,
credit agreement or instrument pursuant to which any Material Indebtedness is
outstanding or by which any Credit Party or any of its Properties is bound.

 

(c)          Each Material Document is in full force and effect, and constitutes
a valid and legally enforceable obligation of the parties thereto, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles; and no Credit Party is in default
thereunder, nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a default thereunder, or would permit any counterparty thereto
the right to terminate such Material Document or any transaction thereunder, or
exercise any remedial rights thereunder.

 

(d)          No Default has occurred and is continuing.

 

Section 7.08         Taxes. Each of the Parent and the Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Parent or such Subsidiary, as applicable, has set
aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Parent and the Subsidiaries in respect of Taxes and other governmental charges
are, in the reasonable opinion of the Parent and the Borrower, adequate. No Tax
Lien has been filed (other than Excepted Liens) and, to the knowledge of the
Parent or the Borrower, no claim is being asserted with respect to any such Tax
or other such governmental charge.

 

Section 7.09         Employee Benefit Arrangements. No Credit Party maintains
any employee pension or benefit plan. Each Colombian Branch has been and is in
material compliance with all labor, pension fund, health, industrial security
and social security obligations required under Colombian law.

 

Section 7.10         Disclosure; No Material Misstatements. None of the reports,
financial statements, certificates or other information furnished by or on
behalf of any Credit Party to the Administrative Agent or any Lender or any of
their Affiliates in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Parent and the Borrower represents only that such information
was prepared in good faith based upon assumptions believed to be reasonable at
the time. There is no fact peculiar to any Credit Party which could reasonably
be expected to have a Material Adverse Effect or in the future is reasonably
likely to have a Material Adverse Effect and which has not been set forth in
this Agreement or the Loan Documents or the other documents, certificates and
statements furnished to the Administrative Agent or the Lenders by or on behalf
of any Credit Party prior to, or on, the date hereof in connection with the
transactions contemplated hereby. There are no statements or conclusions in any
Reserve Report which are based upon or include misleading information or fail to
take into account material information regarding the matters reported therein.

 

54

 

 

Section 7.11         Insurance. The Parent has, and has caused all Credit
Parties to have, (a) all insurance policies sufficient for the compliance by
each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Subsidiaries. The Administrative
Agent and the Lenders have been named as additional insureds in respect of such
liability insurance policies in respect of all insurance covering Oil and Gas
Properties of the Credit Parties and the Administrative Agent has been named as
loss payee with respect to Property loss insurance in respect of all insurance
covering Oil and Gas Properties of the Credit Parties.

 

Section 7.12         Restrictive Agreements. No Credit Party is a party to any
agreement or arrangement, or subject to any order, judgment, writ or decree,
which either restricts or purports to restrict its ability to grant Liens to the
Administrative Agent and the Lenders on or in respect of its Properties to
secure the Indebtedness and the Loan Documents, or restricts such Credit Party
from paying dividends or making any other distributions in respect of its Equity
Interests to any other Credit Party, or restricts such Credit Party from making
loans or advances or transferring any Property to any other Credit Party, or
which requires the consent of or notice to other Persons in connection
therewith, except, in each case, for such encumbrances or restrictions permitted
under Section 9.15.

 

Section 7.13         Subsidiaries.

 

(a)          Set forth on Schedule 7.13, or as disclosed in writing to the
Administrative Agent, which shall promptly furnish a copy to the Lenders, and
which disclosure shall be a supplement to Schedule 7.13, is (i) a true and
complete list of each Subsidiary and each Person holding ownership interests in
such Subsidiary, and (ii) a true and complete description of the nature of the
ownership interests held by each such Person and the percentage of ownership of
such Subsidiary represented by such ownership interests.

 

(b)          Except as disclosed in Schedule 7.13, or as disclosed in writing to
the Administrative Agent, which shall promptly furnish a copy to the Lenders,
and which shall be a supplement to Schedule 7.13, (i) each of the Parent and the
Subsidiaries owns, free and clear of Liens (other than Liens created pursuant to
the Security Instruments), and has the unencumbered right to vote, all
outstanding ownership interests in each Person shown therein to be held by it,
(iii) all of the issued and outstanding Equity Interests of each such Person has
been duly authorized and is validly issued, fully paid and nonassessable, and
(iv) there are no outstanding Equity Rights with respect to such Person.

 

(c)          Each Subsidiary is a Wholly-Owned Subsidiary.

 

Section 7.14         Location of Business and Offices. The Parent’s jurisdiction
of incorporation is the State of Nevada, United States of America; the name of
the Parent as listed in the public records of its jurisdiction of organization
is Gran Tierra Energy Inc.; the organizational identification number of the
Parent in its jurisdiction of organization is C13734-2003; the Parent’s
principal place of business and chief executive offices are located at the
address specified in Section 12.01; and the Parent’s U.S. federal taxpayer
identification number is 98-0479924 (or, in each case, as set forth in a notice
delivered to the Administrative Agent pursuant to Section 8.01(m) in accordance
with Section 12.01). The Borrower’s jurisdiction of organization is the Cayman
Islands; the name of the Borrower as listed in the public records of its
jurisdiction of organization is Gran Tierra Energy International Holdings Ltd.;
the organizational identification number of the Borrower in its jurisdiction of
organization is 238484; and the Borrower’s principal place of business and chief
executive offices are located at the address specified in Section 12.01 (or, in
each case, as set forth in a notice delivered to the Administrative Agent
pursuant to Section 8.01(m) in accordance with Section 12.01).

 

55

 

 

Section 7.15         Properties; Titles, Etc.

 

(a)          Each Credit Party has good and defensible title to the Oil and Gas
Properties evaluated in the most recently delivered Reserve Report and good
title to all its personal Properties, in each case, free and clear of all Liens
except Liens permitted by Section 9.03. After giving full effect to the Excepted
Liens, each Credit Party specified as the owner owns, or has exclusive rights
in, the net interests in production attributable to the Hydrocarbon Interests as
reflected in the most recently delivered Reserve Report.

 

(b)          All material leases and agreements necessary for the conduct of the
business of the Credit Parties are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to have a
Material Adverse Effect.

 

(c)          The rights and Properties presently owned, leased or licensed by
the Credit Parties including, without limitation, all easements and rights of
way, include all rights and Properties necessary to permit the Credit Parties to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the date hereof.

 

(d)          All of the Properties of the Credit Parties which are reasonably
necessary for the operation of their businesses are in good working condition
and are maintained in accordance with prudent business standards.

 

(e)          Each Credit Party owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by such Credit Party does not infringe upon the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The Credit Parties either own or have valid licenses or other
rights to use all databases, geological data, geophysical data, engineering
data, seismic data, maps, interpretations and other technical information used
in their businesses as presently conducted, subject to the limitations contained
in the agreements governing the use of the same, which limitations are customary
for companies engaged in the business of the exploration and production of
Hydrocarbons, with such exceptions as could not reasonably be expected to have a
Material Adverse Effect.

 

Section 7.16         Maintenance of Properties. Except for such acts or failures
to act as could not be reasonably expected to have a Material Adverse Effect,
the Oil and Gas Properties (and Properties unitized therewith) of the Credit
Parties have been maintained, operated and developed in a good and workmanlike
manner and in conformity with all Governmental Requirements and in conformity
with the provisions of all leases, subleases or other contracts comprising a
part of the Hydrocarbon Interests and other contracts and agreements forming a
part of the Oil and Gas Properties of the Credit Parties. Specifically in
connection with the foregoing, except for those as could not be reasonably
expected to have a Material Adverse Effect, (i) no Oil and Gas Property of any
Credit Party is subject to having allowable production reduced below the full
and regular allowable (including the maximum permissible tolerance) because of
any overproduction (whether or not the same was permissible at the time) and
(ii) none of the wells comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) of any Credit Party is deviated from the vertical
more than the maximum permitted by Governmental Requirements, and such wells
are, in fact, bottomed under and are producing from, and the well bores are
wholly within, the Oil and Gas Properties (or in the case of wells located on
Properties unitized therewith, such unitized Properties) of such Credit Party.
All pipelines, wells, gas processing plants, platforms and other material
improvements, fixtures and equipment owned in whole or in part by any Credit
Party that are necessary to conduct normal operations are being maintained in a
state adequate to conduct normal operations, and with respect to such of the
foregoing which are operated by any Credit Party, in a manner consistent with
Credit Parties’ past practices (other than those the failure of which to
maintain in accordance with this Section 7.16 could not reasonably be expected
to have a Material Adverse Effect).

 

56

 

 

Section 7.17         Marketing of Production.

 

(a)          Schedule 1.02(c) sets forth as of the Effective Date a true and
complete list of (i) all Persons to whom each Credit Party sells crude oil and
any other Hydrocarbons and (ii) all contracts for the purchase and sale of crude
oil and any other Hydrocarbons to which the any Credit Party is a party.

 

(b)          Each contract for the purchase and sale of crude oil and other
Hydrocarbons to which each Credit Party is a party is an Offtake Agreement.

 

(c)          Each Person to whom any Credit Party sells crude oil and other
Hydrocarbons is an Eligible Buyer.

 

Section 7.18         Swap Agreements. Schedule 7.18, as of and after the
Effective Date, and after the date hereof, each report required to be delivered
by the Borrower pursuant to Section 8.01(d), sets forth, a true and complete
list of all Swap Agreements of each Credit Party, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.

 

Section 7.19         Use of Loans and Letters of Credit. The proceeds of the
Loans and the Letters of Credit shall be used (a) to repay Debt under the
Existing Credit Agreement and (b) to provide working capital for exploration and
production operations and for general corporate purposes of the Borrower and its
Subsidiaries; provided that the Borrower may contribute proceeds of the Loans to
the Colombian branch office of Petrolifera (as a capital contribution, not a
loan, whether in the form of capital suplementario or in other form of capital
contribution legally permitted under Colombian law, in which case the
Administrative Agent shall have received copies of forms number 4 and 13
(Formularios 4 y 13) under Circular DCIN-83 of Colombian Central Bank (Banco de
la República), issued by the Colombian Central Bank with blanks properly
completed) and shall use, or cause such Colombian branch office to use, the
proceeds of the Loans and the Letters of Credit hereunder solely for the general
corporate purposes of such Colombian branch office, including, but not limited
to, the exploration, development and exploitation of crude oil and gas reserves
from the Colombian Hydrocarbon Properties; provided that none of the
Administrative Agent, the Issuing Bank nor any Lender shall have any
responsibility to monitor or verify the application by the Borrower of any
amounts borrowed pursuant to this Agreement. The Parent and the Subsidiaries are
not engaged principally, or as one of its or their important activities, in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of Regulation
T, U or X of the Board). No part of the proceeds of any Loan or Letter of Credit
will be used for any purpose which violates the provisions of Regulations T, U
or X of the Board.

 

57

 

 

Section 7.20         Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Credit Parties, taken as a
whole, will exceed the aggregate Debt of the Credit Parties on a consolidated
basis, as the Debt becomes absolute and matures, (b) each of the Credit Parties
will not have incurred or intended to incur, and will not believe that it will
incur, Debt beyond its ability to pay such Debt (after taking into account the
timing and amounts of cash to be received by each of the Credit Parties and the
amounts to be payable on or in respect of its liabilities, and giving effect to
amounts that could reasonably be received by reason of indemnity, offset,
insurance or any similar arrangement) as such Debt becomes absolute and matures
and (c) each of the Credit Parties will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct
of its business.

 

Section 7.21         Material Documents. The copies of the Material Documents
previously delivered by the Parent or the Borrower to the Administrative Agent
are true, accurate and complete and have not been amended or modified in any
manner, other than pursuant to amendments or modifications permitted pursuant to
Section 9.17 and previously delivered to the Administrative Agent.

 

Section 7.22         Ranking. The Loans and the LC Exposure constitute senior
secured Debt of the Credit Parties and rank (a) pari passu with all obligations
under all Secured Swap Agreements, all Specified Cash Management Agreements, and
Debt secured by Liens permitted by Section 9.03(d) and (b) effectively senior to
all other Debt of the Credit Parties to the extent of the value of the
Collateral (other than Debt secured by Liens permitted by Section 9.03(d)),
except for obligations that are accorded mandatory preference by law and as may
be limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally and as may be limited by equitable principles of
general applicability.

 

Section 7.23         USA Patriot Act/Anti-Money Laundering. To the extent
applicable, the Parent and each Subsidiary is in compliance, in all material
respects, with (a) the Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) the USA Patriot Act. No part of the
proceeds of the Loans will be used, directly or indirectly, for any payments to
any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

Section 7.24         OFAC. Neither the Parent nor any of the Subsidiaries, nor
any director, officer, agent, employee or Affiliate of the Parent or any of the
Subsidiaries is currently subject to any material U.S. sanctions administered by
the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), and
the Borrower will not directly or indirectly use the proceeds from the Loans or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person, for the purpose of financing the
activities of any Person currently subject to any U.S. sanctions administered by
OFAC.

 

Section 7.25         Foreign Exchange Special Regime. Each Colombian Branch is
subject to, and in compliance with, the corresponding foreign exchange special
regime applicable to oil sector companies, composed by External Resolution 8 of
2000 and circular reglamentaria externa DCIN-83, both issued by the Colombian
Central Bank (Banco de la Republica), and by Decree 2080 of 2000 issued by
Ministry of Finance and Public Credit (Ministerio de Hacienda y Credito
Publico).

 

58

 

 

Article VIII

Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, the Parent and the Borrower each covenants and agrees with the
Lenders that:

 

Section 8.01         Financial Statements; Other Information. The Parent will
furnish to the Administrative Agent and each Lender:

 

(a)          Annual Financial Statements. As soon as available, but in any event
in accordance with then applicable law and not later than 90 days after the end
of each fiscal year of the Parent, its audited consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by Deloitte & Touche LLP
or other independent public accountants of recognized national standing (without
a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Parent and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.

 

(b)          Quarterly Financial Statements. As soon as available, but in any
event in accordance with then applicable law and not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Parent, its consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such fiscal quarter
and the then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Parent and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.

 

(c)          Certificate of Financial Officer – Compliance. Concurrently with
any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Section 9.01,
(iii) setting forth reasonably detailed calculations of Adjusted Consolidated
Net Income, (iv) specifying each Material Subsidiary, and (v) stating whether
any change in GAAP or in the application thereof has occurred since the date of
the Financial Statements and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such certificate.

 

(d)          Certificate of Financial Officer – Swap Agreements. Concurrently
with the delivery of each Reserve Report hereunder, a certificate of a Financial
Officer, in form and substance satisfactory to the Administrative Agent, setting
forth as of a recent date, a true and complete list of all Swap Agreements of
the Credit Parties, the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net
mark-to-market value therefor, any new credit support agreements relating
thereto not listed on Schedule 7.18, any margin required or supplied under any
credit support document, and the counterparty to each such agreement.

 

59

 

 

(e)          Certificate of Insurer – Insurance Coverage. Concurrently with any
delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.

 

(f)          Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other report or letter submitted to the Parent or any of its Subsidiaries
by independent accountants in connection with any annual, interim or special
audit made by them of the books of the Parent or any such Subsidiary, and a copy
of any response by the Parent or any such Subsidiary, or the Board of Directors
of the Parent or any such Subsidiary, to such letter or report.

 

(g)          Securities Exchange and Other Filings; Reports to Shareholders.
Promptly after the same become publicly available, copies of all periodic and
other reports, proxy statements and other materials filed by the Parent or any
Subsidiary with the SEC, or with any national securities exchange (including the
NYSE Amex and the Toronto Stock Exchange), or distributed by the Parent to its
shareholders generally, as the case may be.

 

(h)          Notices Under Material Documents. Promptly after the furnishing
thereof, copies of any notice, inquiry or demand (including, without limitation,
any notice of, or request for information regarding, any default, event of
default, force majeure event or termination event (caducidad), furnished to or
by any Person (whether any Credit Party, any Offtaker, any Governmental
Authority, ANH, Ecopetrol S.A., any counterparty or otherwise) pursuant to or in
connection with the terms of any Material Document.

 

(i)          Defaults under Material Documents. Promptly after the Parent or the
Borrower knows or has reason to believe that any condition or event that
constitutes a default, event of default, force majeure event or termination
event (howsoever described) under any Material Document has occurred, a notice
of such occurrence, together with a certificate from a Responsible Officer of
the Parent or the Borrower specifying the nature and period of existence of such
default, event of default, force majeure event or termination event, and any
action taken or proposed to be taken with respect thereto.

 

(j)          Lists of Purchasers. Promptly following the written request of the
Administrative Agent, a list of all Persons purchasing Hydrocarbons from any
Credit Party.

 

(k)          Notice of Sales of Oil and Gas Properties and Liquidation of Swap
Agreements.

 

(i)          In the event any Credit Party intends to sell, transfer, assign or
otherwise dispose of any Oil or Gas Properties pursuant to Section 9.11(d) or
the Parent or any Subsidiary intends to sell, transfer, assign or otherwise
dispose of any Equity Interests in any Subsidiary Guarantor pursuant to Section
9.11(d), prior written notice (and in any event no later than 10 days, or such
later date as the Administrative Agent may agree, prior thereto) of such
disposition, the price thereof and the anticipated date of closing and any other
details thereof requested by the Administrative Agent or any Lender.

 

(ii)         In the event any Credit Party intends to transfer or otherwise
dispose of any of its Property pursuant to Section 9.11(h) or Section 9.11(l),
prior written notice (and in any event no later than 10 days, or such later date
as the Administrative Agent may agree, prior thereto) of such transfer or other
disposition and any other details thereof requested by the Administrative Agent
or any Lender.

 

60

 

 

(iii)        In the event that the Parent or any Subsidiary receives any notice
of early termination of any Swap Agreement to which it is a party from any of
its counterparties, or any Swap Agreement to which the Parent or any Subsidiary
is a party is Liquidated, prompt written notice of the receipt of such early
termination notice or such Liquidation (and in the case of a voluntary
Liquidation of any Swap Agreement, no less than three (3) Business Days’ prior
written notice thereof), as the case may be, together with a reasonably detailed
description or explanation thereof and any other details thereof reasonably
requested by the Administrative Agent or any Lender.

 

(l)          Notice of Casualty Events. Prompt written notice, and in any event
within three Business Days, of the occurrence of any Casualty Event having a
Fair Market Value in excess of $10,000,000 or the commencement of any action or
proceeding that could reasonably be expected to result in a Casualty Event
having a Fair Market Value in excess of $10,000,000.

 

(m)          Information Regarding Guarantors. Prompt written notice (and in any
event within thirty (30) days prior thereto) of any change in (i) any
Guarantor’s corporate name or in any trade name used to identify such Person in
the conduct of its business or in the ownership of its Properties, (ii)the
location of any Guarantor’s chief executive office or principal place of
business, (iii) any Guarantor’s identity or corporate structure or in the
jurisdiction in which such Person is incorporated or formed, (iv) any
Guarantor’s jurisdiction of organization or such Person’s organizational
identification number in such jurisdiction of organization, and (v) any
Guarantor’s taxpayer identification number.

 

(n)          Production Report and Operating Statements.

 

(i)          Within forty five (45) days after the end of each fiscal quarter, a
report setting forth, for each calendar month during the then current fiscal
year to date, the volume of production and sales attributable to production (and
the prices at which such sales were made and the revenues derived from such
sales), including gross production and net production after royalties, for each
such calendar month from the Oil and Gas Properties of the Credit Parties, and
setting forth the related ad valorem, severance and production taxes and
operating expenses attributable thereto and incurred for each such calendar
month, and such other related information as the Administrative Agent may
reasonably request.

 

(ii)         Within sixty (60) days after the end of each fiscal year of the
Parent, a report prepared by or on behalf of the Parent detailing (i) the
projected production of Hydrocarbons by the Credit Parties in each of the next
four fiscal quarters and the assumptions used in calculating such projections,
(ii) an annual operating budget for the Credit Parties for the forthcoming
fiscal year, and (iii) the projected capital expenditures to be incurred by the
Credit Parties 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 the Oil and Gas Properties of the Credit Parties (including the
Colombian Hydrocarbon Properties), and the assumptions used in calculating such
projections.

 

(o)          Notices of Certain Changes. Promptly, but in any event within five
(5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the certificate or articles of incorporation,
by-laws, any preferred stock designation or any other organic document of any
Credit Party.

 

(p)          Material Changes. Promptly after any material change in royalties
or taxes, or the confiscation, condemnation, seizure, forfeiture or
expropriation in respect of any Oil and Gas Properties of any Credit Party.

 

(q)          Certificate of Financial Officer – Environmental Laws; Corporate
Social Responsibility. Promptly, but no later than ninety (90) days following
the end of each fiscal year of the Parent, a certificate of a Responsible
Officer of the Parent, in form and substance reasonably satisfactory to the
Administrative Agent, confirming compliance with Section 7.06, or details of any
potential or actual material deviation therefrom, together with details of the
actions being taken to respond to and remedy the situation.

 

61

 

 

(r)          Notices under Concession Agreements. Promptly after receipt
thereof, copies of any requirement that any Colombian Branch receives from ANH
or Ecopetrol S.A. that results or may result in the early termination
(caducidad) of one or more of the Concession Agreements.

 

(s)          Notice of Senior Debt Issuance. Written notice at least (5) days
(or such later date as the Administrative Agent may agree) prior to the issuance
of any Senior Debt as contemplated by Section 9.02(g), the amount thereof and
the anticipated date of closing and a copy of the preliminary offering
memorandum (if any), the final offering memorandum (if any) and the most recent
draft of the indenture available at such time (if any) relating to such offering
of Senior Debt.

 

(t)          Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Parent or any Subsidiary, or compliance with the
terms of this Agreement or any other Loan Document, as the Administrative Agent
or any Lender may reasonably request.

 

Any financial statement or filing required to be furnished pursuant to Section
8.01(a), Section 8.01(b) or Section 8.01(g) shall be deemed to have been
furnished on the date on which the Borrower has notified the Administrative
Agent that the Parent or the Borrower has filed such financial statement or
filing with either (i) the Securities and Exchange Commission and such financial
statement is available on the EDGAR website at www.sec.gov or (ii) the Canadian
Securities Administrators and such financial statement is available on the SEDAR
website at www.sedar.com. Notwithstanding the foregoing, if the Administrative
Agent requests the Borrower to furnish paper copies of any such financial
statement or filing, the Borrower shall deliver such paper copies to the
Administrative Agent until the Administrative Agent gives written notice to
cease delivering such paper copies.

 

Section 8.02         Notices of Material Events. The Parent will furnish to the
Administrative Agent and each Lender prompt written notice after a Responsible
Officer of the Parent or of the Borrower obtains knowledge of any of the
following:

 

(a)          the occurrence of any Default;

 

(b)          the filing or commencement of, or the threat in writing of, any
action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against or affecting the Parent or any
Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders) that, in either
case, if adversely determined, could reasonably be expected to result in
liability in excess of $1,000,000, not fully covered by insurance, subject to
normal deductibles; and

 

(c)          any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

 

62

 

 

Section 8.03         Existence; Conduct of Business. The Parent will, and will
cause each other Credit Party to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.10.

 

Section 8.04         Payment of Obligations. The Parent will, and will cause
each Subsidiary to, pay its obligations, including Tax liabilities of the Parent
and all of its Subsidiaries before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) the Parent or such Subsidiary has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect or result in the
seizure or levy of any Property of the Parent or any Subsidiary.

 

Section 8.05         Performance of Obligations under Loan Documents. The
Borrower will pay the Notes and Colombian Notes according to the reading, tenor
and effect thereof, and the Parent will, and will cause each other Credit Party
to, do and perform every act and discharge all of the obligations to be
performed and discharged by them under the Loan Documents, including, without
limitation, this Agreement, at the time or times and in the manner specified.

 

Section 8.06         Operation and Maintenance of Properties. The Parent, at its
own expense, will, and will cause each other Credit Party to:

 

(a)          operate its Oil and Gas Properties and other material Properties or
cause such Oil and Gas Properties and other material Properties to be operated
in a careful and efficient manner in accordance with the practices of the
industry and in compliance with all applicable contracts and agreements and in
compliance with all Governmental Requirements, including, without limitation,
applicable pro ration requirements and Environmental Laws, and all applicable
laws, rules and regulations of every other Governmental Authority from time to
time constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.

 

(b)          keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material Oil and Gas Properties and
other material Properties, including, without limitation, all equipment,
machinery and facilities.

 

(c)          promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.

 

(d)          promptly perform or make reasonable and customary efforts to cause
to be performed, in accordance with industry standards, the obligations required
by each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties.

 

63

 

 

(e)          to the extent a Credit Party is not the operator of any Property,
the Parent shall use reasonable efforts to cause the operator to comply with
this Section 8.06.

 

Section 8.07         Insurance. The Parent will, and will cause each Subsidiary
to, maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations. The loss payable clauses or provisions in said insurance
policy or policies insuring any of the Collateral shall be endorsed in favor of
and made payable to the Administrative Agent as its interests may appear and
such policies shall name the Administrative Agent and the Lenders as “additional
insureds” and provide that the insurer will endeavor to give at least 30 days
prior notice of any cancellation to the Administrative Agent.

 

Section 8.08         Books and Records; Inspection Rights. The Parent will, and
will cause each other Credit Party to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Parent will, and
will cause each other Credit Party to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its Properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.

 

Section 8.09         Compliance with Laws. The Parent will, and will cause each
Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except (other than with
respect to bribery and anti-corruption Governmental Requirements) where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

Section 8.10         Environmental Matters.

 

(a)          The Parent shall at its sole expense: (i) comply, and shall cause
its Properties and operations and each Subsidiary and each Subsidiary’s
Properties and operations to comply, with all applicable Environmental Laws, the
breach of which could be reasonably expected to have a Material Adverse Effect;
(ii) not Release or threaten to Release, and shall cause each Subsidiary not to
Release or threaten to Release, any Hazardous Material on, under, about or from
any of the Parent’s or its Subsidiaries’ Properties or any other property
offsite the Property to the extent caused by the Parent’s or any of its
Subsidiaries’ operations except in compliance with applicable Environmental
Laws, the Release or threatened Release of which could reasonably be expected to
have a Material Adverse Effect; (iii) timely obtain or file, and shall cause
each Subsidiary to timely obtain or file, all Environmental Permits, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Parent’s or its Subsidiaries’
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the “Remedial Work”) in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future Release or threatened Release of any Hazardous Material on, under, about
or from any of the Parent’s or its Subsidiaries’ Properties, which failure to
commence and diligently prosecute to completion could reasonably be expected to
have a Material Adverse Effect; (v) conduct, and cause its Subsidiaries to
conduct, their respective operations and businesses in a manner that will not
expose any Property or Person to Hazardous Materials that could reasonably be
expected to form the basis for a claim for damages or compensation; and (vi)
establish and implement, and shall cause each Subsidiary to establish and
implement, such procedures as may be necessary to continuously determine and
assure that the Parent’s and its Subsidiaries’ obligations under this Section
8.10(a) are timely and fully satisfied, which failure to establish and implement
could reasonably be expected to have a Material Adverse Effect.

 

64

 

  

(b)          The Parent will promptly, but in no event later than five days of
the occurrence thereof, notify the Administrative Agent and the Lenders in
writing of any threatened action, investigation or inquiry by any Governmental
Authority or any threatened demand or lawsuit by any Person against the Parent
or any Subsidiary or any of their Properties of which the Parent has knowledge
in connection with any Environmental Laws if the Parent could reasonably
anticipate that such action will result in liability (whether individually or in
the aggregate) in excess of $2,000,000, not fully covered by insurance, subject
to normal deductibles.

 

Section 8.11         Further Assurances.

 

(a)          The Parent at its sole expense will, and will cause each other
Credit Party to, promptly execute and deliver to the Administrative Agent all
such other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of any Credit Party, as the case
may be, in the Loan Documents, including the Notes and the Colombian Notes, or
to further evidence and more fully describe the Collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.

 

(b)          The Parent and the Borrower each hereby authorizes the
Administrative Agent to file one or more financing or continuation statements
(or the equivalent thereof), and amendments thereto, relative to all or any part
of the Mortgaged Property without the signature of any Credit Party where
permitted by law. A carbon, photographic or other reproduction of the Security
Instruments or any financing statement covering the Mortgaged Property or any
part thereof shall be sufficient as a financing statement where permitted by
law.

 

Section 8.12         Reserve Reports.

 

(a)          On or before March 1 and September 1 of each year, commencing
September 1, 2013, the Borrower shall furnish to the Administrative Agent and
the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Credit
Parties as of the immediately preceding December 31 and July 1. The Reserve
Report as of December 31 of each year shall be prepared by one or more Approved
Petroleum Engineers, and the July 1 Reserve Report of each year shall be
prepared by or under the supervision of the chief engineer of the Borrower or
the Parent who shall certify such Reserve Report to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately
preceding December 31 Reserve Report.

 

(b)          In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of the Borrower or the Parent who
shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
December 31 Reserve Report. For any Interim Redetermination requested by the
Administrative Agent or the Borrower pursuant to Section 2.07(b), the Borrower
shall provide such Reserve Report with an “as of” date as required by the
Administrative Agent as soon as possible, but in any event no later than thirty
(30) days following the receipt of such request.

 

65

 

 

(c)          With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or the other
Credit Parties owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments with respect to its Oil and Gas Properties evaluated in
such Reserve Report which would require any Credit Party to deliver Hydrocarbons
either generally or produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor, (iv) none of
their Oil and Gas Properties have been sold since the date of the last Borrowing
Base determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such detail
as reasonably required by the Administrative Agent, (v) each Offtaker has
executed instruction letters pursuant to which it has agreed to make payments
under each Offtake Agreement to which it is a party to the relevant Collection
Account as required by Section 8.14(d), (vi) attached to the certificate is a
true and complete list of (A) all Persons to whom the Credit Parties sell crude
oil and any other Hydrocarbons and (B) all contracts for the purchase and sale
of crude oil and any other Hydrocarbons to which any Credit Party is a party
(including, without limitation, each Offtake Agreement), (vii) attached thereto
is a schedule of the Oil and Gas Properties evaluated by such Reserve Report
that are included in the Borrowing Base, and (viii) attached thereto is a
schedule of the Oil and Gas Properties evaluated by such Reserve Report that are
subject to Security Instruments in favor of the Administrative Agent and
demonstrating the percentage of the total proved value of the Oil and Gas
Properties that the value of such Oil and Gas Properties represent.

 

Section 8.13         Title Defects. The Parent or the Borrower shall, promptly
upon becoming aware of the existence of any title defect or any Lien (other than
Excepted Liens) affecting any Oil and Gas Properties (including any Colombian
Hydrocarbon Property) of any Credit Party which has been given value in the most
recent Reserve Report, give the Administrative Agent prompt written notice of
such title defect or Lien, and in such case, the Parent shall, or shall cause
the applicable Credit Party to, undertake to take all steps necessary to cure
such title defect or discharge such Lien; provided that if the applicable Credit
Party does not cure such title defect or discharge such Lien to the reasonable
satisfaction of the Administrative Agent within sixty (60) days following the
earlier of (a) the date on which the Parent or the Borrower shall have given the
notice referred to in this Section, (b) the date a Responsible Officer of the
Parent or the Borrower has become aware of such title defect or Lien and (c) the
date that the Administrative Agent has notified the Parent or the Borrower of
such title defect or Lien, then the Administrative Agent and the Required
Lenders may 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 Interests in the most recent Borrowing Base.

 

Section 8.14         Guaranty; Collateral.

 

(a)          Guaranty. The Parent shall guarantee, and the Parent shall cause
(i) each Material Subsidiary, (ii) each Subsidiary that directly owns any Equity
Interests in the Borrower or a Material Subsidiary, and (iii) each Subsidiary
that guarantees any Senior Debt, to guarantee, within three (3) days of such
Person becoming a Material Subsidiary or Subsidiary (as applicable), the
Indebtedness pursuant to the Guaranty Agreement (by supplement, joinder or
otherwise) and/or one or more other guaranty agreements on terms satisfactory in
form and substance to the Administrative Agent; provided that once a Person is a
Guarantor hereunder, such Person shall always be a Guarantor hereunder even if
such Person ceases to otherwise meet the foregoing requirements of becoming a
Guarantor.

 

66

 

 

(b)          Liens and Material Documents. The Parent shall, and shall cause
each other Credit Party to (and with respect to any Person that becomes a
Subsidiary Guarantor after the Effective Date, within three (3) days of such
Person becoming a Subsidiary Guarantor), grant to the Administrative Agent for
the benefit of the Secured Parties to secure the Indebtedness (i) on or prior to
the date that such Credit Party enters into any Swap Agreement or Offtake
Agreement, a first priority, perfected Lien on all of its right, title and
interest in and to such Swap Agreement or Offtake Agreement (but in the case of
an Offtake Agreement, only if the Administrative Agent determines in its sole
discretion that obtaining such Lien is practicable under the circumstances and
the benefits of doing so outweighs the burdens of doing so), and (ii) a first
priority, perfected Lien on all of its right, title and interest in and to such
Credit Party’s proved Oil and Gas Properties (including, without limitation, in
the economic rights in each Concession Agreement to which it is a party),
material personal property related thereto, and the following personal property
within the meaning of the UCC (and, in other jurisdictions not subject to the
UCC, similar property): Accounts; all Chattel Paper (whether Tangible Chattel
Paper or Electronic Chattel Paper); the Collection Accounts; all General
Intangibles (including, without limitation, all rights under insurance
contracts, rights to insurance proceeds and all proceeds of insurance); all
Instruments (including, without limitation, all Pledged Notes); all
Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a
writing); all books and records pertaining to the foregoing; and to the extent
not otherwise included, all Proceeds, Supporting Obligations and products of any
and all of the foregoing and all collateral security and guarantees given by any
Person with respect to any of the foregoing; in each case pursuant to one or
more Security Instruments on terms satisfactory in form and substance to the
Administrative Agent. In connection therewith, on or prior to the execution and
delivery by any Credit Party of any Swap Agreement or Offtake Agreement, the
Parent shall, and shall cause such Credit Party to, deliver to the
Administrative Agent a duly executed agreement of the counterparty to such Swap
Agreement or the Offtaker under such Offtake Agreement (and in either case, any
other Person that is obligated (whether contingently or otherwise) to make
payments thereunder), as applicable, in form and substance satisfactory to the
Administrative Agent, pursuant to which such Person shall agree to make all
payments under such Swap Agreement and Offtake Agreement to the relevant
Collection Account.

 

(c)          Pledge of Equity Interests. The Parent shall, and shall cause its
Subsidiaries to, pledge all of the Equity Interests in the Borrower and each
Subsidiary Guarantor (and with respect to any Person that becomes a Subsidiary
Guarantor after the Effective Date, within three (3) days of such Person
becoming a Subsidiary Guarantor), pursuant to one or more Security Instruments
on terms satisfactory in form and substance to the Administrative Agent.

 

(d)          Collection Accounts. The Parent shall, and shall cause each other
Credit Party to:

 

(i)          deposit or cause to be deposited directly into one or more
Collection Accounts in US Dollars or such other currency as the Majority Lenders
may approve in their reasonable discretion, all Dedicated Cash Receipts; and

 

(ii)         grant a first priority, perfected Lien to the Administrative Agent
for the benefit of the Secured Parties on all of its right, title and interest
in and to each Collection Account established in the name of such Credit Party
pursuant to one or more Deposit Account Control Agreements and/or one or more
other Security Instruments on terms satisfactory in form and substance to the
Administrative Agent.

 

67

 

 

(e)          Other Actions. In addition to the requirements of subsections (a)
through (d) above, the Parent shall, and shall cause each other Credit Party to,
(i) execute and deliver such other additional Security Instruments as may be
necessary or advisable in the reasonable opinion of the Administrative Agent in
connection therewith, (ii) execute and deliver such other closing documents,
certificates and legal opinions as shall be required by the Security
Instruments, by Governmental Requirements or as may be reasonably requested by
the Administrative Agent in connection therewith (including, the delivery of
original stock certificates evidencing the Equity Interests of the Borrower or a
Subsidiary Guarantor, together with appropriate undated stock powers for each
certificate duly executed in blank by the registered owner thereof), and (iii)
take all other action reasonably requested by the Administrative Agent,
including, without limitation, the filing of appropriate financing statements
(or the equivalent thereof) under the provisions of the Uniform Commercial Code,
applicable foreign, domestic or local laws, rules or regulations in each of the
offices where such filing is necessary or appropriate.

 

(f)          Notwithstanding the foregoing, the Administrative Agent may waive
any obligation of a Credit Party to grant a Lien on any property or to provide
any item of collateral pursuant to this Section 8.14 if in the sole judgment of
the Administrative Agent the cost or other consequences of granting a Lien on
such property or providing such collateral shall be excessive in view of the
benefits to be obtained by the Lenders therefrom.

  

Section 8.15         Unrestricted Subsidiaries. The Parent shall cause each
Unrestricted Subsidiary to:

 

(a)          maintain its own separate books and records and bank accounts,
which are and will be, in each case, separate and apart from those of any other
Person;

 

(b)          be, and at all times hold itself out to the public as, a legal
entity separate and distinct from any other Person, maintain and utilize
separate invoices and checks bearing its own name and otherwise conduct its own
business and own its own assets and correct any known misunderstanding regarding
its separate identity;

 

(c)          refrain from commingling its funds or other assets with those of
any other Person;

 

(d)          refrain from maintaining its assets in such a manner that would
make it costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person; and

 

(e)          observe all corporate formalities.

 

Article IX
Negative Covenants

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Parent and the Borrower each covenants and agrees with the
Lenders that:

 

Section 9.01         Financial Covenants.

 

(a)          Ratio of Total Debt to EBITDAX. The Parent will not, at any time,
permit the ratio of Total Debt as of such time to EBITDAX for the four fiscal
quarters ending on the last day of the fiscal quarter immediately preceding the
date of determination for which financial statements have been delivered to the
Administrative Agent hereunder to be greater than 3.00 to 1.0.

 

68

 

 

(b)          Current Ratio. The Parent will not permit, as of the last day of
any fiscal quarter, the ratio of (i) consolidated current assets (including the
unused amount of the total Commitments, but excluding non-cash assets under ASC
Topic 815) to (ii) consolidated current liabilities (excluding non-cash
obligations under ASC Topic 815 and current maturities under this Agreement) to
be less than 1.0 to 1.0.

 

Section 9.02         Debt. The Parent will not, and will not permit any
Subsidiary to, incur, create, assume or suffer to exist any Debt, except:

 

(a)          the Loans or other Indebtedness arising under the Loan Documents or
any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.

 

(b)          Debt of the Parent and the Subsidiaries existing on the date hereof
that is reflected in Schedule 9.02, and any refinancings, refundings, renewals
or extensions thereof (without increasing, or shortening the maturity of, the
principal amount thereof).

 

(c)          Debt under Capital Leases not to exceed $5,000,000.

 

(d)         Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of its Oil and Gas
Properties.

 

(e)          intercompany Debt (i) between Credit Parties, (ii) between
Unrestricted Subsidiaries, (iii) owed by Credit Parties to Unrestricted
Subsidiaries or (iv) owed by Unrestricted Subsidiaries to Credit Parties to the
extent permitted by Section 9.05(g)(ii); provided that such Debt is not held,
assigned, transferred, negotiated or pledged to any Person other than the Parent
or one of its Wholly-Owned Subsidiaries; and provided further, that any such
Debt owed by a Credit Party shall be subordinated to the Indebtedness on terms
satisfactory to the Administrative Agent.

 

(f)          endorsements of negotiable instruments for collection in the
ordinary course of business.

 

(g)          Senior Debt incurred by the Parent or any other Credit Party, and
any guarantees thereof, the principal amount of which does not exceed
$600,000,000 in the aggregate at any one time outstanding; provided that: (i)
the Borrower shall have complied with Section 8.01(s); (ii) both before and
immediately after giving effect to the incurrence of any such Senior Debt, no
Default, Event of Default or Borrowing Base Deficiency exists or would exist
(after giving effect to any concurrent repayment of Debt with the proceeds of
such incurrence, if any); (iii) the Parent is in Pro Forma Compliance after
giving effect to the incurrence of any such Debt and the transactions
contemplated thereby (and the Parent shall deliver to the Administrative Agent
on the date of incurrence thereof a certificate of a Financial Officer setting
forth reasonably detailed calculations demonstrating Pro Forma Compliance); (iv)
such Senior Debt does not have any scheduled principal amortization prior to the
date which is one hundred eighty days after the Maturity Date (as in effect on
the date of the incurrence of such Senior Debt); (v) such Senior Debt does not
mature sooner than the date which is one hundred eighty days after the Maturity
Date (as in effect on the date of the incurrence of such Senior Debt); (vi) no
Subsidiary is required to guarantee such Senior Debt unless such Subsidiary has
guaranteed the Indebtedness pursuant to the Guaranty Agreement (by supplement,
joinder or otherwise) and/or one or more other guaranty agreements on terms
satisfactory in form and substance to the Administrative Agent; (vii) if such
Senior Debt is senior subordinated Debt, such Senior Debt is expressly
subordinate to the payment in full of all of the Indebtedness on terms and
conditions reasonably satisfactory to the Administrative Agent; (viii) such
Senior Debt and any guarantees thereof are on terms, taken as a whole, no more
restrictive on the Parent or any other Credit Party than the terms and
conditions of this Agreement, taken as a whole, as reasonably determined by the
Board of Directors of the Parent acting in good faith; and (ix) such Senior Debt
does not have any mandatory prepayment or mandatory redemption provisions (other
than customary change of control or asset sale tender offer provisions) that
would require a mandatory prepayment or redemption in priority to the
Indebtedness.

 

69

 

 

(h)          Debt of any Credit Party under a Colombian Peso denominated
unsecured credit facility with a commercial bank or a syndicate of commercial
banks in an aggregate principal amount not to exceed the US Dollar equivalent of
$30,000,000 (determined as of the closing date of such Colombian Peso
denominated unsecured credit facility based on a prevailing exchange rate
selected by the Administrative Agent in its reasonable discretion); provided
that: (i) such Debt is unsecured; (ii) such Debt does not have any restriction
on the ability of the Borrower or any Credit Party to amend, supplement or
modify this Agreement or the other Loan Documents, (iii) such Debt does not have
any restrictions on the ability of the Borrower or any other Credit Party to
guarantee the Indebtedness or pledge assets as collateral security for the
Indebtedness, and (iv) the credit agreement governing such Debt is, taken as a
whole, no more restrictive on the Parent and the Subsidiaries than the terms and
conditions of this Agreement, taken as a whole, as reasonably determined by the
Board of Directors of the Parent acting in good faith, and the terms and
conditions of such Debt shall not conflict with the terms and conditions of this
Agreement or any other Loan Document.

 

Section 9.03         Liens. The Parent will not, and will not permit any other
Credit Party to, create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except:

 

(a)          Liens securing the payment of any Indebtedness.

 

(b)          Excepted Liens.

 

(c)          Liens securing Capital Leases permitted by Section 9.02(c) but only
on the Property under lease.

 

(d)          Liens on Property not constituting Collateral securing Debt and not
otherwise permitted by the foregoing clauses of this Section 9.03; provided that
the aggregate principal or face amount of all Debt secured under this Section
9.03(d) shall not exceed $1,000,000 at any time.

 

(e)          Liens on Property of a Person (excluding any Property given credit
in the Borrowing Base) existing at the time such Person is acquired by the
Parent or any Subsidiary to the extent such acquisition constitutes a Permitted
Acquisition (and not created in anticipation or contemplation thereof); provided
that such Liens do not extend to Property not subject to such Liens at the time
of acquisition (other than improvements thereon).

 

Section 9.04         Restricted Payments; Repayment of Senior Debt; Amendments
to Terms of Senior Debt.

 

(a)          Restricted Payments. The Parent will not, and will not permit any
other Credit Party to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, return any capital to its stockholders or
make any distribution of its Property to its Equity Interest holders, except (i)
any Credit Party may declare and pay dividends with respect to its Equity
Interests payable solely in additional shares of its Equity Interests (other
than Disqualified Capital Stock); (ii) any Credit Party (other than the Parent)
may declare and pay dividends ratably with respect to its Equity Interests to
the direct holders of its Equity Interests that are other Credit Parties; and
(iii) the Parent may make Restricted Payments pursuant to and in accordance with
stock option plans or other benefit plans for management or employees of the
Parent and its Subsidiaries.

 

70

 

 

(b)          Repayment of Senior Debt; Amendment to Terms of Senior Debt. The
Parent will not, and will not permit any of its Subsidiaries to, prior to the
date that is one hundred eighty (180) days after the Maturity Date: (i) call,
make or offer to make any optional or voluntary Redemption of or otherwise
optionally or voluntarily Redeem (whether in whole or in part) any Senior Debt;
(ii) amend, modify, waive or otherwise change, consent or agree to any
amendment, modification, waiver or other change to, any of the terms of the
Senior Debt or any Senior Debt Document if (A) the effect thereof would be to
shorten its maturity or average life, in either case to a date that is prior to
one hundred eighty (180) days after the Maturity Date, or increase the amount of
any payment of principal thereof or increase the rate or shorten any period for
payment of interest thereon or (B) such action requires the payment of a consent
fee (howsoever described); provided that the foregoing shall not prohibit the
execution of supplemental indentures associated with the incurrence of
additional Senior Debt to the extent permitted by Section 9.02(g) or the
execution of supplemental indentures to add guarantors if required by the terms
of any Senior Debt Document; provided such Person complies with Section 8.14(a)
and becomes a Guarantor or (C) with respect to any Senior Debt that is
subordinated to the Indebtedness or any other Debt, designate any Debt (other
than obligations of the Parent and the Subsidiaries pursuant to any other Senior
Debt that is not so subordinated or the Loan Documents) as “Specified Senior
Indebtedness” or “Specified Guarantor Senior Indebtedness” or give any such
other Debt any other similar designation for the purposes of any Senior Debt
Document related to Senior Debt that is subordinated to the Indebtedness or any
other Debt.

 

Section 9.05         Investments, Loans and Advances. The Parent will not, and
will not permit any other Credit Party to, make or permit to remain outstanding
any Investments in or to any Person, except that the foregoing restriction shall
not apply to:

 

(a)          Investments reflected in the Financial Statements or which are
disclosed to the Lenders in Schedule 9.05.

 

(b)          accounts receivable arising in the ordinary course of business.

 

(c)          direct obligations of the United States, Canada, or any agency
thereof, or obligations guaranteed by the United States, Canada, or any agency
thereof, in each case maturing within one year from the date of creation
thereof.

 

(d)          commercial paper maturing within one year from the date of creation
thereof rated no lower than A2 or P2 by S&P, Moody’s, Dominion Bond Rating
Service Limited or Canada Bond Rating Service.

 

(e)          deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States or Canada of any other bank or trust company which
is organized under the laws of the United States or any state thereof or Canada
or any province thereof, has capital, surplus and undivided profits aggregating
at least $100,000,000 (as of the date of such bank or trust company’s most
recent financial reports) and has a short term deposit rating of no lower than
A2 or P2, as such rating is set forth from time to time, by S&P, Moody’s,
Dominion Bond Rating Service Limited or Canada Bond Rating Service.

 

71

 

 

(f)          deposits in money market funds investing exclusively in Investments
described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).

 

(g)          (i) Investments made by any Credit Party in or to any other Credit
Party; and (ii) Investments made by any Credit Party in or to Unrestricted
Subsidiaries not to exceed $200,000,000 in the aggregate at any time
outstanding; provided that, with respect to this clause (ii), (A) both before
and immediately after giving effect to any such Investment, no Default shall
exist, and (B) after giving effect to any such Investment, the Borrowing Base
Utilization Percentage shall not exceed ninety percent (90%).

 

(h)         subject to the limits in Section 9.06(a), Investments (including,
without limitation, capital contributions) in general or limited partnerships or
other types of entities (each a “venture”) entered into by a Credit Party with
others in the ordinary course of business; provided that (i) any such venture is
engaged exclusively in oil and gas exploration, development, production,
processing and related activities, including transportation, (ii) the interest
in such venture is acquired in the ordinary course of business and on fair and
reasonable terms and (iii) such venture interests acquired and capital
contributions made (valued as of the date such interest was acquired or the
contribution made) do not exceed, in the aggregate at any time outstanding an
amount equal to $2,000,000.

 

(i)           Investments in direct ownership interests in additional Oil and
Gas Properties and gas gathering systems related thereto or related to farm-out,
farm-in, joint operating, joint venture or area of mutual interest agreements,
gathering systems, pipelines or other similar arrangements which are usual and
customary in the oil and gas exploration and production business; provided that
no Default shall have occurred and be continuing or would result therefrom.

 

(j)           Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 9.05
owing to any Credit Party as a result of a bankruptcy or other insolvency
proceeding of the obligor in respect of such debts or upon the enforcement of
any Lien in favor of any Credit Party; provided that the Parent shall give the
Administrative Agent prompt written notice in the event that the aggregate
amount of all Investments held at any one time under this Section 9.05(j)
exceeds $1,000,000.

 

(k)          other Investments not to exceed $50,000,000 in the aggregate at any
time outstanding; provided that: (ii) both before and after giving effect to any
such Investment, no Default exists, and (ii) after giving effect to any such
Investment, the Borrowing Base Utilization Percentage shall not exceed ninety
percent (90%).

 

(l)           Investments made with all or a portion of the Available Amount on
the date that a Responsible officer of the Parent elects to apply all or a
portion thereof to this Section 9.05(l), such election to be specified in a
written notice of a Responsible Officer of the Parent calculating in reasonable
detail the amount of Available Amount immediately prior to such election and the
amount thereof elected to be so applied.

 

Section 9.06         Nature of Business; Investments by Unrestricted
Subsidiaries.

 

(a)          The Parent will not, and will not permit any Subsidiary to, allow
any material change to be made in the character of its business as an
independent oil and gas exploration and production company.

 

(b)          The Parent will not permit any Unrestricted Subsidiary to make
Investments in any Person except Investments (i) in Credit Parties or (ii)
reasonably related to the conduct of such Subsidiary’s business as an
independent oil and gas exploration and production company.

 

72

 

 

Section 9.07         Limitation on Leases. The Parent will not, and will not
permit any other Credit Party to, create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal but excluding Capital Leases and leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made by the Credit Parties pursuant to all such leases or
lease agreements, including, without limitation, any residual payments at the
end of any lease, to exceed $3,000,000 in any period of twelve consecutive
calendar months during the life of such leases.

 

Section 9.08         Proceeds of Notes. The Parent will not permit the proceeds
of the Notes to be used for any purpose other than those permitted by Section
7.19. Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Loan Documents to
violate Regulations T, U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Parent or the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.

 

Section 9.09         Sale or Discount of Receivables. Except for receivables
obtained by any Credit Party out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of business
or discounts granted to settle collection of accounts receivable or the sale of
defaulted accounts arising in the ordinary course of business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, the Parent will not, and will not permit any other Credit Party to,
discount or sell (with or without recourse) any of its notes receivable or
accounts receivable.

 

Section 9.10         Mergers, Etc. The Parent will not, and will not permit any
other Credit Party to, merge into or with or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its Property to any other
Person (whether now owned or hereafter acquired) (any such transaction, a
“consolidation”), or liquidate or dissolve; provided that, so long as no Default
then exists, or would exist after giving effect thereto, and both before and
after giving effect thereto, each Credit Party is in compliance with Section
8.14: (a) any Subsidiary Guarantor may participate in a consolidation with the
Borrower so long as the Borrower is the surviving Person or transferee, (b) any
Subsidiary Guarantor may participate in a consolidation with the Parent so long
as the Parent is the surviving Person or transferee, (c) any Subsidiary
Guarantor may participate in a consolidation with any Unrestricted Subsidiary so
long as the Subsidiary Guarantor is the surviving Person or transferee, and (d)
any Subsidiary Guarantor may participate in a consolidation with any other
Subsidiary Guarantor; provided that, in the case of clause (d), the surviving
Subsidiary Guarantor or transferee (the “Surviving Subsidiary Guarantor”) shall
either be organized in (i) the same jurisdiction as the Subsidiary Guarantor
that is not the surviving Subsidiary Guarantor or transferee (the “Non-Surviving
Subsidiary Guarantor”), (ii) the same jurisdiction as the Surviving Subsidiary
Guarantor if the Property of the Non-Surviving Subsidiary Guarantor has a de
minimus value or derives substantially all of its value from the jurisdiction in
which the Surviving Subsidiary Guarantor is organized, (iii) any state of the
United States of America or province of Canada, or (iv) such other jurisdiction
as approved by the Majority Lenders.

 

Section 9.11         Disposition of Properties. The Parent will not, and will
not permit any Subsidiary to, sell, assign, farm-out, convey or otherwise
dispose of or transfer (including, without limitation, as a result of a Casualty
Event) any Property (including, without limitation, any Equity Interests in any
Subsidiary Guarantor owing Oil and Gas Properties) except for:

 

73

 

 

(a)          the sale of Hydrocarbons in the ordinary course of business;

 

(b)          farmouts of undeveloped acreage to which no proved reserves are
attributable and assignments in connection with such farmouts;

 

(c)          the sale or transfer of equipment that is no longer necessary for
the business of the Parent or such Subsidiary or is replaced by equipment of at
least comparable value and use;

 

(d)          the sale or other disposition (including Casualty Events) of any
Oil and Gas Property or any interest therein or any Subsidiary Guarantor owning
Oil and Gas Properties; provided that (i) 100% of the consideration received in
respect of such sale or other disposition shall be cash, (ii) the consideration
received in respect of such sale or other disposition shall be equal to or
greater than the Fair Market Value of the Oil and Gas Property, interest therein
or Subsidiary Guarantor subject of such sale or other disposition (as reasonably
determined by the board of directors of the Parent and, if requested by the
Administrative Agent, the Parent shall deliver a certificate of a Responsible
Officer of the Parent certifying to that effect), (iii) if the Oil and Gas
Property, interest therein or Subsidiary Guarantor owning Oil and Gas Properties
subject of such sale or other disposition has a Fair Market Value in excess of
five percent (5%) of the then effective Borrowing Base, the Borrowing Base shall
be reduced, effective immediately upon such sale or disposition, by an amount
equal to the value, if any, assigned such Property in the then effective
Borrowing Base, as determined by the Administrative Agent and (iv) if any such
sale or other disposition is of a Subsidiary Guarantor owning Oil and Gas
Properties, such sale or other disposition shall include all the Equity
Interests in such Subsidiary Guarantor;

 

(e)          sales and other dispositions of Properties to which the exceptions
pursuant to Section 9.11(a) to (d) do not apply having a Fair Market Value not
to exceed $1,000,000 during any 6-month period;

 

(f)          any Unrestricted Subsidiary may sell, transfer, lease or otherwise
dispose of any of its Property other than Equity Interests (whether owned or
held by it directly or indirectly) in any Credit Party except as otherwise
expressly permitted by Section 9.11(d);

 

(g)          sales, transfers, leases or dispositions of Property permitted by
Section 9.10;

 

(h)          any Credit Party may transfer or otherwise dispose of any of its
Property to any other Credit Party; provided that both before and after giving
effect to such transfer or disposition, (A) no Default or Event of Default
exists or would exist and (B) the Credit Parties are in compliance with Sections
8.14(a) and (b) as of the date of such transfer or disposition without giving
effect to the three day grace period specified in such Sections;

 

(i)           any Credit Party may transfer Property (other than Oil and Gas
Properties or interests therein or any Equity Interests in any Credit Party) to
any Unrestricted Subsidiary to the extent such transfer constitutes an
Investment permitted by Section 9.05(g)(ii); provided that both before and after
giving effect to such transfer or disposition, no Default or Event of Default
exists or would exist;

 

(j)           farmouts of the Farmout Concession Agreements and assignments in
connection with such farmouts; provided that a farmout of any Farmout Concession
Agreement shall not exceed a 50% interest in each such Farmout Concession
Agreement; and

 

(k)          the sale of any Oil and Gas Properties related to the Petrolifera
Excluded Concession Agreements.

 

74

 

 

(l)           the sale of other disposition of Property of a Person (excluding
any Property given credit in the Borrowing Base) existing at the time such
Person is acquired by the Parent or any Subsidiary to the extent such
acquisition is consummated after the Effective Date and constitutes a Permitted
Acquisition; provided that (i) not less than 75% of the consideration received
in respect of such sale or other disposition shall be cash or Cash Equivalents
or any combination thereof, (ii) the consideration received in respect of such
sale or other disposition shall be not less than the Fair Market Value of the
Property subject of such sale or other disposition (as reasonably determined by
the board of directors of the Parent and, if requested by the Administrative
Agent, the Parent shall deliver a certificate of a Responsible Officer of the
Parent certifying to that effect), (iii) such sale or disposition must be
consummated no later than the date that is the one year anniversary of such
acquisition, and (iv) if any such sale or other disposition is of Equity
Interests in a Subsidiary owning Oil and Gas Properties, such sale or other
disposition shall include all the Equity Interests in such Subsidiary.

 

Section 9.12         Environmental Matters. The Parent will not, and will not
permit any Subsidiary to, cause or permit any of its Property to be in violation
of, or do anything or permit anything to be done which will subject any such
Property to a Release or threatened Release of Hazardous Materials, exposure to
any Hazardous Materials, or to any Remedial Work under any Environmental Laws,
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to such Property where
such violations, Release or threatened Release, exposure, or Remedial Work could
reasonably be expected to have a Material Adverse Effect.

 

Section 9.13         Transactions with Affiliates. The Parent will not, and will
not permit any other Credit Party to, enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate (other than the Borrower or any
Subsidiary Guarantor) unless such transactions are otherwise permitted under
this Agreement and are upon fair and reasonable terms no less favorable to it
than it would obtain in a comparable arm’s length transaction with a Person not
an Affiliate.

 

Section 9.14         Subsidiaries. The Parent will not, and will not permit any
Subsidiary to, create or acquire any additional Subsidiary unless the Parent
gives prior written notice to the Administrative Agent of such creation or
acquisition and complies with Section 8.14. The Parent shall not, and shall not
permit any Subsidiary to, sell, assign or otherwise dispose of any Equity
Interests in any Subsidiary Guarantor except in compliance with Section 9.11(d).

 

Section 9.15         Restrictive Agreements. The Parent will not, and will not
permit any other Credit Party to, create, incur, assume or suffer to exist any
contract, agreement or understanding which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of its Property
in favor of the Administrative Agent and the Lenders, or restricts any Credit
Party (other than the Parent) from paying dividends or making any other
distributions in respect of its Equity Interests to the Parent or any other
Credit Party, or restricts the Parent or any other Credit Party from making
loans or advances, or transferring any Property, to the Parent or any other
Credit Party, or which requires the consent of or notice to other Persons in
connection therewith, other than (i) any such restrictions imposed by law or by
the Loan Documents, (ii) restrictions with respect to secured Debt permitted
under Sections 9.02 and 9.03 to the extent such restrictions restrict the
transfer of the collateral provided under or in connection with such Debt, (iii)
restrictions that restrict in a customary manner the subletting, assignment or
transfer of any Property that is subject to a lease, farm-in agreement or
farm-out agreement, license or similar contract, or the assignment or transfer
of any such lease, license or other contract, (iv) restrictions pursuant to
customary provisions restricting dispositions of real property interests set
forth in any reciprocal easement agreement of the Borrower or any of its
Subsidiaries and (v) restrictions with respect to the disposition or
distribution of Property in operating agreements, joint venture agreements,
development agreements, area of mutual interest agreements and other agreements
that are customary in the Hydrocarbon business and entered into in the ordinary
course of business.

 

75

 

 

Section 9.16         Swap Agreements. The Parent will not, and will not permit
any Subsidiary to, enter into any Swap Agreements with any Person other than (a)
Swap Agreements entered into by the Parent or the Borrower in respect of
commodities (i) with an Approved Counterparty and (ii) the notional volumes for
which (when aggregated with other commodity Swap Agreements then in effect other
than basis differential swaps on volumes already hedged pursuant to other Swap
Agreements) do not exceed, as of the date such Swap Agreement is executed, 85%
of the reasonably anticipated projected production from proved, developed,
producing Oil and Gas Properties of the Parent and the Subsidiaries for each
month during the period during which such Swap Agreement is in effect for each
of crude oil and natural gas, calculated separately; (b) Swap Agreements entered
into by the Parent or the Borrower in respect of interest rates with an Approved
Counterparty, as follows: (i) Swap Agreements effectively converting interest
rates from fixed to floating, the notional amounts of which (when aggregated
with all other Swap Agreements of the Parent and the Borrower then in effect
effectively converting interest rates from fixed to floating) do not exceed 50%
of the then outstanding principal amount of the Parent’s or Borrower’s Debt for
borrowed money which bears interest at a fixed rate and (ii) Swap Agreements
entered into by the Parent or the Borrower effectively converting interest rates
from floating to fixed, the notional amounts of which (when aggregated with all
other Swap Agreements of the Parent and the Borrower then in effect effectively
converting interest rates from floating to fixed) do not exceed 100% of the then
outstanding principal amount of the Parent’s Debt for borrowed money which bears
interest at a floating rate; and (c) Swap Agreements in respect of foreign
exchange and currency option transactions with an Approved Counterparty
providing for (1) the purchase by the Borrower or any Guarantor of an agreed
amount of Colombian Pesos in exchange for the sale by the Borrower or such
Guarantor of an agreed amount of US Dollars (or entitling the Borrower or such
Guarantor to purchase at a strike price a specified quantity of Colombian Pesos
and to sell at the strike price a specified quantity of US Dollars) and (2) the
purchase by the Borrower or any Guarantor of an agreed amount of US Dollars in
exchange for the sale by the Borrower or such Guarantor of an agreed amount of
Colombian Pesos (or entitling the Borrower or such Guarantor to purchase at a
strike price a specified quantity of US Dollars and to sell at the strike price
a specified quantity of Colombian Pesos), in each case, to provide protection
against fluctuations in currency values for the purpose of making Tax payments
by or on behalf of itself or any Subsidiary in Colombia; provided that all such
Swap Agreements shall be entered into in the ordinary course of business and
consistent with prudent business practice and not for speculative purposes. In
no event shall any Swap Agreement contain any requirement, agreement or covenant
for the Parent or any Subsidiary to post collateral or margin to secure
obligations under such Swap Agreement or to cover market exposures and neither
the Parent nor the Borrower will enter into any Swap Agreement unless
concurrently therewith, the Parent or the Borrower (as applicable) shall have
delivered to the Administrative Agent a duly executed consent and agreement of
the counterparty to such Swap Agreement in form and substance satisfactory to
the Administrative Agent, pursuant to which such counterparty shall (i) consent
to the grant of Liens in all of the Parent’s or the Borrower’s right, title and
interest in and to such Swap Agreement to secure the Indebtedness and (ii) agree
to make all payments under such Swap Agreement to the Collection Account.

 

Section 9.17         Material Documents. The Parent will not, and will not
permit any other Credit Party to, amend, modify, supplement, cancel or
terminate, or waive compliance with respect to, any Material Documents without
the prior written consent of the Majority Lenders (and, provided that the Parent
promptly furnishes to the Administrative Agent a copy of such amendment,
modification, supplement, cancellation, termination or waiver).

 

76

 

 

Section 9.18         Marketing Activities. The Parent will not, and will not
permit any other Credit Party to, enter into any contracts for the purchase and
sale of crude oil or any other Hydrocarbons other than Offtake Agreements.

 

Article X
Events of Default; Remedies

 

Section 10.01       Events of Default. One or more of the following events shall
constitute an “Event of Default”:

 

(a)          the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof, by acceleration or otherwise.

 

(b)          the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days.

 

(c)          any representation or warranty made or deemed made by or on behalf
of any Credit Party in or in connection with any Loan Document or any amendment
or modification of any Loan Document or waiver under such Loan Document, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect when made or deemed made.

 

(d)          any Credit Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 8.01(h), Section 8.01(i), Section
8.01(m), Section 8.02, Section 8.03, Section 8.13, Section 8.14, Section 8.15 or
in Article IX.

 

(e)          any Credit Party shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any other Loan
Document, and such failure shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent to the Borrower (which notice
will be given at the request of any Lender).

 

(f)           any Credit Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable.

 

(g)          any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, but in any event after the
expiration of any applicable grace period provided in the applicable agreement
or instrument under which such Material Indebtedness was created) the holder or
holders of any Material Indebtedness or any trustee or agent on its or their
behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or require any Credit Party to make an offer in
respect thereof; provided that this clause (g) shall not apply to any conversion
or exchange trigger that results in conversion or exchange of any convertible or
exchangeable debt securities into equity, as applicable.

 

77

 

 

(h)          an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Credit Party or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Credit
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered.

 

(i)          any Credit Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in Section 10.01(h), (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Credit Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing; or any
stockholder of the Parent or the Borrower shall make any request or take any
action for the purpose of calling a meeting of the stockholders of the Parent or
the Borrower to consider a resolution to dissolve and wind-up the Parent or the
Borrower’s affairs.

 

(j)           any Credit Party shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due.

 

(k)          (i) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 or (ii) any one or more non-monetary judgments
that have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, shall be rendered against any Credit Party
or any combination thereof and the same shall remain undischarged for a period
of 60 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or levy
upon any assets of the any Credit Party to enforce any such judgment.

 

(l)           the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against any Credit Party party thereto or shall be repudiated by any of them, or
cease to create a valid and perfected Lien of the priority required thereby on
any of the Collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or any Credit Party or any of their
Affiliates shall so state in writing.

 

(m)         any Governmental Authority shall (i) take any action to condemn,
seize, nationalize or appropriate any portion of the Property of any Credit
Party (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 Borrowing Base then in effect, or (ii) take
any action to renegotiate, materially modify or increase the rate of taxation or
the amount of royalties payable by any Credit Party and such renegotiation,
modification or increase could reasonably be expected to result in a Material
Adverse Effect.

 

(n)          any Credit Party defaults on any of its obligations under one or
more Concession Agreements relating to Oil and Gas Properties having a Fair
Market Value greater than $10,000,000, where the effect of such default is to
entitle a ANH or Ecopetrol, either immediately or with the giving of notice, but
in any event after the expiration of any applicable grace period provided in the
applicable Concession Agreement, to early terminate (declaración de caducidad)
such Concession Agreement(s), or to take any other course of action with respect
thereto.

 

78

 

 

(o)          any Credit Party 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,
but in any event after the expiration of any applicable grace period provided in
the applicable Offtake Agreement, to terminate such Offtake Agreement, or to
take any other course of action with respect thereto.

 

(p)          a Change in Control shall occur.

 

Section 10.02       Remedies.

 

(a)          In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent, at
the request of the Majority Lenders, shall, by notice to the Borrower, take
either or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes, the Colombian Notes and the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Credit Parties accrued hereunder and under the Notes, the
Colombian Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in Section
2.08(i)), shall become due and payable immediately, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which are hereby waived by each Credit Party; and in case of
an Event of Default described in Section 10.01(h), Section 10.01(i) or Section
10.01(j), the Commitments shall automatically terminate and the Notes, the
Colombian Notes and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and the other obligations of the Credit
Parties accrued hereunder and under the Notes, the Colombian Notes and the other
Loan Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(i)), shall automatically
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Credit Parties.

 

Declaration of an Event of Default referred to in Section 10.01(h), Section
10.01(i) or Section 10.01(j) shall not: (1) prevent the commencement of a
proceeding under Law 1116 of 2006 (“Law 1116”) or any Colombian Branch or the
Borrower, whether in a voluntary or involuntary manner; (2) be construed to mean
that the purpose of this Section is to prevent or create obstacles to prevent,
directly or indirectly, that proceedings be commenced in Colombia under Law 1116
with respect to any Colombian Branch or the Borrower; (3) prohibit any Colombian
Branch or the Borrower from negotiating or entering into a restructuring
agreement under Law 1116; or (4) impose any restrictions or prohibitions, or
unfavorable effects “efectos desfavorables” upon any Colombian Branch or the
Borrower for the negotiation or execution of a restructuring agreement under Law
1116. The rights of the Lenders under this Section may not be exercised in
connection with Section 10.01(h) and Section 10.01(i) if and for so long as a
proceeding is commenced or a petition is filed in Colombia to commence a
proceeding under Law 1116 with respect to any Colombian Branch or the Borrower,
whether in a voluntary or involuntary manner or any Colombian Branch or the
Borrowers engage in negotiations to enter into, or enters into a restructuring
agreement in Colombia under Law 1116.

 

(b)          In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.

 

79

 

 

(c)          All proceeds realized from the liquidation or other disposition of
Collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied:

 

(i)          first, to payment or reimbursement of that portion of the
Indebtedness constituting fees, expenses and indemnities payable to the
Administrative Agent and the Global Coordinator in their capacities as such;

 

(ii)         second, pro rata to payment or reimbursement of that portion of the
Indebtedness constituting fees, expenses and indemnities payable to the Lenders;

 

(iii)        third, pro rata to payment of accrued interest on the Loans;

 

(iv)        fourth, pro rata to payment of (A) principal outstanding on the
Loans, (B) reimbursement obligations in respect of Letters of Credit pursuant to
Section 2.08(e) (and cash collateralization of LC Exposure hereunder), (C)
Secured Swap Obligations (other than Excluded Swap Obligations) owing to Secured
Swap Parties, and (D) Specified Cash Management Obligations owing to Secured
Cash Management Parties;

 

(v)         fifth, pro rata to any other Indebtedness; and

 

(vi)        sixth, any excess, after all of the Indebtedness shall have been
indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise
required by any Governmental Requirement.

 

Article XI
The Agents

 

Section 11.01       Appointment; Powers. Each of the Lenders and the Issuing
Bank hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto. The provisions of this Article are solely for
the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and
neither the Borrower nor any Guarantor shall have rights as a third party
beneficiary of any of such provisions.

 

Section 11.02       Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing (the use of the term “agent” herein and in the other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Credit Party that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in Article VI or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent
or as to those conditions precedent expressly required to be to the
Administrative Agent’s satisfaction, (vi) the existence, value, perfection or
priority of any collateral security or the financial or other condition of any
Credit Party or any other obligor or guarantor, or (vii) any failure by the
Borrower or any other Person (other than itself) to perform any of its
obligations hereunder or under any other Loan Document or the performance or
observance of any covenants, agreements or other terms or conditions set forth
herein or therein. For purposes of determining compliance with the conditions
specified in Article VI, each Lender shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
written notice from such Lender prior to the proposed closing date specifying
its objection thereto.

 

80

 

 

Section 11.03       Action by Administrative Agent. The Administrative Agent
shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise in writing as directed by the Majority Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) and in all cases the Administrative
Agent shall be fully justified in failing or refusing to act hereunder or under
any other Loan Documents unless it shall (a) receive written instructions from
the Majority Lenders or the Lenders, as applicable, (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02) specifying the action to be taken and (b) be
indemnified to its satisfaction by the Lenders against any and all liability and
expenses which may be incurred by it by reason of taking or continuing to take
any such action. The instructions as aforesaid and any action taken or failure
to act pursuant thereto by the Administrative Agent shall be binding on all of
the Lenders. If a Default has occurred and is continuing, then the
Administrative Agent shall take such action with respect to such Default as
shall be directed by the requisite Lenders in the written instructions (with
indemnities) described in this Section 11.03; 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 interests of the Lenders. In no event, however, shall the
Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law. If a Default has occurred and
is continuing, none of the Global Coordinator, the Syndication Agent or the
Documentation Agent shall have any obligation to perform any act in respect
thereof. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Majority Lenders or
the Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02), and otherwise
the Administrative Agent shall not be liable for any action taken or not 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 including its own ordinary negligence, except for its own
gross negligence or willful misconduct.

 

81

 

 

Section 11.04       Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute
the Administrative Agent’s record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

 

Section 11.05       Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this Article XI shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.

 

Section 11.06       Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
in this Section 11.06, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower, and the Administrative
Agent may be removed at any time with or without cause by the Majority Lenders.
Upon any such resignation or removal, the Majority Lenders shall have the right,
in consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation or removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article XI and Section 12.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

 

Section 11.07       Agents as Lenders. Each bank serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with any Credit Party or Affiliate thereof as if it were
not an Agent hereunder.

 

82

 

 

Section 11.08       No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Agents shall not be required to
keep themselves informed as to the performance or observance by any Credit Party
of this Agreement, the Loan Documents or any other document referred to or
provided for herein or to inspect the Properties or books of any Credit Party.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Administrative Agent hereunder,
no Agent or the Arranger shall have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Borrower (or any of its Affiliates) which may come
into the possession of such Agent or any of its Affiliates. In this regard, each
Lender acknowledges that Paul Hastings LLP is acting in this transaction as
special counsel to the Administrative Agent only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document. Each other party
hereto will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.

 

Section 11.09       Administrative Agent May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Credit Party, the Administrative Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)          to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 12.03) allowed in such judicial proceeding;
and

 

(b)          to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

83

 

 

Section 11.10       Withholding Tax. To the extent required by any applicable
law, the Administrative Agent may withhold from any payment to any Lender an
amount equivalent to any applicable withholding tax. Without limiting the
provisions of Section 5.03(a) or Section 5.03(c), each Lender and the Issuing
Bank shall, and does hereby, indemnify the Administrative Agent, and shall make
payable in respect thereof within 30 days after demand therefor, against any and
all Taxes and any and all related losses, claims, liabilities and expenses
(including fees, charges and disbursements of any counsel for the Administrative
Agent) incurred by or asserted against the Administrative Agent by the Internal
Revenue Service or any other Governmental Authority as a result of the failure
of the Administrative Agent to properly withhold tax from amounts paid to or for
the account of any Lender for any reason (including, without limitation, because
the appropriate form was not delivered or not property executed, or because such
Lender failed to notify the Administrative Agent of a change in circumstance
that rendered the exemption from, or reduction of withholding tax ineffective).
A certificate as to the amount of such payment or liability delivered to any
Lender or the Issuing Bank by the Administrative Agent shall be conclusive
absent manifest error. Each Lender and the Issuing Bank hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender or the Issuing Bank under this Agreement or any other Loan
Document against any amount due the Administrative Agent under this Section
11.10. The agreements in this Section 11.10 shall survive the resignation and/or
replacement of the Administrative Agent, any assignment of rights by, or the
replacement of, a Lender, the termination of the Commitments and the repayment,
satisfaction or discharge of all other Indebtedness.

 

Section 11.11       Authority of Administrative Agent to Release Collateral and
Liens.

 

(a)          Each Lender and the Issuing Bank hereby authorizes the
Administrative Agent to release any Collateral that is permitted to be sold or
released pursuant to the terms of the Loan Documents. Each Lender and the
Issuing Bank hereby authorizes the Administrative Agent to execute and deliver
to the Borrower, at the Borrower’s sole cost and expense, any and all releases
of Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of Section 9.11 or is otherwise authorized by the terms of the Loan Documents.

 

(b)          The grant of a security interest under the Security Instruments and
all of rights, powers and remedies in connection therewith shall remain in full
force and effect until the Administrative Agent has (i) retransferred and
delivered all Collateral in its possession to the relevant Credit Parties and
(ii) executed a written release or termination statement and reassigned to the
relevant Credit Parties without recourse or warranty any remaining Collateral
and all rights conveyed thereby. Upon the date that the Indebtedness shall have
been indefeasibly paid in full in cash, no Letter of Credit shall be
outstanding, all of the Commitments shall have terminated, all Secured Swap
Agreements shall have been terminated or novated to third parties and the
irrevocable and indefeasible payment in full in cash or posting of acceptable
substitute collateral in respect of all obligations or amounts that are owed to
any Secured Swap Party under such Secured Swap Agreements shall have occurred as
required by the terms thereof or in connection with any such novation, and the
Credit Parties shall have fully complied with all covenants and agreements of
the Security Instruments, the Administrative Agent, at the written request and
expense of the Borrower, will promptly release, reassign and transfer the
Collateral to the relevant Credit Parties.

 

(c)          At the request and sole expense of the Borrower, a Credit Party
other than the Borrower or the Parent shall be released from its obligations
under the Security Instruments in the event that all of the Equity Interests of
such Credit Party shall be sold, transferred or otherwise disposed of in a
transaction permitted by this Agreement; provided that the Borrower shall have
delivered to the Administrative Agent, at least ten (10) Business Days prior to
the date of the proposed release, a written notice of a Responsible Officer of
the Borrower identifying the relevant Credit Party and the terms of the sale or
other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the Borrower
stating that such transaction is in compliance with this Agreement and the other
Loan Documents.

 

84

 

 

Section 11.12       Colombian Security Documents. Each Secured Party hereby
authorizes the Administrative Agent, on behalf of and for the benefit of the
Secured Parties, to be the agent for and representative of the Secured Parties
with respect to the Collateral and the Colombian Security Documents and any
other Security Instruments governed by the laws of Colombia. Each Secured Party
further authorizes the Administrative Agent to execute on its behalf, directly
or through attorneys-in-fact duly appointed for such purposes (including,
without limitation, pursuant to a power of attorney in form and substance
satisfactory to the Administrative Agent), and to accept the benefits of, each
of the Colombian Security Documents and any other agreements or documents as may
be necessary or advisable in connection with the grant of, or attachment or
perfection of, the security interest granted to the Administrative Agent, for
the benefit of the Secured Parties, pursuant to the Colombian Security Documents
or any other Security Instruments governed by the laws of Colombia (including,
but not limited to, the execution, amendment, modification, waiver, supplement,
cancellation and/or termination, of the Colombian Security Documents and the
filing and registration of any amendment, supplement, release and/or
cancellation before any competent registry in Colombia, in connection with the
Colombian Security Documents).

 

Section 11.13       The Global Coordinator, the Arranger, the Syndication Agent
and the Documentation Agent. None of the Global Coordinator, the Arranger, the
Syndication Agent or the Documentation Agent shall have any duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in their
capacity as Lenders hereunder.

 

Article XII
Miscellaneous

 

Section 12.01       Notices.

 

(a)          Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

(i)          if to the Borrower, to it at 300, 611 - 10th Avenue S.W., Calgary,
Alberta, Canada Attention of Chief Financial Officer (Telecopy No. (403)
265-3242);

 

(ii)         if to the Parent, to it at 300, 611 - 10th Avenue S.W., Calgary,
Alberta, Canada Attention of Chief Financial Officer (Telecopy No. (403)
265-3242);

 

(iii)        if to the Administrative Agent, the Global Coordinator or the
Issuing Bank, to it at:

 

Wells Fargo Bank, National Association
1000 Louisiana Street, Floor 8
Houston, TX 77002
Attention: Juan Carlos Sandoval, Director
Telecopy: 713-651-8101
JC.Sandoval@wellsfargo.com

 

(iv)        if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

 

85

 

 

(b)          Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Articles II, III, IV and V unless otherwise agreed
by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

(c)          Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

 

Section 12.02       Waivers; Amendments.

 

(a)          No failure on the part of the Administrative Agent, any other
Agent, the Issuing Bank or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or
privilege, under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies of the
Administrative Agent, any other Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 12.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any other Agent, any
Lender or the Issuing Bank may have had notice or knowledge of such Default at
the time.

 

(b)          Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall (i)
increase the Commitment or the Maximum Credit Amount of any Lender without the
written consent of such Lender, (ii) increase the Borrowing Base without the
written consent of each Lender (other than any Defaulting Lender), decrease or
maintain the Borrowing Base without the consent of the Required Lenders, or
modify Section 2.07 in any manner without the consent of each Lender (other than
any Defaulting Lender); provided that a Scheduled Redetermination may be
postponed by the Majority Lenders, (iii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, or reduce any other Indebtedness hereunder or under any other
Loan Document, without the written consent of each Lender affected thereby, (iv)
postpone the scheduled date of payment or prepayment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or any other Indebtedness hereunder or under any other Loan Document,
or reduce the amount of, waive or excuse any such payment, or postpone or extend
the Termination Date without the written consent of each Lender affected
thereby, (v) change Section 4.01(b) or Section 4.01(c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (vi) waive or amend Section 3.04(c), Section 6.01,
Section 8.14, Section 10.02(c) or Section 12.15 or change the definition of the
term “Material Subsidiary”, “Subsidiary”, or “Unrestricted Subsidiary”, without
the written consent of each Lender, (vii) release any Guarantor (except as set
forth in the Guaranty Agreement), release all or substantially all of the
Collateral (other than as provided in Section 11.10), without the written
consent of each Lender, or (viii) change any of the provisions of this Section
12.02(b) or the definitions of “Required Lenders” or “Majority Lenders” or any
other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or under any other Loan Documents
or make any determination or grant any consent hereunder or any other Loan
Documents, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent, any other Agent, or the Issuing Bank hereunder or
under any other Loan Document without the prior written consent of the
Administrative Agent, such other Agent or the Issuing Bank, as the case may be.
Notwithstanding the foregoing, (a) any supplement to Schedule 1.02(b) (Eligible
Buyers) or Schedule 7.13 (Subsidiaries) shall be effective simply by delivering
to the Administrative Agent a supplemental schedule clearly marked as such and,
upon receipt, the Administrative Agent will promptly deliver a copy thereof to
the Lenders, and (b) any Security Instrument may be supplemented to add
additional collateral with the consent of the Administrative Agent.

 

86

 

 

Section 12.03       Expenses, Indemnity; Damage Waiver.

 

(a)          The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses, and the cost
of environmental invasive and non-invasive assessments and audits and surveys
and appraisals, in connection with the syndication of the credit facilities
provided for herein, the preparation, negotiation, execution, delivery and
administration (both before and after the execution hereof and including advice
of counsel to the Administrative Agent as to the rights and duties of the
Administrative Agent and the Lenders with respect thereto) of this Agreement and
the other Loan Documents and any amendments, modifications or waivers of or
consents related to the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
costs, expenses, Taxes, assessments and other charges incurred by any Agent or
any Lender in connection with any filing, registration, recording or perfection
of any security interest contemplated by this Agreement or any Security
Instrument or any other document referred to therein, (iii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder, (iv) all out-of-pocket expenses incurred by any Agent,
the Issuing Bank or any Lender, including the fees, charges and disbursements of
any counsel for any Agent, the Issuing Bank or any Lender, in connection with
the enforcement or protection of its rights in connection with this Agreement or
any other Loan Document, including its rights under this Section 12.03, or in
connection with the Loans made or Letters of Credit issued hereunder, including,
without limitation, all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

 

87

 

 

(b)          The Borrower shall indemnify each Agent, the Arranger, the Issuing
Bank and each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an “Indemnitee”) against, and defend and hold
each Indemnitee harmless from, any and all losses, claims, damages, penalties,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or the parties to any other Loan Document of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or by any other Loan Document, (ii) the failure of any
Credit Party to comply with the terms of any Loan Document, including this
Agreement, or with any Governmental Requirement, (iii) any inaccuracy of any
representation or any breach of any warranty or covenant of any Credit Party set
forth in any of the Loan Documents or any instruments, documents or
certifications delivered in connection therewith, (iv) any Loan or Letter of
Credit or the use of the proceeds therefrom, including, without limitation, (A)
any refusal by the Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit, or (B) the payment of a drawing
under any Letter of Credit notwithstanding the non-compliance, non-delivery or
other improper presentation of the documents presented in connection therewith,
(v) any other aspect of the Loan Documents, (vi) the operations of the business
of the Credit Parties by the Credit Parties, (vii) any assertion that the
Lenders were not entitled to receive the proceeds received pursuant to the
Security Instruments, (viii) any Environmental Law applicable to the Credit
Parties or any of their Properties or operations, including, the presence,
generation, storage, release, threatened release, use, transport, disposal,
arrangement of disposal or treatment of Hazardous Materials on or at any of
their Properties, (ix) the breach or non-compliance by any Credit Party with any
Environmental Law applicable to any Credit Party, (x) the past ownership by any
Credit Party of any of its Properties or past activity on any of their
Properties which, though lawful and fully permissible at the time, could result
in present liability, (xi) the presence, use, release, storage, treatment,
disposal, generation, threatened release, transport, arrangement for transport
or arrangement for disposal of Hazardous Materials on or at any of the
Properties owned or operated by any Credit Party or any actual or alleged
presence or release of Hazardous Materials on or from any Property owned or
operated by any Credit Party, (xii) any environmental liability related in any
way to any Credit Party, or (xiii) any other environmental, health or safety
condition in connection with the Loan Documents, or (xiv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, and such indemnity
shall extend to each Indemnitee notwithstanding the sole or concurrent
negligence of every kind or character whatsoever, whether active or passive,
whether an affirmative act or an omission, including without limitation, all
types of negligent conduct identified in the restatement (second) of torts of
one or more of the Indemnitees or by reason of strict liability imposed without
fault on any one or more of the Indemnitees; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.

 

(c)          To the extent that the Borrower fails to pay any amount required to
be paid by it to any Agent, the Arranger or the Issuing Bank under Section
12.03(a) or (b), each Lender severally agrees to pay to such Agent, the Arranger
or the Issuing Bank, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against such Agent, the Arranger or the
Issuing Bank in its capacity as such.

 

(d)          To the extent permitted by applicable law, the Borrower and the
Parent shall not assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby or thereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

 

(e)          All amounts due under this Section 12.03 shall be payable not later
than three (3) days after written demand therefor.

 

88

 

 

Section 12.04       Successors and Assigns.

 

(a)          The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void), (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section 12.04 and (iii) no Lender may assign to the Borrower, an Affiliate
of the Borrower, a Defaulting Lender or an Affiliate of a Defaulting Lender all
or any portion of such Lender’s rights and obligations under this Agreement or
all or any portion of its Commitments or the Loans owing to it hereunder.
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit), Participants (to the extent provided in Section
12.04(c)) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)          (i) Subject to the conditions set forth in Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:

 

(A)        the Borrower; provided that no consent of the Borrower shall be
required if such assignment is to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing, is to
any other assignee; and

 

(B)         the Administrative Agent; provided that no consent of the
Administrative Agent shall be required for an assignment to an assignee that is
a Lender immediately prior to giving effect to such assignment.

 

(ii)         Assignments shall be subject to the following additional
conditions:

 

(A)         except in the case of an assignment to a Lender or an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent; provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

 

(B)         each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement;

 

(C)         the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

 

(D)         the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

89

 

 

(iii)        Subject to Section 12.04(b)(iv) and the acceptance and recording
thereof, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 5.01,
Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 12.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
Section 12.04(c).

 

(iv)        The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Maximum Credit Amount of, and principal amount
of the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice. In connection with any
changes to the Register, if necessary, the Administrative Agent will reflect the
revisions on Annex I and forward a copy of such revised Annex I to the Borrower,
the Issuing Bank and each Lender.

 

(v)         Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 12.04(b)
and any written consent to such assignment required by Section 12.04(a), the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this Section 12.04(b).

 

(c)          (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the proviso to Section
12.02 that affects such Participant. In addition such agreement must provide
that the Participant shall be bound by the provisions of Section 12.03. Subject
to Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b). To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender; provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.

 

90

 

 

(ii)          A Participant shall not be entitled to receive any greater payment
under Section 5.01 or Section 5.03 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent. A Participant shall not be entitled to the
benefits of Section 5.03 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 5.03(e) as though it were a Lender. Each Lender
that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
the Loan Documents (the “Participant Register”). Any such Participant Register
shall be available for inspection by the Administrative Agent at any reasonable
time and from time to time upon reasonable prior notice; provided that the
applicable Lender shall have no obligation to show such Participant Register to
the Borrower except to the extent such disclosure is necessary to establish that
such Loan, commitment, letter of credit or other obligation is in registered
form under Section 5f.103-1(c) of the Treasury regulations. The entries in the
Participant Register shall be conclusive absent manifest error, and such Lender
shall treat each Person whose name is recorded in the Participant Register as
the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.

 

(d)          Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 12.04(d) shall not apply
to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

(e)          Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require any Credit Party to file a registration statement with
the SEC or to qualify the Loans under the “Blue Sky” laws of any state.

 

Section 12.05       Survival; Revival; Reinstatement.

 

(a)          All covenants, agreements, representations and warranties made by
the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, any other Agent, the Issuing Bank or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and Article XI shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.

 

91

 

 

(b)          To the extent that any payments on the Indebtedness or proceeds of
any Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s and the Lenders’ Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.

 

Section 12.06       Counterparts; Integration; Effectiveness.

 

(a)          This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.

 

(b)          This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

(c)          Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy, facsimile or other similar
electronic means shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

Section 12.07       Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.

 

Section 12.08       Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
any Credit Party against any of and all the obligations of any Credit Party owed
to such Lender now or hereafter existing under this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. The rights of each Lender under this Section 12.08 are in
addition to other rights and remedies (including other rights of setoff) which
such Lender or its Affiliates may have.

 

92

 

 

Section 12.09       Governing law; Jurisdiction; Consent to Service of Process.

 

(a)          This Agreement and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York except to the extent that
United States Federal law permits any Lender to contract for, charge, receive,
reserve or take interest at the rate allowed by the laws of the State where such
Lender is located.

 

(b)          Any legal action or proceeding with respect to the Loan Documents
may be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this agreement, each party hereby accepts for itself and (to the extent
permitted by law) in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts. Each party hereby
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action or proceeding in
such respective jurisdictions. This submission to jurisdiction is non-exclusive
and does not preclude a party from obtaining jurisdiction over another party in
any court otherwise having jurisdiction.

 

(c)          In addition, to the extent that any Credit Party or Affiliate
thereof 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 Person
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 Act of 1976 of the United States of
America, as amended, and is intended to be irrevocable for the purpose of such
Act.

 

(d)          The Borrower hereby irrevocably designates, appoints and empowers
and hereby confers an irrevocable special power, ample and sufficient, to the
Parent as its designee, appointee and agent with respect to any such action or
proceeding in New York 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 such proceeding (the Parent in
such appointed capacity, the “Process Agent”) and agrees that the failure of
such agent to give any advice of any such service of process to the Borrower
shall not impair or affect the validity of such service or of any claim based
thereon. The Parent hereby accepts such appointment as the Process Agent and
hereby agrees to forward promptly to the Borrower all legal process addressed to
the Borrower received by the Process Agent. If for any reason the Process Agent
shall cease to be available to act as such, the Borrower agrees to designate a
new designee, appointee and agent in New York City reasonably satisfactory to
the Administrative Agent on the terms and for the purposes of this provision.
Each party irrevocably consents to the service of process 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 it at the address
specified in Section 12.01 or such other address as is specified pursuant to
Section 12.01 (or its assignment and assumption), such service to become
effective thirty (30) days after such mailing. Nothing herein shall affect the
right of a party or any holder of a Note to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
another party in any other jurisdiction.

 

(e)          Each party hereby (i) irrevocably and unconditionally waives, to
the fullest extent permitted by law, trial by jury in any legal action or
proceeding relating to this Agreement or any other Loan Document and for any
counterclaim therein; (ii) irrevocably waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages
other than, or in addition to, actual damages; (iii) certifies that no party
hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waivers; and (iv)
acknowledges that it has been induced to enter into this Agreement, the Loan
Documents and the transactions contemplated hereby and thereby by, among other
things, the mutual waivers and certifications contained in this Section 12.09.

 

93

 

 

Section 12.10      Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

Section 12.11       Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 12.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Swap Agreement relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 12.11 or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section 12.11, “Information” means all
information received from any Credit Party relating to the Credit Parties and
their businesses, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by a Credit Party; provided that, in the case of information
received from any Credit Party after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required
to maintain the confidentiality of Information as provided in this Section 12.11
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Section 12.12       Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America or any other jurisdiction whose laws may be mandatorily applicable to
such Lender notwithstanding the other provisions of this Agreement), then, in
that event, notwithstanding anything to the contrary in any of the Loan
Documents or any agreement entered into in connection with or as security for
the Notes, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to any Lender that is contracted for,
taken, reserved, charged or received by such Lender under any of the Loan
Documents or agreements or otherwise in connection with the Notes shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Indebtedness (or, to the extent
that the principal amount of the Indebtedness shall have been or would thereby
be paid in full, refunded by such Lender to the Borrower); and (ii) in the event
that the maturity of the Notes is accelerated by reason of an election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). All sums paid or agreed to be paid to
any Lender for the use, forbearance or detention of sums due hereunder shall, to
the extent permitted by law applicable to such Lender, be amortized, prorated,
allocated and spread throughout the stated term of the Loans evidenced by the
Notes until payment in full so that the rate or amount of interest on account of
any Loans hereunder does not exceed the maximum amount allowed by such
applicable law. If at any time and from time to time (i) the amount of interest
payable to any Lender on any date shall be computed at the Highest Lawful Rate
applicable to such Lender pursuant to this Section 12.12 and (ii) in respect of
any subsequent interest computation period the amount of interest otherwise
payable to such Lender would be less than the amount of interest payable to such
Lender computed at the Highest Lawful Rate applicable to such Lender, then the
amount of interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.12.

 

94

 

 

Section 12.13       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 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 Lender 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 Credit Party in
respect of any such sum due from it to the Administrative Agent or any other
Person under any Loan Document (in this Section 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 Credit Party
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.

 

Section 12.14       EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”

 

95

 

 

Section 12.15       Collateral Matters; Secured Swap Agreements and Specified
Cash Management Agreements. The benefit of the Security Instruments and of the
provisions of this Agreement relating to any Collateral securing the
Indebtedness shall also extend to and be available to Secured Swap Parties and
Secured Cash Management Parties on a pro rata basis (but subject to the terms of
the Loan Documents, including, without limitation, provisions thereof relating
to the application and priority of payments to the Secured Parties) in respect
Secured Swap Obligations and Specified Cash Management Obligations. No Secured
Swap Party or Secured Cash Management Party shall have any voting rights under
any Loan Document as a result of the existence of Secured Swap Obligations or
Specified Cash Management Obligations.

 

Section 12.16       Collateral Assignment of Swap Agreements.

 

(a)          Pursuant to the Security Instruments, each Credit Party is required
to pledge, assign and transfer (the “Swap Assignment”) to the Administrative
Agent, for the benefit of the Secured Parties, as collateral security for the
prompt and complete payment and performance when due of the Obligations (as
defined therein), a first priority continuing security interest in, lien on and
right of setoff against, all of its right, title and interest in and to each
Swap Agreement to which it is a party, including each Swap Agreement between
such Credit Party and any Lender or Affiliate of a Lender, all as more
particularly described in the Security Instruments (the “Swap Collateral”). In
furtherance of the foregoing, each Lender hereby: (i) consents and agrees to the
Swap Assignment and (ii) agrees that from and after the Effective Date it will
make any payments which become payable by such Lender under or pursuant to any
Swap Agreement between such Lender and any Credit Party directly to the relevant
Collection Account until such time as the grant of security interest in such
Collateral is released pursuant to the terms of this Agreement and the other
Loan Documents.

 

(b)          The Parent and the Borrower each agrees that any payment made by a
Lender or an Affiliate of a Lender pursuant to the provisions of this Section
12.16 shall, to the extent of such payment, satisfy the obligations of such
Lender or its Affiliate under the relevant Swap Agreement. The Parent and the
Borrower each agrees to hold each Lender and its Affiliates harmless from any
claims or liabilities resulting from actions of such Lender or its Affiliates in
accordance with the terms of this Section 12.16.

 

Section 12.17       No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialsman) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, any other Agent,
the Issuing Bank or any Lender for any reason whatsoever. There are no third
party beneficiaries.

 

96

 

 

Section 12.18       USA Patriot Act Notice.

 

(a)          Each Lender and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies each Credit Party that pursuant to the
requirements of the USA Patriot Act, it is required to obtain, verify and record
information that identifies each of them, which information includes the name
and address of each Credit Party and other information that will allow such
Lender or the Administrative Agent, as applicable, to identify such Person in
accordance with the USA Patriot Act. The Parent 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 Lender and
the Administrative Agent to maintain compliance with the Act.

 

(b)          In the event that: (i) the introduction of or any change in (or in
the interpretation, administration or application of) any law or regulation made
after the date of this Agreement, (ii) any change in the status of any Credit
Party after the date of this Agreement, or (iii) a proposed assignment or
transfer by a Lender of any of its rights and obligations under this Agreement
to a party that is not a Lender prior to such assignment or transfer, requires
the Administrative Agent (for itself or on behalf of a Lender) or a Lender to
comply with “know your customer” or similar identification procedures in
circumstances where the necessary information is not already available to it,
any or all of the Credit Parties, as applicable, shall promptly, upon the
request of the Administrative Agent, supply, or produce the supply of such
documentation and other evidence as is requested by the Administrative Agent
(for itself or on behalf of any of the Lenders) in order for the Administrative
Agent or the Lenders, as the case may be, to carry out and be satisfied it has
complied with all necessary “know your customer” or other similar checks under
all applicable laws.

 

(c)          Each Lender shall promptly upon the request of the Administrative
Agent, supply or procure the supply of, such documentation and other evidence as
is reasonably requested by the Administrative Agent (for itself) in order for
the Administrative Agent to carry out and be satisfied it has complied with all
necessary “know your customer” or other similar checks under all applicable
laws.

 

Section 12.19       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.

 

[SIGNATURES BEGIN NEXT PAGE]

 

97

 

 

The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

 

BORROWER: GRAN TIERRA ENERGY INTERNATIONAL
HOLDINGS LTD.       By: /s/ Julio Moreira   Name: Julio Moreira   Title:
Director

 

Signature Page – Credit Agreement

  

 

 

 

PARENT: GRAN TIERRA ENERGY INC.       By: /s/ Dana Coffield   Name:  Dana
Coffield   Title: President and Chief Executive Officer

 

Signature Page – Credit Agreement

  

 

 

 

ADMINISTRATIVE AGENT: WELLS FARGO BANK, NATIONAL ASSOCIATION,   as
Administrative Agent, the Issuing Bank and a Lender       By: /s/ Juan Carlos
Sandoval   Name: Juan Carlos Sandoval   Title: Director       SYNDICATION AGENT
SOCIETE GENERALE, AND LENDER: as Syndication Agent and a Lender       By: /s/
Graeme Bullen   Name: Graeme Bullen   Title: Managing Director     DOCUMENTATION
AGENT THE BANK OF NOVA SCOTIA, AND LENDER: as Documentation Agent and a Lender  
    By: /s/ Sohail Nawaz   Name: Sohail Nawaz   Title: Associate Director - CAG
      By: /s/ Anastasia Kotsidis   Name: Anastasia Kotsidis   Title: Director -
CAG     LENDERS: EXPORT DEVELOPMENT CANADA, as a Lender       By: /s/ Deena
Padamadan   Name: Deena Padamadan   Title: Senior Associate       By: /s/ James
Babbitt   Name: James Babbitt   Title: Sr. Project Finance Manager       HSBC
BANK CANADA, as a Lender       By: /s/ Jean-Philippe Gariazzo   Name:
Jean-Philippe Gariazzo   Title: Vice President Global Banking

 

Signature Page – Credit Agreement

 

 

 

 

Annex I
List of Maximum Credit Amounts

 

Lender  Applicable Percentage   Maximum Credit Amounts  Wells Fargo Bank,
National Association   26.66666668%  $80,000,000.00  Societe Generale 
 23.33333333%  $70,000,000.00  The Bank of Nova Scotia   23.33333333% 
$70,000,000.00  Export Development Canada   13.33333333%  $40,000,000.00  HSBC
Bank Canada   13.33333333%  $40,000,000.00  TOTAL:   100.00000000% 
$300,000,000.00 

 

Annex I – Page 1

 

 

Exhibit A
Form of Note

 

$[          ] [          ], 20[     ]

 

FOR VALUE RECEIVED, GRAN TIERRA ENERGY INTERNATIONAL HOLDINGS LTD., a company
duly incorporated and existing under the laws of the Cayman Islands (the
“Borrower”), hereby promises to pay to the order of [         ] (the “Lender”),
at the principal office of Wells Fargo Bank, National Association (the
“Administrative Agent”), at 1000 Louisiana Street, Floor 8, Houston, Texas
77002, United States of America, the principal sum of [         ] Dollars
($[          ]) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower under the
Credit Agreement, as hereinafter defined), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.

 

The date, amount, Type, interest rate, Interest Period and maturity of each Loan
made by the Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, may be endorsed by the Lender on the schedules
attached hereto or any continuation thereof or on any separate record maintained
by the Lender. Failure to make any such notation or to attach a schedule shall
not affect any Lender’s or the Borrower’s rights or obligations in respect of
such Loans or affect the validity of such transfer by any Lender of this Note.

 

This Note is one of the Notes referred to in the Credit Agreement dated as of
August 30, 2013 among the Borrower, the Parent, the Administrative Agent, and
the other agents and lenders signatory thereto (including the Lender), and
evidences Loans made by the Lender thereunder (such Credit Agreement as the same
may be amended, supplemented, restated or otherwise modified from time to time,
the “Credit Agreement”). Capitalized terms used in this Note have the respective
meanings assigned to them in the Credit Agreement.

 

This Note is issued pursuant to, and is subject to the terms and conditions set
forth in, the Credit Agreement and is entitled to the benefits provided for in
the Credit Agreement and the other Loan Documents. The Credit Agreement provides
for the acceleration of the maturity of this Note upon the occurrence of certain
events, for prepayments of Loans upon the terms and conditions specified therein
and other provisions relevant to this Note.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW
PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT
THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED.

 

  GRAN TIERRA ENERGY INTERNATIONAL
HOLDINGS LTD.       By:     Name:     Title:  

 

Exhibit A – Page 1

 

 

Exhibit B
Form of Borrowing Request

 

[                   ], 20[    ]

 

Gran Tierra Energy International Holdings Ltd., a company duly incorporated and
existing under the laws of the Cayman Islands (the “Borrower”), pursuant to
Section 2.03 of the Credit Agreement dated as of August 30, 2013 (together with
all amendments, restatements, supplements or other modifications thereto, the
“Credit Agreement”) among the Borrower, the Parent, Wells Fargo Bank, National
Association, as Administrative Agent and the other agents and lenders (the
“Lenders”) which are or become parties thereto (unless otherwise defined herein,
each capitalized term used herein is defined in the Credit Agreement), hereby
requests a Borrowing as follows:

 

(i)          Aggregate amount of the requested Borrowing is
$[                  ];

 

(ii)         Date of such Borrowing is [                    ], 20[   ];

 

(iii)        Requested Borrowing is to be [an ABR Borrowing] [a Eurodollar
Borrowing];

 

(iv)        [The initial Interest Period applicable thereto is [__________];]
[Applicable only to Eurodollar Borrowings]

 

(v)         Amount of Borrowing Base in effect on the date hereof is
$[                      ];

 

(vi)        Total Revolving Credit Exposures on the date hereof (i.e.,
outstanding principal amount of Loans and total LC Exposure) are
$                     ];

 

(vii)       Pro forma total Revolving Credit Exposures (giving effect to the
requested Borrowing) are $[                    ]; and

 

(viii)      Location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.05 of the
Credit Agreement, is as follows:

 

[___________________________]
[___________________________]
[___________________________]
[___________________________]
[___________________________]

 

Exhibit B – Page 1

 

 

The undersigned certifies that he/she is the [                 ] of the
Borrower, and that as such he/she is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested Borrowing under the terms and conditions of the Credit Agreement.

 

  GRAN TIERRA ENERGY INTERNATIONAL
HOLDINGS LTD.       By:     Name:     Title:  

 

Exhibit B – Page 2

 

 

Exhibit C
Form of Interest Election Request

 

[                ], 20[    ]

 

Gran Tierra Energy International Holdings Ltd., a company duly incorporated and
existing under the laws of the Cayman Islands (the “Borrower”), pursuant to
Section 2.04 of the Credit Agreement dated as of August 30, 2013 (together with
all amendments, restatements, supplements or other modifications thereto, the
“Credit Agreement”) among the Borrower, the Parent, Wells Fargo Bank, National
Association, as Administrative Agent and the other agents and lenders (the
“Lenders”) which are or become parties thereto (unless otherwise defined herein,
each capitalized term used herein is defined in the Credit Agreement), hereby
makes an Interest Election Request as follows:

 

(i)          The Borrowing to which this Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information specified pursuant to (ii) and (iii) below shall be
specified for each resulting Borrowing) is [                 ];

 

(ii)         The effective date of the election made pursuant to this Interest
Election Request is [                 ], 20[   ];[and]

 

(iii)        The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar
Borrowing][; and]

 

(iv)        The Interest Period applicable to the resulting Borrowing after
giving effect to such election is [__________]]]. [Applicable only to Eurodollar
Borrowings]

 

The undersigned certifies that he/she is the [                    ] of the
Borrower, and that as such he/she is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested continuation or conversion under the terms and conditions of the
Credit Agreement.

 

  GRAN TIERRA ENERGY INTERNATIONAL
HOLDINGS LTD.       By:     Name:     Title:  

 

Exhibit C – Page 1

 

 

Exhibit D
Form of Compliance Certificate

 

The undersigned hereby certifies that he/she is the [            ] of Gran
Tierra Energy International Holdings Ltd., a company duly incorporated and
existing under the laws of the Cayman Islands (the “Borrower”), and that as such
he/she is authorized to execute this certificate on behalf of the Borrower. With
reference to the Credit Agreement dated as of August 30, 2013 (together with all
amendments, restatements, supplements or other modifications thereto being the
“Agreement”) among the Borrower, the Parent, Wells Fargo Bank, National
Association, as Administrative Agent, and the other agents and lenders (the
“Lenders”) which are or become a party thereto, the undersigned represents and
warrants as follows (each capitalized term used herein having the same meaning
given to it in the Agreement unless otherwise specified):

 

(a)          Except as set forth below, the representations and warranties of
the Credit Parties contained in Article VII of the Agreement and in the Loan
Documents were true and correct in all material respects when made, and are
repeated at and as of the time of delivery hereof and are true and correct in
all material respects at and as of the time of delivery hereof, except to the
extent such representations and warranties are expressly limited to an earlier
date.

 

(b)          There exists no Default or Event of Default [or specify Default and
describe].

 

(c)          Attached hereto are the detailed computations necessary to
determine Adjusted Consolidated Net Income for the [fiscal quarter][fiscal year]
ended [          ].

 

(d)          Attached hereto is a list of each Material Subsidiary.

 

(e)          Attached hereto are the detailed computations necessary to
determine whether the Parent is in compliance with Section 9.01 as of the end of
the [fiscal quarter][fiscal year] ended [            ].

 

EXECUTED AND DELIVERED this [          ] day of [             ].

 

  GRAN TIERRA ENERGY INTERNATIONAL
HOLDINGS LTD.       By:     Name:     Title:  

 

Exhibit D – Page 1

 

 

Exhibit E
Security Instruments

 

1)Guaranty and Collateral Agreement made by each of the Obligors (as defined
therein), in favor of the Administrative Agent

 

2)UCC-1 Financing Statements in respect of item 1, by

 

a)Gran Tierra Energy Inc. (filed with the Secretary of State of Nevada)

b)Gran Tierra Energy International Holdings Ltd. (filed with the Recorder of
Deeds of the District of Colombia)

c)Petrolifera Petroleum (Colombia) Limited (filed with the Recorder of Deeds of
the District of Colombia)

d)Gran Tierra Energy Cayman Islands Inc. (filed with the Recorder of Deeds of
the District of Colombia)

e)Argosy Energy LLC (filed with the Secretary of State of Delaware)

f)Gran Tierra Energy Colombia, Ltd. (filed with the Secretary of State of Utah)

g)Gran Tierra Energy Brasil Ltda. (filed with the Recorder of Deeds of the
District of Colombia)

 

3)Stock Powers delivered in respect of any certificated U.S. entities whose
equity interests are required to be pledged under the Loan Documents

 

4)Contratos de Prenda Abierta y Sin Tenencia Sobre Los Derechos Económicos
Derivados de Los Contratos de Concesión in favor of the Administrative Agent and
the Lenders (filed with the applicable Chamber of Commerce), by

 

a)Petrolifera Petroleum (Colombia) Limited

b)Gran Tierra Energy Colombia Ltd.

 

5)Letters of Instruction / Consent and Agreements by:

 

a)Ecopetrol S.A – Agreement for the Purchase and Sale of Crude Petroleum under
the Chaza E&P Contract, Guayuyaco Association Contract and the Santana Risk
Participation Contract between Ecopetrol S.A. and Gran Tierra Energy Colombia,
Ltd., effective December 1, 2012, expiring November 30, 2013.

 

b)Ecopetrol S.A.— Agreement for the Purchase and Sale of Crude Petroleum under
the Chaza E&P Contract and the Guayuyaco Association Contract between Ecopetrol
S.A. and Petrolifera Petroleum (Colombia) Limited effective December 1, 2012,
expiring November 30, 2013.

 

c)Petrobras Colombia Limited - Agreement for the Purchase and Sale of Crude
Petroleum under the Jilguero and Melero wells located under the Garibay E&P
Contract between Petrobras Colombia Limited and Petrolifera Petroleum (Colombia)
Limited, effective July 1, 2013, expiring December 31, 2013.

 

d)Petrobras Colombia Limited - Agreement for the Purchase and Sale of Crude
Petroleum under the Ramiriquí well located under the Llanos - 22 E&P Contract
between Petrobras Colombia Limited and Gran Tierra Energy Colombia Ltd.,
effective February 1, 2013, expiring January 31, 2014.

 

Exhibit E – Page 1

 

 

e)Emerald Energy Plc Sucursal Colombia - Agreement for the Purchase and Sale of
Crude Petroleum under the Chaza E&P Contract and the Guayuyaco Association
Contract between Emerald Energy Plc Sucursal Colombia and Petrolifera Petroleum
(Colombia) Limited effective May 12, 2012, expiring May 11, 2014.

 

f)Emerald Energy Plc Sucursal Colombia - Agreement for the Purchase and Sale of
Crude Petroleum under the Chaza E&P Contract, Guayuyaco Association Contract and
the Santana Risk Participation Contract between Emerald Energy Plc Sucursal
Colombia and Gran Tierra Energy Colombia Ltd effective May 12, 2012, expiring
May 11, 2014.

 

g)Gunvor Colombia SAS - Agreement for the Purchase and Sale of Crude Petroleum
under the Chaza E&P Contract between Gunvor Colombia SAS and Petrolifera
Petroleum (Colombia) Limited effective December 3, 2012, expiring December 2,
2013.

 

h)Gunvor Colombia SAS - Agreement for the Purchase and Sale of Crude Petroleum
under the Chaza E&P Contract between Gunvor Colombia SAS and Gran Tierra Energy
Colombia Ltd. effective December 3, 2012, expiring December 2, 2013.

 

i)Cepcolsa - Agreement for the Purchase and Sale of Crude Petroleum under the
Garibay Contract between Petrolifera Petroleum (Colombia) Limited and Cepcolsa,
executed on May 30, 2013, effective April 1, 2013, expiring March 31, 2014.

 

j)Cepcolsa - Agreement for the Purchase and Sale of Crude Petroleum under the
Llanos 22 Contract between Gran Tierra Energy Colombia Ltd. and Cepcolsa,
executed May 30, 2013, effective April 1, 2013, expiring March 31, 2014.

 

6)Equitable Charge over Shares in Gran Tierra Energy International Holdings Ltd.
by Solana Resources Limited, in favor of the Administrative Agent and the
Secured Parties (both as defined in the Guaranty and Collateral Agreement).

 

7)Notation on Register of Members of Gran Tierra Energy International Holdings
Ltd. indicating charge on shares and providing details (with respect to item 7).

 

8)Equitable Charge over Shares in Petrolifera Petroleum (Colombia) Limited by
Gran Tierra Energy International Holdings Ltd. in favor of the Administrative
Agent and the Secured Parties (both as defined in the Guaranty and Collateral
Agreement).

 

9)(i) Notation on Register of Members of Petrolifera Petroleum (Colombia)
Limited indicating charge on shares and providing details; and (ii) Entry on
Register of Mortgages and Charges of Gran Tierra Energy International Holdings
Ltd. (both with respect to item 9).

 

10)Equitable Charge over Shares in Gran Tierra Energy Cayman Islands Inc. by
Gran Tierra International Holdings Ltd. in favor of the Administrative Agent and
the Secured Parties (both as defined in the Guaranty and Collateral Agreement).

 

11)(i) Notation on Register of Members of Gran Tierra Energy Cayman Islands Inc.
indicating charge on shares and providing details; and (ii) Entry on Register of
Mortgages and Charges of Gran Tierra Energy International Holdings Ltd. (both
with respect to item 11).

 

Exhibit E – Page 2

 

 

12)Deposit Account Control Agreement (Gran Tierra Energy Colombia) and Deposit
Account Control Agreement (Petrolifera) (as such terms defined in the Credit
Agreement).

 

13)Canadian Securities Pledge Agreement from Gran Tierra Callco ULC respecting
the shares of Gran Tierra Exchangeco Inc. and from Gran Tierra Exchangeco Inc.
respecting the shares of Solana Resources Limited.

 

14)Stock powers of attorney or other transfer documents with respect to item 14

 

15)Canadian Security Agreement from Gran Tierra Energy Inc., Gran Tierra
Exchangeco Inc., Solana Resources Limited, and Gran Tierra Callco ULC

 

16)Registration of Financing Statements at the Personal Property Registry of
Alberta (and each other applicable jurisdiction) in respect of item 13 and 15,
by Norton Rose Fulbright Canada LLP

 

17)Quota Pledge Agreement by and between Gran Tierra Finance (Luxembourg)
S.à.r.l., Gran Tierra Brazco (Luxembourg) S.à.r.l., the Administrative Agent, as
Intervening Party, and Gran Tierra Energy Brasil Ltda.

 

18)Agreement for Fiduciary Assignment of Rights Over Bank Accounts between Gran
Tierra Energy Brasil Ltda. and the Administrative Agent.

 

19)Deed of Charge from Gran Tierra Energy Colombia, Ltd. to the Administrative
Agent in respect of Deposit Account Control Agreement (Gran Tierra Energy
Colombia).

 

20)Deed of Charge from Petrolifera to the Administrative Agent in respect of and
Deposit Account Control Agreement (Petrolifera).

 

Exhibit E – Page 3

 

 

Exhibit F
Form of Assignment and Assumption

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit and guarantees included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

 

1. Assignor: ______________________________       2. Assignee:
______________________________     [and is an Affiliate/Approved Fund of
[identify Lender]1]       3. Borrower: Gran Tierra Energy International Holdings
Ltd.       4. Administrative Agent: Wells Fargo Bank, National Association      
5. Credit Agreement: The Credit Agreement dated as of August 30, 2013 among Gran
Tierra Energy International Holdings Ltd., as Borrower, the Parent, Wells Fargo
Bank, National Association, as Administrative Agent and the Lenders parties
thereto.       6. Assigned Interest:  

 

 

1 Select as applicable.

  

 

Exhibit F – Page 1

 

 

Commitment
Assigned  Aggregate Amount of
Commitment/Loans
for all Lenders   Amount of
Commitment/Loans
Assigned   Percentage Assigned
of
Commitment/Loans2    $    $      %    $    $      %    $    $      %

 

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

  ASSIGNOR       [NAME OF ASSIGNOR]       By:     Name:     Title:        
ASSIGNEE       [NAME OF ASSIGNEE]       By:     Name:     Title:  

 

 

2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

Exhibit F – Page 2

 

 

[Consented to and]3 Accepted:       Wells Fargo Bank, National Association, as  
Administrative Agent       By:     Name:     Title:         [Consented to:]4    
  [NAME OF RELEVANT PARTY]       By:     Name:     Title:    

 

 

3 To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

4 To be added only if the consent of the Borrower and/or other parties (e.g.
Issuing Bank) is required by the terms of the Credit Agreement.

 

 

Exhibit F – Page 3

 

 

Schedule 1.02(a)

Hydrocarbon Properties/Concession Agreements

 

BLOCK DESCRIPTION EFFECTIVE
DATE PARTIES

Santana

Shared Risk Contract - Ecopetrol S.A. July 27, 1987 Ecopetrol S.A., Gran Tierra
Energy Colombia Ltd. Guayuyaco Association Contract - Ecopetrol S.A. September
30, 2002 Ecopetrol S.A., Gran Tierra Energy Colombia Ltd., Petrolifera Petroleum
(Colombia) Limited Chaza Exploration and Exploitation Contract June 27, 2005
Agencia Nacional de Hidrocarburos, Gran Tierra Energy Colombia Ltd., Petrolifera
Petroleum (Colombia) Limited Putumayo Piedemonte Norte Exploration and
Exploitation Contract June 17, 2009 Agencia Nacional de Hidrocarburos, Gran
Tierra Energy Colombia Ltd, Cepcolsa Putumayo Piedemonte Sur Exploration and
Exploitation Contract June 17, 2009 Agencia Nacional de Hidrocarburos, Gran
Tierra Energy Colombia Ltd. Magangue5 Association Contract – Ecopetrol S.A.
January 1, 1990 Ecopetrol S.A., Petrolifera Petroleum (Colombia) Limited PUT- 10
Exploration and Exploitation Contract March 16, 2010 Agencia Nacional de
Hidrocarburos, Gran Tierra Energy Colombia Ltd. Cauca 6 Technical Evaluation
Contract March 16, 2011 Agencia Nacional de Hidrocarburos, Gran Tierra Energy
Colombia Ltd. Cauca 7 Technical Evaluation Contract March 16, 2011 Agencia
Nacional de Hidrocarburos, Gran Tierra Energy Colombia Ltd. Sinú 1 Technical
Evaluation Contract November 29, 2012 Agencia Nacional de Hidrocarburos,
Consorcio Gran Tierra Energy Colombia Ltd - Pluspetrol Sinú 3 Exploration and
Exploitation Contract November 29, 2012 Agencia Nacional de Hidrocarburos,
Consorcio Gran Tierra Energy Colombia Ltd - Perenco Llanos 22 Exploration and
Exploitation Contract February 5, 2009 Agencia Nacional de Hidrocarburos, Gran
Tierra Energy Colombia Ltd, Cepcolsa

 

 

5Termination in progress.

 

Schedule 1.02(a) – Page 1

 

 

BLOCK DESCRIPTION EFFECTIVE
DATE PARTIES Garibay Exploration and Exploitation Contract October 25, 2005
Agencia Nacional de Hidrocarburos, Petrolifera Petroleum (Colombia) Limited,
Cepcolsa Rio Magdalena6 Association Contract February 8, 2002 Ecopetrol S.A.,
Gran Tierra Energy Colombia Ltd. Catguas Exploration and Exploitation Contract
November 2005 Agencia Nacional de Hidrocarburos, Petrolifera Petroleum
(Colombia) Limited Sierra Nevada Exploration and Exploitation Contract April 11,
2007 Agencia Nacional de Hidrocarburos, Petrolifera Petroleum (Colombia) Limited
Magdalena7 Exploration and Exploitation Contract September 15, 2009 Agencia
Nacional de Hidrocarburos, Petrolifera Petroleum (Colombia) Limited

Put-1

Exploration and Exploitation Contract

March 31, 2009 

Agencia Nacional de Hidrocarburos, Gran Tierra Energy Colombia Ltd., Lewis
Energy Colombia Inc.

Block REC-T-129 Concession Contract March 12, 2008 GranTierra Energy do Brasil
Block REC-T-142 Concession Contract March 12, 2008 GranTierra Energy do Brasil
Block REC-T-155 Concession Contract March 12, 2008 GranTierra Energy do Brasil
Block REC-T-224 Concession Contract March 12, 2008 GranTierra Energy do Brasil
Block BMCAL-7 (186) Concession Contract November 24, 2004

GranTierra Energy do Brasil

Statoil do Brasil

Petroleo Brasileiro SA

 

 

6 Termination in progress.

7 Termination in progress.

 

Schedule 1.02(a) – Page 2

 

 

Schedule 1.02(b)

Eligible Buyers

 

Petroleo Brasileiro SA

 

Emerald Energy Plc Sucursal Colombia

 

Gunvor Colombia SAS

 

Cepcolsa

 

Kronos Energy S.A. ESP.

 

Comercializadora de Energía, GAS y servicio S.A ESP GEACOM

 

Equion Energy Limited S.A

 

Schedule 1.02(b) – Page 1

 

 

Schedule 1.02(c)

Offtake Agreements

 

1)Agreement for the Purchase and Sale of Crude Petroleum under the Chaza E&P
Contract, Guayuyaco Association Contract and the Santana Risk Participation
Contract between Ecopetrol S.A. and Gran Tierra Energy Colombia, Ltd., effective
December 1, 2012, expiring November 30, 2013.

 

2)Agreement for the Purchase and Sale of Crude Petroleum under the Chaza E&P
Contract and the Guayuyaco Association Contract between Ecopetrol S.A. and
Petrolifera Petroleum (Colombia) Limited effective December 1, 2012, expiring
November 30, 2013

 

3)Agreement for the Purchase and Sale of Crude Petroleum under the Jilguero and
Melero wells located under the Garibay E&P Contract between Petrobras Colombia
Limited and Petrolifera Petroleum (Colombia) Limited., effective July 1, 2013,
expiring December 31, 2013.

 

4)Agreement for the Purchase and Sale of Crude Petroleum under the Ramiriquí
well located under the Llanos - 22 E&P Contract between Petrobras Colombia
Limited and Gran Tierra Energy Colombia Ltd., effective February 1, 2013,
expiring January 31, 2014.

 

5)Agreement for the Purchase and Sale of Crude Petroleum under the Chaza E&P
Contract and the Guayuyaco Association Contract between Emerald Energy Plc
Sucursal Colombia and Petrolifera Petroleum (Colombia) Limited effective May 12,
2012, expiring May 11, 2014.

 

6)Agreement for the Purchase and Sale of Crude Petroleum under the Chaza E&P
Contract, Guayuyaco Association Contract and the Santana Risk Participation
Contract between Emerald Energy Plc Sucursal Colombia and Gran Tierra Energy
Colombia Ltd effective May 12, 2012, expiring May 11, 2014.

 

7)Agreement for the Purchase and Sale of Crude Petroleum under the Chaza E&P
Contract between Gunvor Colombia SAS. and Petrolifera Petroleum  (Colombia)
Limited effective December 3, 2012, expiring December 2, 2013.

 

8)Agreement for the Purchase and Sale of Crude Petroleum under the Chaza E&P
Contract  between Gunvor Colombia SAS. and Gran Tierra Energy Colombia Ltd.
effective December 3, 2012, expiring December 2, 2013.

 

9)Agreement for the Purchase and Sale of Crude Petroleum under the Garibay
Contract between Petrolifera Petroleum (Colombia) Limited and Cepcolsa, executed
on May 30, 2013, effective April 1, 2013, expiring March 31, 2014.

 

10)Agreement for the Purchase and Sale of Crude Petroleum under the Llanos 22
Contract between Gran Tierra Energy Colombia Ltd. and Cepcolsa, executed May 30,
2013, effective April 1, 2013, expiring March 31, 2014.

 

11)Agreement with offer to purchase crude from Block Rec-T-155, between Gran
Tierra Energy do Brasil Ltda and Petroleo Brasileiro S.A., signed on November 8,
2011 expiring on September, 2012 an amended to expire on Dec 2012.

 

12)Agreement with offer to purchase crude from Block Rec-T-155, between Gran
Tierra Energy do Brasil Ltda and Petroleo Brasileiro S.A., signed on January 01,
2013 expiring on December 2013, amended on April 1, 2013 to expire on March 31,
2014.

 

Schedule 1.02(c) – Page 1

 

 

13)Agreement for the Purchase and Sale of Gas under the Llanos - 22 Contract
between Equion Energy Limited S.A and Cepsa Colombia S.A. effective April 23,
2013, expiring October 22, 2013.  Gran Tierra Energy Colombia Ltd. is a
co-participant in this Agreement by way of a Mandate Agreement between Cepsa
Colombia S.A. and Gran Tierra Energy Colombia Ltd. effective Aril 23, 2013,
expiring October 22, 2013.

 

14)Agreement for the Purchase and Sale of Gas under the Sierra Nevada contract,
for the Brillante Sureste 1X well, Contract between Comercializadora de Energía,
GAS y servicio S.A ESP GEACOM and Petrolifera Petroleum (Colombia) Limited
effective November 9, 2010, started on August 23, 2011 and expiring August 23,
2014.

 

15)Agreement for the Purchase and Sale of Gas under the Llanos 22 Contract
between Gran Tierra Energy Colombia and Kronos Energy S.A. ESP, executed April
23, 2013, expiring October 22, 2013.

  

Schedule 1.02(c) – Page 2

 

 

Schedule 7.05

Litigation

 

1.Ecopetrol S.A. v. Gran Tierra Energy Colombia Ltd. and Petrolifera Petroleum
(Colombia) Limited.

 

Ecopetrol S.A. (“Ecopetrol”) and Gran Tierra Energy Colombia Ltd. (“GTEC”), the
contracting parties of the Guayuyaco Association Contract (the “Guayuyaco
Association Contract”), are engaged in a dispute regarding the interpretation of
the procedure for allocation of oil produced and sold during the long term test
of the Guayuyaco-1 and Guayuyaco-2 wells. There is a material difference in the
interpretation of the procedure established in Clause 3.5 of Attachment-B of the
Guayuyaco Association Contract. Ecopetrol interprets the contract to provide
that the extended test production up to a value equal to 30% of the direct
exploration costs of the wells is for Ecopetrol’s account only and serves as
reimbursement of its 30% back-in to the Guayuyaco discovery. GTEC’s contention
is that this amount is merely the recovery of 30% of the direct exploration
costs of the wells and not exclusively for benefit of Ecopetrol. There has been
no agreement between the parties, and Ecopetrol filed a lawsuit in the
Administrative Tribunal in the District of Cauca regarding this matter. GTEC
filed a response on April 29, 2008 in which it refuted all of Ecopetrol’s claims
and requested a change of venue to the courts in Bogota. Closing arguments were
presented by all parties during 2009. During the first quarter of 2013, the
Administrative Tribunal in the District of Cauca Province ruled against GTEC and
Petrolifera Petroleum (Colombia) Limited (“Petrolifera”) over the interpretation
of the procedure established in the Guayuyaco Association Contract. The ruling
requires GTEC and Petrolifera to pay Ecopetrol 44,025bb. On March 20th, 2013,
GTEC and Petrolifera appealed such decision before the Council of State of
Colombia.

 

2.Gran Tierra Energy Colombia Ltd. and Petrolifera Petroleum (Colombia) Limited
vs. Agencia Nacional de Hidrocarburos

 

Dispute related with the contractual interpretation of clause 16.2 of the Chaza
Exploration and Exploitation Contract executed between GTEC, Petrolifera and the
National Hydrocarbons Agency (the “ANH”) (hereinafter the “Chaza Contract”), in
regards to the moment as of which the Moquetá field must be subject to the
application of the High Pricing Rights (as defined in the Chaza Contract). The
ANH sustains that in accordance with the Chaza Contract, the production of the
total contracted area must be accumulated for purposes of applying the payment
of the High Pricing Rights. In this vein, taking into account that the accrued
production of such area surpassed 5 million barrels of liquid hydrocarbons, GTEC
and Petrolifera would have acquired the obligation to make the payment of the
High Pricing Rights in regards to the Moquetá field, as from the first barrel of
crude produced.

 

On the other hand, GTEC and Petrolifera sustain that the High Pricing Rights
must be applied to each exploitation area, individually and independently
considered, without it being possible to accumulate the production of more than
one area. In accordance with the latter, the payment of High Pricing Rights in
relation with the Moquetá Field, would only be enforceable once said field
exceeds an accrued production of 5 million barrels of crude, regardless of the
production generated in other exploitation areas located in the contracted area
of the Chaza Contract.

 

Considering the parties did not reach an agreement in regards to this subject,
GTEC and Petrolifera activated the arbitral clause established in the Chaza
Contract and filed an arbitral suit against the ANH on January 14, 2013. Up to
this date, the Arbitral Tribunal has been installed and the arbitral lawsuit was
admitted.

 

Pending: The ANH has 45 business days to answer the arbitral lawsuit (Approx.
September 4th, 2013).

 

Schedule 7.05 – Page 1

 

 

3.Carlos Arturo Tisoy vs. Corriente Alterna and Gran Tierra Energy Colombia Ltd.

The plaintiff, an ex-contractor of Corriente Alterna (Contractor of GTEC) has
filed a labour action vs. GTEC (as a party severally responsible), claiming an
invalidity pension derived from a supposed work accident suffered during his
employment with Corriente Alterna. GTEC has argued that it has no relationship
with the plaintiff. The legal/commercial relationship existed solely and
exclusively with GTEC’s contractor, Corriente Alterna which acted as the
employer of the plaintiff. Amount: Currently this dispute has no value.
Estimated amount US$20,891.

 

4.National Tax and Customs Office (DIAN) v. Solana Petroleum Exploration
Colombia Limited (today Petrolifera Petroleum (Colombia) Limited).

 

On February 17th, 2012, Solana (today Petrolifera) received a notice from DIAN
in which such entity rejected a special deduction made on 2008 over some
unsuccessful investments, arguing that said investments did not generate income
and therefore were not subject to deductions. Solana answered DIAN’s notice on
May 16th, 2012. On November 13th, 2012, Petrolifera received a notice from DIAN
with the official liquidation. On January 14th, 2013 Petrolifera requested a
reconsideration of the official liquidation. Currently, a DIAN’s response is
pending.

 

5.National Tax and Customs Office (DIAN) v. Solana Petroleum Exploration
Colombia Limited (today Petrolifera Petroleum (Colombia) Limited).

 

On May 28th, 2012, Solana (today Petrolifera) received a notice from DIAN in
which it was increased the 2006 income tax base, based on the rejection of some
assets under construction not recorded in the accounts subject to the accounting
principles generally accepted in Colombia, and therefore not treated as “under
construction”. DIAN´s notice was answered by Solana (today Petrolifera) on
August 28th, 2012. On February 24th, 2013, DIAN issued an income tax return
official proposal. Based on a tax reform of 2012, Petrolifera paid to DIAN the
amount corresponding to due taxes without any penalties or interests. Pending:
to send a communication requesting the expiration of this administrative
process.

 

6.National Tax and Customs Office (DIAN) v. Solana Petroleum Exploration
Colombia Limited (today Petrolifera Petroleum (Colombia) Limited).

 

On June 28th, 2012, Solana (today Petrolifera) received a notice from the DIAN
in which it was rejected (i) the investments made by Solana in 2007 on
non-productive periods and (ii) some expenses made in 2007, claiming that they
did not have associated revenues. These expenses are related with the
cancellation of some investments made on contracts with $0 value. DIAN´s notice
was answered by Solana (now Petrolifera) on September 28th, 2012. On March 21th,
2013, DIAN issued an income tax return official proposal confirming the
rejections. On May 21st, 2013, Petrolifera made a reconsideration requested on
the official liquidation. A DIAN´s response about the appeal is pending.

  

Schedule 7.05 – Page 2

 

 

Schedule 7.06

Environmental Matters

 

None.

  

Schedule 7.06 – Page 1

 

 

Schedule 7.13

Subsidiaries

 

Subsidiary Jurisdiction of
Organization Percentage of
Equity Interests
Owned Nature of
Ownership Owner Gran Tierra Callco ULC Alberta 100% Shares Gran Tierra Energy
Inc. Gran Tierra Exchangeco Inc. Alberta 100% Shares Gran Tierra Callco ULC
Solana Resources Limited Alberta 9.5% Shares Gran Tierra Exchangeco Inc. Gran
Tierra Petroco Inc. Alberta 100% Shares Solana Resources Limited Petrolifera
Petroleum Limited Alberta 100% Shares Gran Tierra Petroco Inc. Petrolifera
Petroleum (US) Limited Delaware 100% Shares Petrolifera Petroleum Limited
Petrolifera Petroleum (Holdings) Limited Barbados 100% Shares Petrolifera
Petroleum Limited Petrolifera Petroleum (Peru) Limited Barbados 100% Shares
Petrolifera Petroleum (Holdings) Limited Petrolifera Petroleum Del Peru S.A.C.
Peru 99% Shares Petrolifera Petroleum (Peru) Limited     1% Shares Petrolifera
Petroleum (Holdings) Limited Petrolifera Petroleum (Americas) Limited Barbados
100% Shares Petrolifera Petroleum (Holdings) Limited Petrolifera Petroleum
(Americas) Limited Sucursal Argentina Argentina Branch 100% N/A Petrolifera
Petroleum (Americas) Limited Petrolifera Petroleum Limited Sucursal Argentina
Argentina Branch 100% Shares Petrolifera Petroleum Limited Gran Tierra Energy
International Holdings Ltd. Cayman Islands 100% Shares Solana Resources Limited
Gran Tierra Luxembourg Holdings S.a.r.l. Luxembourg 100% Shares Gran Tierra
Energy International Holdings Ltd. Gran Tierra Finance (Luxembourg) S.a.r.l.
Luxembourg 53.8% Common Shares Gran Tierra Luxembourg Holdings S.a.r.l.
Luxembourg 46.2% Preferred Shares Gran Tierra Energy International Holdings Ltd.
Gran Tierra Brazco (Luxembourg) S.a.r.l. Luxembourg 100% Shares Gran Tierra
Finance (Luxembourg) S.a.r.l.

 

Schedule 7.13 – Page 1

 

 

Subsidiary Jurisdiction of
Organization Percentage of
Equity Interests
Owned Nature of
Ownership Owner Gran Tierra Energy Brasil Ltda. Brasil 97% Quotas Gran Tierra
Finance (Luxembourg) S.a.r.l. Brasil 3% Quotas Gran Tierra Brazco (Luxembourg)
S.a.r.l. Petrolifera Petroleum (Colombia) Limited Cayman Islands 100% Shares
Gran Tierra Energy International Holdings Ltd. Petrolifera Petroleum (Colombia)
Limited Colombia Branch 100% Shares Petrolifera Petroleum (Colombia) Limited
Gran Tierra Energy Cayman Islands Inc. Cayman Islands 100% Shares Gran Tierra
Energy International Holdings Ltd. Gran Tierra Energy Canada ULC Alberta 100%
Shares Gran Tierra Energy Cayman Islands Inc. Argosy Energy, LLC Delaware 100%
Membership Interest Gran Tierra Energy Cayman Islands Inc. Gran Tierra Energy
Colombia, Ltd. Utah 99.2857% Partnership Interest Gran Tierra Energy Cayman
Islands Inc.     0.7143% Partnership Interest Argosy Energy, LLC Gran Tierra
Energy Colombia Ltd. Colombia Branch 100% N/A Gran Tierra Energy Colombia, Ltd.
Gran Tierra Energy International (Peru) Holdings B.V. Curacao 100% Shares Gran
Tierra Energy International Holdings Ltd. Gran Tierra Energy Peru B.V. Curacao
100% Shares Gran Tierra Energy International (Peru) Holdings B.V. Gran Tierra
Energy Peru S.R.L. Peru 96.7% Shares Gran Tierra Energy International (Peru)
Holdings B.V.     3.3% Shares Gran Tierra Energy Peru B.V. 1203847 Alberta Inc.
Alberta 100% Shares Gran Tierra Energy Inc. Gran Tierra Goldstrike Inc. Alberta
100% Shares 1203847 Alberta Inc. Gran Tierra Energy Inc. Alberta 100% Shares
Gran Tierra Goldstrike Inc. PCESA Ecuador 100% Shares Gran Tierra Energy Inc.
(Alberta) Gran Tierra Energy Argentina S.R.L. Argentina 90% Shares Gran Tierra
Energy Inc. (Alberta)     10% Shares PCESA Gran Tierra Argentina Holdings ULC
Alberta 100% Shares Gran Tierra Energy Inc. (Alberta)

 

Schedule 7.13 – Page 2

 

 

Subsidiary Jurisdiction of
Organization Percentage of
Equity Interests
Owned Nature of
Ownership Owner P.E.T.J.A. S.A. Argentina 90% Shares Gran Tierra Energy
Argentina S.R.L.     10% Shares Gran Tierra Energy Inc. (Alberta)

  

Schedule 7.13 – Page 3

 

 

Schedule 7.18

Swap Agreements

 

None.

  

Schedule 7.18 – Page 1

 

 

Schedule 9.02

Debt

 

Lender  Borrower  Amount Owed
(USD)  Solana Resources Limited  Gran Tierra Energy Inc. [Alberta]  $79,269,262 
Gran Tierra Energy Canada ULC  Gran Tierra Energy Inc. [Alberta]   1,766,842 
Parent  Gran Tierra Energy Inc. [Alberta]   28,095,433  Gran Tierra Energy Inc.
[Alberta]  Gran Tierra Argentina Energy SRL   24,733,754  Gran Tierra Energy
Inc. [Alberta]  Gran Tierra Energy Colombia, Ltd.   52,321  Gran Tierra Energy
Inc. [Alberta]  Gran Tierra Exchangeco Inc.   130,188  Gran Tierra Energy Inc.
[Alberta]  Gran Tierra Energy Brasil Ltda.   1,097,967  Gran Tierra Energy Inc.
[Alberta]  Gran Tierra Energy Peru S.R.L.   101,266  Gran Tierra Energy Inc.
[Alberta]  Petrolifera Petroleum Del Peru S.A.C.   62,703  Gran Tierra Energy
Inc. [Alberta]  Petrolifera Petroleum (Colombia) Limited   216,416  Solana
Resources Limited  Gran Tierra Petroco Inc.   481,100  Solana Resources Limited 
Parent   481,100  Solana Resources Limited  Gran Tierra Energy Peru S.R.L. 
 36,010,086  Solana Resources Limited  Gran Tierra Energy Brasil Ltda. 
 2,000,000  Solana Resources Limited  Petrolifera Petroleum (Colombia) Limited 
 1,974,480  Borrower  Solana Resources Limited   33,800,000  Petrolifera
Petroleum (Colombia) Limited  Solana Resources Limited   30,939,000  Petrolifera
Petroleum Limited  Solana Resources Limited   1,848,183  Parent  Gran Tierra
Exchangeco Inc.   1,677,262  Parent  Gran Tierra Argentina Energy SRL 
 10,514,663  Parent  Gran Tierra Energy Peru S.R.L.   6,543,295  Parent  Gran
Tierra Energy Colombia, Ltd.   10,642,539  Parent  Gran Tierra Energy Brasil
Ltda.   10,286,128  Parent  Petrolifera Petroleum Limited   1,520,928  Parent 
Petrolifera Petroleum Limited Sucursal Argentina   1,866,942  Parent 
Petrolifera Petroleum (Colombia) Limited   9,959,914  Parent  Petrolifera
Petroleum Del Peru S.A.C.   367,535  Parent  Borrower   43,201  Parent  Gran
Tierra Energy Cayman Islands Inc.   4,736  Borrower  Gran Tierra Energy Cayman
Islands Inc.   9,200,000  Borrower  Gran Tierra Finance (Luxembourg) SARL 
 22,738,342  Borrower  Gran Tierra Energy Peru S.R.L.   1,951,000  Borrower 
Gran Tierra Energy International (Peru) Holdings B.V   118,395,878  Borrower 
Gran Tierra Energy Peru B.V.   3,938,022  Borrower  Petrolifera Petroleum
Limited   20,500,000  Borrower  Petrolifera Petroleum Limited Sucursal
Argentina   7,000,000  Borrower  Petrolifera Petroleum Del Peru S.A.C. 
 12,119,000  Borrower  Petrolifera Petroleum (Peru) Ltd.   53,200  Borrower  GTE
Brazco (Luxembourg) sarl   2,667,583  Borrower  Petrolifera Petroleum Holdings 
 54,100  Borrower  Petrolifera Petroleum (Americas) Ltd.   45,500  Gran Tierra
Energy Cayman Islands Inc.  Gran Tierra Energy Colombia, Ltd.   8,945,727 
Petrolifera Petroleum (Colombia) Limited  Borrower   177,315,980  Gran Tierra
Energy Colombia, Ltd.  Borrower   107,380,000  GTF Luxembourg  Gran Tierra
Energy Brasil Ltda.   70,889,176  Petrolifera Petroleum (Colombia) Limited 
Petrolifera Petroleum Holdings   1,990,760  Gran Tierra Argentina Energy SRL 
Gran Tierra Energy Peru S.R.L.   471,414  Gran Tierra Energy Peru S.R.L. 
Petrolifera Petroleum Del Peru S.A.C.   2,731,811  Gran Tierra Argentina Energy
SRL  Petrolifera Petroleum Limited Sucursal Argentina   12,664,257  Gran Tierra
Energy Colombia, Ltd.  Petrolifera Petroleum (Colombia) Limited   1,291,859 
Petrolifera Petroleum Holdings  Petrolifera Petroleum Limited Sucursal
Argentina   8,328,906  Petrolifera Petroleum (Americas) Ltd.  Petrolifera
Petroleum Holdings   26,161,791  Petrolifera Petroluem (Peru) Ltd  Petrolifera
Petroleum Holdings   1,730,000 

  

Schedule 9.02 – Page 1

 

 

Letters of credit:

 

Entity and guarantee purpose  Amount
(usd)   Expiry of
obligation  Expiry
of lc  Collateral  Issuer PEtrolifera Petroleum Canada Limited Corporate Letters
of Credit & Guarantees8 Colombia - E&P SIERRA NEVADA-Phase IV  $500,000  
31-Jul-13  30-Aug-13  Helm Facility  Helm  Bank Colombia - MAGDALENA (Phase
III)  $170,000   1-Nov-13  1-Dec-13  Bancolombia  Bancolombia Peru - BLOCK 133 -
2nd PERIOD  $750,000   1-Apr-13  2-May-13  Cash  National Bank of Canada Peru -
BLOCK 133 - 2nd PERIOD  $750,000   8-Aug-13  8-Aug-13  Export Development Canada
(“EDC”)  HSBC Canada Peru - BLOCK 107  $1,500,000   8-Jul-13  8-Aug-13  EDC &
Performance Service Guarantee (“PSG”)  HSBC Canada Petrolifera Petroleum
(Colombia) Limited - Letters of Credit & Guarantees LC for Petrolifera Petroleum
(Colombia) Limited - Garibay - Posterior Period - Cepcolsa  $300,000  
25-Jan-14  25-Feb-14  HSBC facility  HSBC Colombia Available cash balance held
in CDT  $23,000   N/A  N/A   Cash  Standard Bank Catguas Phases 2-3  $775,000  
6-Feb-14  6-Feb-14  Cash – Certificate of Deposit (“CDT”)  Banco de Occidente
Panama Solana Resources Limited - on behalf of Gran Tierra Energy Brasil Ltda. 9
GTEB - BRL 4,865,888 - Block Rec T 129 - ANP Brazil  $2,431,000   20-Oct-14 
20-Oct-14  EDC & PSG  HSBC Canada GTEB - BRL 4,865,888 - Block Rec T 155 - ANP
Brazil  $2,431,000   23-Jun-14  23-Jun-14  EDC & PSG  HSBC Canada GTEB - BRL
4,865,888 - Block Rec T 142 - ANP Brazil  $2,431,000   23-Jun-14  23-Jun-14  EDC
& PSG  HSBC Canada GTEB - BRL 4,865,888 - Block Rec T 224 - ANP Brazil 
$2,431,000   5-Jan-15  5-Jan-15  EDC & PSG  HSBC Canada GTEB - BMCAL 186 / BMCAL
120 (10% buffer)  $271,000   27-Nov-13  27-Nov-13  Cash  HSBC Canada GTEB - BRL
4,672,800 - Block CAL-M-186 - ANP Brazil  $2,334,000   27-Nov-13  27-Nov-13  EDC
& PSG  HSBC Canada GTEB - BRL 892,800 - Block CAL-M-120 - ANP Brazil  $446,000  
27-Nov-13  27-Nov-13  EDC & PSG  HSBC Canada

 

 

8 Colombia "facilities" are collateralized by a promissory note.

9 All of these have a standby from Solana Resources Limited, with a local LC in
Brazil, issued by HSBC Brazil.

 

Schedule 9.02 – Page 2

 

 

Entity and guarantee purpose  Amount
(usd)   Expiry of
obligation  Expiry
of lc  Collateral  Issuer GTEB - BRL 850,000 - Block 155 - ANP Brazil 
$4,246,000   27-Jan-15  27-Jan-15  EDC & PSG  HSBC Canada GTEB - BRL 850,000 -
Block 155 - ANP Brazil (10% Buffer)  $426,000   27-Jan-15  27-Jan-15  Cash  HSBC
Canada Gran Tierra Energy Colombia Ltd. - Letters of Credit & Guarantees
Piedemonte Sur Phase 2-3 - Beneficiary ANH  $558,000   16-Jun-13  16-Jun-13 
HSBC facility  HSBC Colombia Mecaya Phase 1-2, Beneficiary ANH  $820,000  
14-Jun-13  14-Jun-13  Helm Bank Facility  Helm Bank Putumayo-1 Phase 1  -
Beneficiary ANH  $6,650,000   3-Dec-13  3-Dec-13  Helm Bank Facility  Helm Bank
Chaza Phase 6 - Beneficiary ANH  $850,000   30-Jun-13  30-Jun-13  Helm Bank
Facility  Helm Bank Piedemonte Norte  Phase 1- Beneficiary ANH  $235,000  
17-Jun-13  17-Jun-13  Helm Bank Facility  Helm Bank Rumiyaco  Phase 2-3 -
Beneficiary ANH  $1,200,000   5-Sep-13  5-Sep-13  Helm Bank Facility  Helm Bank
PUT - 10 Phase 1 - Beneficiary ANH  $600,000   16-Mar-15  16-Mar-13  Helm Bank
Facility  Helm Bank Chaza Phase 1 - Beneficiary ANH  $850,000   26-Sep-13 
26-Sep-13  Helm Bank Facility  Helm Bank Cauca 6 & 7 LC for exploration 
$8,149,000   Jun 2016 /
Dec 2016  Jul 2016 /
Jan 2017  Helm Bank Facility  Helm Bank Llanos 22 - Phase 2 - Beneficiary ANH 
$383,000   4-May-14  4-May-14  Helm Bank Facility  Helm Bank OTA - VIT-024 
$645,000   30-Apr-14  30-Apr-14  Helm Bank Facility  Helm Bank OTA - VIT-023 
$7,277,000   30-Apr-14  30-Apr-14  Helm Bank Facility  Helm Bank PUT -
10  Additional Exploratory Program - Beneficiary ANH  $9,300,000   15-Mar-15 
15-Mar-15  Bancolombia  Bancolombia Gran Tierra Energy Peru S.R.L. - Letters of
Credit & Guarantees Block 128, phase 2 - Beneficiary Peru Petro  $1,150,000  
11-Jul-13  11-Jul-13  EDC & PSG  Banco de Credito/Standard Bank Block 95, phase
3 - Beneficiary Peru Petro  $2,000,000   9-Aug-13  9-Aug-13  EDC & PSG  HSBC
Bank /EDC Block 123, phase 3 extension (100%) - Perupetro  $1,500,000  
12-Jul-13  12-Jul-13  EDC & PSG  HSBC Bank /EDC Security for LC on behalf of GTE
Peru (Block 129, phase 3 )  $204,000   11-May-13  11-May-13  Cash  Banco de
Credito/Standard Bank Block 129, phase 3 - Perupetro  $1,020,000   9-Nov-13 
9-Nov-13  EDC & PSG  HSBC Bank /EDC

 

Schedule 9.02 – Page 3

 

 

Entity and guarantee purpose  Amount
(usd)   Expiry of
obligation  Expiry
of lc  Collateral  Issuer Security for LC (Block 122-Abandonment plan / Ben.
Ministerio de Energia y Minas)  $25,000   25-Jun-13  25-Jun-13  Cash  Banco de
Credito del Peru Security for LC (Block 128-Abandonment plan / Ben. Ministerio
de Energia y Minas)  $40,000   25-Jun-13  25-Jun-13  Cash  Banco de Credito del
Peru Security for LC (Block 123-Abandonment plan / Ben. Ministerio de Energia y
Minas)  $36,000   13-Jun-13  13-Jun-13  Cash  Banco de Credito del Peru Security
for LC (Block 129-Abandonment plan / Ben. Ministerio de Energia y Minas) 
$48,000   13-Jun-13  13-Jun-13  Cash  Banco de Credito del Peru

  

Schedule 9.02 – Page 4

 

 

Schedule 9.05

Investments

 

Owner  Subsidiary  Amount (USD)  Gran Tierra Energy Inc. [Alberta]  Gran Tierra
Argentina Energy SRL  $65,198,742  Gran Tierra Energy Inc. [Alberta]  PCESA 
 4,175,541  GTE Goldstrike  Gran Tierra Energy Inc. [Alberta]   32,632,911  Gran
Tierra Exchangeco Inc.  Solana Resources Limited   211,792,290  1203647 Alberta
Ltd  GTE Goldstrike   52,083,468  Gran Tierra Callco ULC  Gran Tierra Exchangeco
Inc.   211,792,290  Solana Resources Limited  Gran Tierra Petroco Inc. 
 193,762,599  Solana Resources Limited  Borrower   264,854,120  Parent  Gran
Tierra Callco ULC   211,792,290  Parent  1203647 Alberta   52,083,468  Gran
Tierra Petroco Inc.  Petrolifera Petroleum Limited   193,762,599  Petrolifera
Petroleum Limited  Petrolifera Petroleum (Holdings) Limited   124,462,461 
Petrolifera Petroleum (Holdings) Limited  Petrolifera Petroleum (Americas) Ltd 
 30,641,852  Petrolifera Petroleum (Holdings) Limited  Petrolifera Petroleum
(Colombia) Limited   3,553,769  Petrolifera Petroleum (Holdings) Limited 
Petrolifera Petroleum del Peru SAC   1,842,368  Petrolifera Petroleum (Holdings)
Limited  Petrolifera Petroleum (Peru) Ltd   54,142,005  Borrower  GTE Luxembourg
Holdings   86,337,589  Petrolifera Petroleum (Peru) Ltd  Petrolifera Petroleum
del Peru SAC   52,230,725  Borrower  Gran Tierra Energy Cayman Islands Inc. 
 46,600,984  Borrower  Petrolifera Petroleum (Colombia) Limited   116,896,220 
Borrower  GTE International (Peru) Holdings BV   15,102,001  Gran Tierra Energy
Cayman Islands Inc. Islands  Gran Tierra Energy Canada ULC   1,000  Gran Tierra
Energy Cayman Islands Inc. Islands  Gran Tierra Energy Colombia, Ltd. 
 31,319,117  GTE International (Peru) Holdings BV  Gran Tierra Energy Peru
S.R.L.   135,435,001  Gran Tierra Energy Peru B.V.  Gran Tierra Energy Peru
S.R.L.   4,439,002  GTE International (Peru) Holdings BV  Gran Tierra Energy
Peru B.V.   501,000  Gran Tierra Finance (Luxembourg) SARL  GTE Brazco
(Luxembourg) SARL   896,096  Gran Tierra Finance (Luxembourg) SARL  Gran Tierra
Energy Brasil Ltda.   103,332,819  GTE Luxembourg Holdings  Gran Tierra Finance
(Luxembourg) SARL   86,789,920  GTE Brazco (Luxembourg) SARL  Gran Tierra Energy
Brasil Ltda.   2,690,583 

 

Schedule 9.05 – Page 1