**EXHIBIT10.15**

 

CONFORMED COPY

 

 

**INVESTMENTNUMBER 24346**

 

**LoanAgreement**

 

**between**

 

**BPZ EXPLORACIÓN & PRODUCCIÓN S.R.L.**

 

**BPZ MARINE PERU S.R.L**

 

**and**

 

**INTERNATIONAL FINANCE CORPORATION**

 

**Dated asof August 15, 2008**

 

 

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**TABLE OFCONTENTS**

 
| **Article/  Section** | ** **                         | **Item**   | ** ** | **Page No.** |
|-----------------------|------------------------------------|------------|------------|-------------------|
| ** **            | ** **                         | ** ** |
| **ARTICLE I**         | **DEFINITIONS AND INTERPRETATION** | **1**      |
| Section 1.01.    | Definitions                        | 1          |
| Section 1.02.    | Interpretation                     | 5          |
| Section 1.03.    | Business Day Adjustment            | 5          |
| Section 1.04.    | Common Terms Agreement             | 5          |
|                  |                               |       |
| **ARTICLE II**        | **THE IFC FACILITY**               | **5**      |
| Section 2.01.    | The IFC Facility                   | 5          |
| Section 2.02.    | Disbursement Procedure             | 6          |
| Section 2.03.    | Interest                           | 6          |
| Section 2.04.    | Default Rate Interest              | 7          |
| Section 2.05.    | Repayment                          | 8          |
| Section 2.06.    | Prepayment                         | 8          |
| Section 2.07.    | Fees                               | 9          |
| Section 2.08.    | Currency and Place of Payments     | 10         |
| Section 2.09.    | Allocation of Partial Payments     | 10         |
| Section 2.10.    | Increased Costs                    | 10         |
| Section 2.11.    | Unwinding Costs                    | 10         |
| Section 2.12.    | Suspension or Cancellation by IFC  | 11         |
| Section 2.13.    | Cancellation by the Borrower       | 12         |
| Section 2.14.    | Taxes                              | 12         |
| Section 2.15.    | Expenses                           | 12         |
| Section 2.16.    | Illegality of Participation        | 13         |
| Section 2.17     | Mitigation                         | 14         |

 

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| ARTICLE III        | **CONDITIONS OF DISBURSEMENT**   | **14** |
|--------------------|----------------------------------|--------|
| Section 3.01. | Conditions of Disbursement       | 14     |
| Section 3.02. | Borrower’s Certification    | 14     |
| Section 3.03. | Conditions for IFC Benefit       | 15     |
|               |                             |   |
| **ARTICLE IV**     | **MISCELLANEOUS**                | **15** |
| Section 4.01. | Saving of Rights                 | 15     |
| Section 4.02. | Notices                          | 15     |
| Section 4.03. | English Language                 | 17     |
| Section 4.04. | Term of Agreement                | 17     |
| Section 4.05. | Disclosure of Information        | 17     |
| Section 4.06. | Successors and Assignees         | 17     |
| Section 4.07. | Amendments, Waivers and Consents | 18     |
| Section 4.08. | Governing Law                    | 18     |
| Section 4.09. | Dispute Resolution               | 18     |
| Section 4.10. | Counterparts                     | 18     |

 

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**LOANAGREEMENT**

 

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

 

**RECITALS**

 

IFC, the Borrowers and theAdditional Secured Facility Lenders (upon accession thereto) have entered orwill enter into a Common Terms Agreement dated as of the date hereof (the “**Common Terms Agreement**”) which sets out, interalia,certain terms and conditions under which the Lenders shall provide revolvingcredit facilities to the Borrowers; and

 

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

 

# **ARTICLE IDefinitions and Interpretation**

# ** **

## Section 1.01.                             *Definitions*.  Wherever used in this Agreement, termsdefined in the Common Terms Agreement (as defined below) shall have the samemeanings herein unless otherwise defined herein.  In addition, the following terms have themeanings opposite them:

##  

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

 

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

 

“Disbursement”                                                                                                          anydisbursement of the Loans;

 

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

 

“Increased Costs”                                                                                              theamount certified in an Increased Costs Certificate to be the net incrementalcosts of, or reduction in return to, IFC or any participant who has acquired aparticipation in the Loans in connection with the making or maintaining of theLoans that result from:

 

(i)                                     anychange in any applicable law or regulation or directive (whether or not havingthe force of law) or in its interpretation or application by any Authoritycharged with its administration; or

 

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

 

which, in eithercase, after the date of this Agreement (or, in the case of a participant thathas acquired a participation in the Loans, the date of its participationagreement):

 

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

 

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

 

(C)                                changesthe basis of taxation on payments received by IFC or such participant inrespect of the Loans or 

 

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

 

(D)                               imposeson IFC or such participant any other condition regarding the making ormaintaining of the Loans or such participation;

 

but excluding anyincremental costs of making or maintaining a participation in the Loans thatare a direct result of the relevant participant having its principal office inPeru or having or maintaining a permanent office or establishment in Peru, ifand to the extent that permanent office or establishment acquires thatparticipation.

 

“Increased Costs

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

 

(i)                                     thecircumstances giving rise to the Increased Costs;

 

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

 

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

 

(iv)                              theamount of Increased Costs;

 

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“Interest Determination

Date”                                                                                                                                                                 exceptas otherwise provided in Section 2.03 (d) (ii) (*Interest*), the second Business Day before the beginning ofeach Interest Period;

 

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

 

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

 

“Interest Rate”                                                                                                                forany Interest Period, the rate at which interest is payable on the Loan duringthat Interest Period, determined in accordance with Section 2.03 (*Interest*);

 

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

 

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

 

“Relevant Change”                                                                                         hasthe meaning specified in Section 2.16 (*Illegality ofParticipation*);

 

“Relevant Spread”                                                                                             2.75%per annum;

 

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

 

“Taxes”                                                                                                                                                     anypresent or future taxes, withholding obligations, duties and other charges ofwhatever nature levied by any Authority.

 

## Section 1.02.                             *Interpretation**.*  This Agreement shall be interpreted inaccordance with Section 1.3 (*Interpretation*)of the Common Terms Agreement.

##  

## Section 1.03.                             *Business DayAdjustment*. (a) When an Interest Payment Date is not a Business Day, then suchInterest Payment Date shall be automatically changed to the next Business Dayin that calendar month (if there is one) or the preceding Business Day (ifthere is not).

##  

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

 

## Section 1.04.                             *Common TermsAgreement*. This Agreement constitutes the IFC Loan Agreement referred to in theCommon Terms Agreement and the provisions of the Common Terms Agreement arehereby incorporated herein by this reference. In the event of any conflict between the provisions of this Agreementand the Common Terms Agreement, the provisions of this Agreement shall prevail.

##  

# **ARTICLE II**

# ** **

# **The IFC Facility**

# ** **

## Section 2.01.                             *The IFC Facility*.  (a) Subject to the provisions of thisAgreement and the Common Terms Agreement, IFC agrees to make available to theBorrowers a revolving loan facility of up to fifteen million Dollars($15,000,000) (the “**IFC Facility**”).

##  

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

 

(c)                                  TheBorrowers’ obligations under this Agreement and the other Finance Documents arejoint and several.

 

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## Section 2.02.                             *DisbursementProcedure**.*

##  

(a)                                  TheBorrowers may request Disbursements during the Availability Period bydelivering to IFC, at least ten (10) Business Days prior to the proposeddate of disbursement, a Disbursement Application substantially in the form ofSchedule 1.

 

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

 

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

 

(d)                                 TheBorrowers shall deliver to IFC a receipt, substantially in the form of Schedule2, within five (5) Business Days following each Disbursement.

 

(e)                                  Oneach Interest Payment Date on which there are any Loans outstanding, theBorrowers shall be conclusively deemed to have delivered to IFC a RolloverRequest in accordance with Section 3.3 (*RolloverLoans*) of the Common Terms Agreement.

 

## Section 2.03.                             *Interest.*  Subject to the provisions of Section 2.04(*Default Rate Interest*), the Borrowershall pay interest on each Loan in accordance with this Section 2.03:

##  

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

 

(b)                                 Intereston each Loan shall accrue from day to day, be prorated on the basis of a360-day year for the actual number of days in the relevant Interest Period andbe payable in arrears on the Interest Payment Date immediately following theend of that Interest Period.

 

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

 

(i)                                     theRelevant Spread; and

 

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

 

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the longer one)) roundedupward to the nearest three decimal places.

 

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

 

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

 

(ii)                                  ifless than two (2) quotations are received from the banks in London inaccordance with subsection (i) above, on the first day of the relevantInterest Period, by calculating the arithmetic mean (rounded upward to thenearest three decimal places) of the offered rates advised to IFC on or around11:00 a.m., New York time, for loans in Dollars and otherwise inaccordance with Section 2.03 (c) (ii), by a major bank or banks inNew York, New York selected by IFC.

 

(e)                                  Oneach Interest Determination Date for any Interest Period, IFC shall determinethe Interest Rate applicable to that Interest Period and promptly notify theBorrowers of those rates.

 

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

 

## Section 2.04.                             *Default RateInterest*.  (a) Withoutlimiting the remedies available to IFC under this Agreement or otherwise (andto the maximum extent permitted by applicable law), if any Borrower fails tomake any payment of principal or interest (including interest payable pursuantto this Section) or any other payment provided for in Section 2.07 (*Fees*) when due as specified in this Agreement (whether atstated maturity or upon acceleration), the Borrowers shall pay interest on theamount of that payment due and unpaid at the rate which shall be the sum of twoper cent (2%) per annum and the Interest Rate in effect from time to time.

 

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

 

## Section 2.05.                             *Repayment**. *(a) Subjectto Section 1.03 (*Business Day Adjustment*)and Section 2.02(e) (*Disbusement Procedure*),the Borrowers shall repay each Loan in full on the Interest Payment Dateimmediately following the date of Disbursement of such Loan.

##  

(b)                                 Subjectto the terms of this Agreement and the Common Terms Agreement, the principalamount of any Loan repaid under this Agreement may be re-borrowed.

 

## Section 2.06.                             *Prepayment**. *Without prejudice toSection 2.16 (*Illegality ofParticipation*):

##  

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

 

(i)                                     theBorrower simultaneously pays all accrued interest and Increased Costs (if any)on the amount of the Loans to be prepaid, together with all other amounts thendue and payable under this Agreement, including the amount payable under Section 2.11(*Unwinding Costs*), if the prepayment isnot made on an Interest Payment Date;

 

(ii)                                  fora partial prepayment, that prepayment is an amount not less than three hundredseventy-five thousand Dollars ($375,000); and

 

(iii)                               ifrequested by IFC, the Borrowers deliver to IFC, prior to the date ofprepayment, evidence reasonably satisfactory to IFC that all necessaryAuthorizations with respect to the prepayment have been obtained.

 

(b)                                 TheBorrowers shall make the prepayment in accordance with the terms of any noticedelivered in accordance with Section 2.06(a).

 

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

 

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## Section 2.07.                             *Fees**. *(a) TheBorrowers shall pay to IFC a commitment fee:

##  

(i)                                     atthe rate of one per cent (1%) per annum on an amount equal to that part of theMaximum Available Amount of the IFC Facility that from time to time has notbeen disbursed or canceled, beginning to accrue on the date of this Agreement;

 

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

 

(iii)                               prorated on the basis of a 360-day year for the actual number of dayselapsed; and

 

(iv)                              payablesemi-annually, in arrears, on each Interest Payment Date, the first suchpayment to be due on December 31, 2008.

 

(b)                                 TheBorrowers shall also pay to IFC:

 

(i)                                     afront-end fee of one and one-half percent (11⁄2%) of the amount of the IFCFacility, to be paid on the earlier of (x) the date which is thirty (30)days after the date of this Agreement and (y) the date immediatelypreceding the date of the first Disbursement;

 

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

 

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

 

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## Section 2.08.                             *Currency and Placeof Payments*. (a) The Borrowers shall make all payments of principal, interest,fees, and any other amount due to IFC under this Agreement in Dollars, in sameday funds, to the account of IFC at Citibank N.A., 111 Wall Street, New York,New York, U.S.A., ABA #021000089*,* for credit toIFC’s account number 36085579, or at such other bank or account as IFC fromtime to time designates, quoting Investment No. 24346.  Payments must be received in IFC’s designatedaccount no later than 1:00 p.m. New York time.

##  

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

 

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

 

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

 

## Section 2.09.                             *Allocation ofPartial Payments**.*  If at any time IFC receives less than thefull amount then due and payable to it under this Agreement, IFC may allocateand apply the amount received in any way or manner and for such purpose orpurposes under this Agreement as IFC in its sole discretion determines,notwithstanding any instruction that the Borrowers may give to the contrary.

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## Section 2.10.                             *Increased Costs*.  On each Interest Payment Date, the Borrowersshall pay, in addition to principal and interest, the amount which IFC fromtime to time notifies to the Borrowers in an Increased Costs Certificate asbeing the aggregate Increased Costs accrued and unpaid prior to that InterestPayment Date.

##  

## Section 2.11.                             *Unwinding Costs*.  (a) If IFC incurs any cost, expense orloss (other than loss of the Relevant Spread) as a result of the Borrowers:

 

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

 

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

 

(iii)                               prepayingall or any portion of the Loans; or

 

(iv)                              afteracceleration of the Loans, paying all or a portion of the Loans on a date otherthan an Interest Payment Date;

 

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

 

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

 

## Section 2.12.                             *Suspension orCancellation by IFC*.  (a) IFC may, by notice to the Borrowers,suspend or cancel the right of the Borrowers to the undisbursed portion of the IFCFacility in whole or in part:

##  

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

 

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

 

(iii)                               anyevent or condition has occurred which has or can be reasonably expected to havea Material Adverse Effect.

 

(b)                                 Uponthe giving of any such notice, the right of the Borrowers to any furtherDisbursement of the undisbursed portion of the IFC Facility shall be suspendedor canceled, as the case may be.  Theexercise by IFC of its right of suspension shall not preclude IFC fromexercising its right of cancellation, either for the same or any other reasonspecified in Section 2.12(a) and shall not limit any other provisionof this Agreement.  Upon any cancellationthe Borrowers shall, subject to paragraph (c) of this Section 2.12,pay to IFC all fees and other amounts accrued (whether or not then due andpayable) under this Agreement up to the date of that cancellation.

 

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(c)                                  Inthe case of partial cancellation of the undisbursed portion of the IFC Facilitypursuant to paragraph (a) of this Section 2.12, or Section 2.13(a),interest on the amount then outstanding of the Loans remains payable asprovided in Section 2.03 (*Interest*).

 

## Section 2.13.                             *Cancellation bythe Borrowers*. (a) Subject to the requirements of Section 3.9 (*Cancellation by the Borrowers*) of the Common TermsAgreement, the Borrowers may, by notice to IFC, irrevocably request IFC tocancel, in whole or in part, the undisbursed portion of the IFC Facility on thedate specified in that notice (which shall be a date not earlier than fifteen(15) days after the date of that notice); provided that the Borrowers mayrequest any such cancellation only once in any Financial Year.

##  

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

 

(c)                                  Anyportion of the Facility that is cancelled under this Section 2.13 may notbe reinstated or disbursed.

 

## Section 2.14.                             *Taxes*.  (a) The Borrowers shall pay or cause tobe paid all Taxes (other than taxes, if any, payable on the overall income ofIFC)onor in connection with the payment of any and all amounts due under thisAgreement that are now or in the future levied or imposed by any Authority ofthe Republic of Peru or by any organization of which the Republic of Peru is amember or any jurisdiction through or out of which a payment is made.

##  

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

 

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

 

(d)                                 IfSection 2.14 (c) applies and IFC so requests, the Borrowers shalldeliver to IFC official tax receipts evidencing payment (or certified copies ofthem) within thirty (30) days of the date of that request.

 

## Section 2.15.                             *Expenses**.*  (a) The Borrowers shall pay or, as thecase may be, reimburse IFC or its assignees any amount paid by them on accountof, all 

 

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

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

 

(i)                                     thefees and expenses set forth in Section 6.14 (*Costs andExpenses*) of the Common Terms Agreement; and

 

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

 

(A)                              Project-relateddue diligence conducted and the preparation of the investment by IFC providedfor under this Agreement and any other Transaction Document; and

 

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

 

## Section 2.16.                             *Illegality ofParticipation*. If IFC has sold a participation in the Loans and after the date of thisAgreement, any change made in any applicable law or regulation or officialdirective (or its interpretation or application by any Authority charged withits administration) (herein the “Relevant Change”) makes it unlawful for theparticipant acquiring that participation to continue to maintain or to fund itsparticipation:

##  

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

 

(b)                                 concurrentlywith the prepayment of the part of the Loans corresponding to the participationaffected by the Relevant Change, the Borrowers shall pay all accrued interest,Increased Costs (if any) on that part of the Loans (and, if that prepayment isnot made on an Interest Payment Date, any amount payable in respect of the prepaymentunder Section 2.11 (*Unwinding Costs*));and

 

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

 

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## Section 2.17.                             *Mitigation**. *If the Borrowersbecome obligated to make payments or prepay Loans under Section 2.10 (*Increased Costs*) or 2.16 (*Illegalityof Participation*), IFC shall request the relevant participant totake such steps (to the extent it can lawfully do so and without prejudice toits own position) as are reasonably available to it with a view to mitigatingthe circumstances giving rise to such payment obligation*s.*

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# **ARTICLE III**

# ** **

# **Conditions of Disbursement**

# ** **

## Section 3.01.                             *Conditions ofDisbursement**.*  (a)  The obligation of IFC to make anyDisbursement is subject to the fulfillment prior to or concurrently with themaking of such Disbursement of the conditions set forth in Section 4.1 (*First Disbursement under each Facility*), Section 4.2 (*Special Conditions for First Disbursement under IFC Facility*)and Section 4.4 (*All Disbursements underthe Facilities*) of the Common Terms Agreement; and

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

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## Section 3.02.                             *Borrower’sCertification*. (a)  The Borrowers shall deliver to IFC with respect to eachrequest for Disbursement:

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

 

(ii)                                  suchevidence as IFC may reasonably request of the proposed utilization of theproceeds of that Disbursement or the utilization of the proceeds of any priorDisbursement.

 

(b)                                 Withrespect to Rollover Loans, the Borrowers shall be deemed to have provided thecertifications set forth in Schedule 1 as of the Interest Payment Date uponwhich such Rollover Loan is made.

 

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## Section 3.03.                             *Conditions forIFC Benefit*. The conditions in Section 4 (*Conditions Precedent*)of the Common Terms Agreement and in this Article III are for the benefitof IFC and may be waived only by IFC in its sole discretion.

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# **ARTICLE IVMiscellaneous**

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## Section 4.01.                             *Saving of Rights*.  (a) Therights and remedies of IFC in relation to any misrepresentation or breach ofwarranty on the part of the Borrowers shall not be prejudiced by anyinvestigation by or on behalf of IFC into the affairs of the Borrowers, by theexecution or the performance of this Agreement, or by any other act or thingwhich may be done by or on behalf of IFC in connection with this Agreement andwhich might, apart from this Section, prejudice such rights or remedies.

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(b)                                 Nocourse of dealing or waiver by IFC in connection with any condition ofDisbursement of any Loan under this Agreement shall impair any right, power orremedy of IFC with respect to any other condition of Disbursement, or beconstrued to be a waiver thereof; nor shall the action of IFC with respect toany Disbursement affect or impair any right, power or remedy of IFC withrespect to any other Disbursement.

 

*(c)*                                  Unless otherwisenotified to the Borrowers by IFC and without prejudice to the generality of Section 4.01(b),the right of IFC to require compliance with any condition under this Agreementthat may be waived by IFC with respect to any Disbursement is expresslypreserved for the purposes of any subsequent Disbursement.

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*(d)*                                 No course ofdealing and no failure or delay by IFC in exercising, in whole or in part, anypower, remedy, discretion, authority or other right under this Agreement or anyother agreement shall waive or impair, or be construed to be a waiver of, suchor any other power, remedy, discretion, authority or right under thisAgreement, or in any manner preclude its additional or future exercise; norshall the action of IFC with respect to any default, or any acquiescence by ittherein, affect or impair any right, power or remedy of IFC with respect to anyother default.

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## Section 4.02.                             *Notices*.  Any notice, request or other communication tobe given or made under this Agreement shall be in writing.  Subject to Sections 6.17(j) and (k) (*Furnishing of Information by the Borrower*) of the CommonTerms Agreement and Section 9.7 (*Jurisdiction andEnforcement*) of the Common Terms Agreement, any such communicationmay be delivered by hand, airmail, facsimile or established courier service tothe party’s address specified below or at such other address as such partynotifies to the other party from time to time, and will be effective uponreceipt.

 

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For the Borrowers:

 

BPZExploración & Producción S.R.L.

BPZ MarinePeru S.R.L.

Attention:  General Manager

Manualde Falla #297

SanBorja, Lima

Peru

 

Facsimile:  (011-511) 225-3289

 

and

 

BPZResources Inc.

Attention:  Chief Financial Officer or General Counsel

TwoWestlake

580Westlake Park Blvd., Suite 525

Houston,Texas 77079

 

Facsimile:(281) 556-6377

 

For IFC:

 

International FinanceCorporation

2121 Pennsylvania Avenue,N.W.

United States of America

 

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

 

Facsimile:                                            (202) 974-4768

 

With acopy (in the case of communications relating to payments) sent to the attentionof the Director, Department of Financial Operations, at:

 

Facsimile:                                            (202) 522-7419.

 

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## Section 4.03.                             *English Language*.  (a) All documents to be provided orcommunications to be given or made under this Agreement shall be in the Englishlanguage.

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

 

## Section 4.04.                             *Term ofAgreement*. This Agreement shall continue in force until all monies payable under ithave been fully paid in accordance with its provisions.

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## Section 4.05.                             *Disclosure ofInformation*. (a) IFC may disclose any documents or records of, or informationabout, this Agreement or any other Transaction Document, or the assets,business or affairs of the Borrowers to:

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(i)                                     itsoutside counsel, auditors and rating agencies,

 

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

 

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

 

(b)                                 TheBorrowers acknowledge and agree that, notwithstanding the terms of any otheragreement between the Borrowers and IFC, a disclosure of information by IFC inthe circumstances contemplated by Section 4.05(a) does not violateany duty owed to the Borrowers under this Agreement or under any such otheragreement.

 

## Section 4.06.                             *Successors andAssignees*. This Agreement binds and benefits the respective successors andassignees of the parties.  However, theBorrowers may not assign or delegate any of their rights or obligations underthis Agreement without the prior consent of IFC.  IFC may assign or delegate any of 

 

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its rights and obligations under the other Finance Documents inconnection with any assignment or delegation of rights and obligations underthis Agreement.

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## Section 4.07.                             *Amendments,Waivers and Consents**.*  Any amendment or waiver of, or any consentgiven under, any provision of this Agreement shall be in writing and, in thecase of an amendment, signed by the parties.

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## Section 4.08.                             *Governing Law**.*  This Agreement is governed by, and shall beconstrued in accordance with, the laws of the State of New York, United Statesof America.

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## Section 4.09.                             *DisputeResolution*. The provisions*of Sections 9.7 (**Jurisdiction and Enforcement**) and 9.8 (**Privileges and Immunities**) of the CommonTerms Agreement shall be applicable to this Agreement as if set forth in fullherein.*

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## Section 4.10.                             *Counterparts*.  This Agreement may be executed in severalcounterparts, each of which is an original, but all of which togetherconstitute one and the same agreement.

 

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

 

 
|   | **BPZ EXPLORACIÓN & PRODUCCIÓN  S.R.L.** |
|--------|-------------------------------------------------------------|
|   |                                                        |   |
|   |                                                        |   |
|   | By:                                                         | /s/ | Manuel Pablo Zúñiga-Pflücker |
|   |                                                        | Name: | Manuel Pablo Zúñiga-Pflücker |
|   |                                                        | Title: | President and CEO |
|   |                                                        |   |
|   |                                                        |   |
|   | **BPZ MARINE PERU S.R.L.**                                  |
|   | ** **                                                  |
|   |                                                        |   |
|   | By:                                                         | /s/ | Manuel Pablo Zúñiga-Pflücker |
|   |                                                        | Name: | Manuel Pablo Zúñiga-Pflücker |
|   |                                                        | Title: | President and CEO |

 

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|   | **INTERNATIONAL FINANCE  CORPORATION** |
|--------|----------------------------------------|
|   | ** **                             |
|   |                                   |   |
|   | By:                                    | /s/ | William Bullmer |
|   |                                   | Name: | William Bullmer |
|   |                                   | Title: | Associate Director |

 

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SCHEDULE 1

 

FORM OF REQUEST FORDISBURSEMENT

 

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

 

[BPZExploración/BPZ Marine’s Letterhead]

 

[Date]

 

International FinanceCorporation

2121 Pennsylvania Avenue,N.W.

Washington, D.C. 20433

United States of America

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

 

Ladies and Gentlemen:

 

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

 

1.                                       Pleaserefer to the Loan Agreement (the “**Loan Agreement**”)dated as of August 15, 2008, between BPZ Exploración & ProducciónS.R.L. (“**BPZ Exploración**”), BPZ Marine PeruS.R.L. (“**BPZ Marine**”) and International FinanceCorporation (“**IFC**”) and the Common TermsAgreement referred to therein. Terms defined in the Loan Agreement have theirdefined meanings whenever used in this request.

 

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

 

3.                                       Forthe purpose of Article III of the Loan Agreement, the Borrower certifiesas follows:

 

(a)                                  noEvent of Default and no Potential Event of Default has occurred and iscontinuing;

 

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*                                         Eachto be numbered in series.

 

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SCHEDULE 1

 

(b)                                 theproceeds of the Disbursement are at the date of this request needed by theBorrowers for the purpose of (i) the Project, or will be needed for suchpurpose within three (3) months of such date, (ii) the PermittedNueva Esperanza Credit Support or (iii) establishing cash collateral infull for BPZ Exploración’s obligations secured under the Import Duty Contractpursuant to Section 6.1(b) (*Use of Proceeds*)of the Common Terms Agreement;

 

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

 

(d)                                 therepresentations and warranties made in Section 5 of the Common TermsAgreement (other than in Sections 5.1(f) and 5.1(h)) are true on the dateof this request and will be true on the date of Disbursement with the sameeffect as if such representations and warranties had been made on and as ofeach such date, except that in the event any such representation or warrantyhas been expressly made only as of an earlier date, such representation andwarranty is true and correct in all material respects as of such earlier date;

 

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

 

(f)                                    noLender has suspended or cancelled its commitment to make Loans in accordancewith the terms of its Facility Agreement to the extent permitted to do sopursuant to the express terms thereof.

 

The above certificationsare effective as of the date of this Request for Disbursement and shallcontinue to be effective as of the date of the Disbursement.  If any of these certifications is no longervalid as of or prior to the date of the requested Disbursement, the Borrowerundertakes to immediately notify IFC.

 
|   | Yours truly,                                                                    |
|--------|---------------------------------------------------------------------------------|
|   |                                                                            |
|   | BPZ EXPLORACIÓN & PRODUCCIÓN   S.R.L./BPZ MARINE PERU S.R.L. |
|   |                                                                            |
|   |                                                                            |
|   | By:                                                                             |   |
|   |                                                                            | Authorized Representative |

 
| Copy to: | Director, Department of Financial Operations International Finance  Corporation |
|----------|---------------------------------------------------------------------------------|

 

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SCHEDULE 2

 

FORM OF DISBURSEMENTRECEIPT

 

(See Section 2.02of the Loan Agreement)

 

[Borrower’sLetterhead]

 

International FinanceCorporation

2121 Pennsylvania Avenue,N.W.

Washington, D.C. 20433

United States of America

Attention:                                         Director,Department of Financial Operations

 

Ladies and Gentlemen:

 

Investment No. 24346

 

DisbursementReceipt No. [·]*

 

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

 
|   | Yours truly,                                                                    |
|--------|---------------------------------------------------------------------------------|
|   |                                                                            |
|   | BPZ EXPLORACIÓN & PRODUCCIÓN   S.R.L./BPZ MARINE PERU S.R.L. |
|   |                                                                            |
|   |                                                                            |
|   | By:                                                                             |   |
|   |                                                                            | Authorized Representative** |

 

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*                                         Tocorrespond with number of the Disbursement request.  See Schedule 1.

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

 

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