to provide the Comfort Letter by December 15,
2008 and is unable to provide the BPZ Resources, Inc. Guaranty by December 18,
2008 because the above financial test has not been met, then Buyer shall provide
Seller with a Standby Letter of Credit in accordance with the below provisions:
(B.)
A STANDBY LETTER OF CREDIT ISSUED OR CONFIRMED
BY A UNITED STATES OR WESTERN EUROPEAN BANK REASONABLY ACCEPTABLE TO SELLER,
GENERALLY IN ACCORDANCE WITH THE SELLER'S FORM ATTACHED AS ATTACHMENT 15, WHICH
STANDBY LETTER OF CREDIT SHALL BE ESTABLISHED BY THE BUYER AND SHALL BECOME
OPERATIVE WITHIN (30) THIRTY DAYS AFTER SELLER HAS REQUESTED BUYER TO PROVIDE
THE STANDBY LETTER OF CREDIT PURSUANT TO THE ABOVE. THE STANDBY LETTER OF CREDIT
ESTABLISHED BY THE BUYER SHALL PROVIDE FOR SELLER'S ABILITY TO MAKE PARTIAL
DRAWINGS PRO RATA ON PARTIAL DELIVERIES.
BUYER WILL INCREASE THE
AMOUNT(S) AND/OR EXTEND THE VALIDITY PERIOD(S) AND/OR POST AN ADDITIONAL STANDBY
LETTER OF CREDIT WITHIN THIRTY (30) DAYS OF SELLER'S PROVISION TO BUYER OF
DOCUMENTATION SHOWING THAT SUCH IS NECESSARY TO SECURE PAYMENTS TO BECOME DUE.
IN THE EVENT OF ANY REFINANCING OR ADDITIONAL FINANCINGS PROVIDING FUNDING FOR
THE PROJECT, BUYER MAY REPLACE THE CURRENT STANDBY LETTER OF CREDIT WITH A
REPLACEMENT STANDBY LETTER OF CREDIT AND SELLER SHALL COOPERATE WITH BUYER IN
SUCH EVENT BY PROMPTLY TAKING ALL ACTIONS ON ITS PART NECESSARY FOR THE
CANCELLATION OF THE CURRENT STANDBY LETTER OF CREDIT.
IF BUYER IS INITIALLY
PREVENTED FROM PROVIDING THE BPZ RESOURCES, INC. GUARANTY BECAUSE THE FINANCIAL
TEST HAS NOT BEEN MET, AND IS REQUIRED TO PROVIDE THE STANDBY LETTER OF CREDIT,
THEN SHOULD BUYER'S EBITDAX AS MEASURED FOR ANY SUBSEQUENT THREE (3) MONTH
PERIOD EQUAL OR EXCEED 2.25 TIMES THE SUM OF THE PAYMENTS DUE FOR THE NEXT THREE
(3) MONTH PERIOD, BUYER SHALL BE ENTITLED TO CANCEL THE STANDBY LETTER OF CREDIT
AND PROVIDE THE BPZ RESOURCES, INC. GUARANTY IN LIEU THEREOF.
THE STANDBY
LETTER OF CREDIT SHALL NOT BE CANCELLED UNTIL SUCH TIME THAT THE BPZ
RESOURCES, INC. GUARANTY HAS BEEN PROVIDED.
At such time that Buyer provides a Comfort Letter to Seller, it shall have no
further obligations to provide or maintain either the BPZ Resources, Inc.
Guaranty or the Standby Letter of Credit.
10
6.3
Effect of Changes in Contract Price
If any adjustment results in an increase to the Contract Price, Buyer shall pay
for the increase in accordance with the corresponding invoice submitted by
Seller.
If any adjustment results in a decrease in the Contract Price, payments
previously made shall be retained by the Seller and will be applied to
subsequent payments as they become due.
6.4
Field Modifications and Offsets
Seller shall not be responsible for back charges or field modifications
performed by Buyer unless Seller authorizes such charges in writing prior to the
incurrence thereof and Buyer specifically waives any right of set-off relating
to such charges.
Any claim or set-off for back charges shall be accompanied by
a copy of such written authorization.
In