Document:

Block 95 Exploration and Production Contract (English Translation)

 Exhibit 10.1 
  
 LICENSE CONTRACT FOR THE 
  
 EXPLORATION AND EXPLOITATION OF 
 HYDROCARBONS IN BLOCK 95 
  
 PERUPETRO S.A.

  
 AND 
  
 HARKEN DEL PERÚ LIMITADA 

 LICENSE CONTRACT FOR THE 
 EXPLORATION AND EXPLOITATION OF HYDROCARBONS IN BLOCK 95 
  
 PERUPETRO S.A. 
  
 AND 
  
 HARKEN DEL
PERÚ LTDA. 
  
 PRELIMINARY CLAUSE - GENERAL 
  

	I.	By virtue of the authority conferred upon it by Law No. 26221, PERUPETRO participates in this document to enter into the License Contract for the Exploration and Exploitation of
Hydrocarbons in Block 95. 

  

	II.	Hydrocarbons “in situ” are the property of the State. The ownership right to extracted Hydrocarbons is transferred by PERUPETRO to the Contractor on the Date of Signing,
as stated in the Contract and in Article 8 of Law No. 26221. 

  
 The Contractor commits itself to pay to the State, through PERUPETRO, a cash royalty under the conditions and at the time set forth in the Contract. 
  

	III.	In accordance with the provisions set forth in Article 12 of Law No. 26221, the Contract shall be governed by Peru’s private law and shall be subject to the scope of Article
1357 of the Civil Code. 

  

	IV.	For all purposes related to and arising from this Contract, the Parties hereby agree that the captions of the clauses are irrelevant for purposes of the interpretation of the
contents thereof. 

  

	V.	Any reference to the Contract includes the annexes. Should any conflict arise between the annexes and the body of the Contract, the latter shall prevail. 

 
 CLAUSE ONE - DEFINITIONS 
  
 The definitions agreed upon by the Parties in this clause are aimed at giving the required
meaning to the terms used in the Contract, and such meaning shall be the only one accepted for purposes of interpretation in the performance hereof, unless otherwise expressly agreed upon by the Parties in writing. 
  

 2 

 The terms defined and used in the Contract, whether in singular or plural, shall be capitalized and shall have the
following meanings: 
  

	1.1	Affiliate 

  
 Any entity, fifty percent (50%) or more of the voting share capital of which is owned, whether directly or indirectly, by any PERUPETRO or the Contractor;
or any entity or person who owns, whether directly or indirectly, fifty percent (50%) or more of the voting share capital of one of PERUPETRO or the Contractor; or any entity, fifty percent (50%) or more of the voting share capital of which is
owned, whether directly or indirectly, by the same shareholder or shareholders who own, whether directly or indirectly, fifty percent (50%) or more of the voting share capital of PERUPETRO or the Contractor. 
  

	1.2	Year 

  
 A period of twelve (12) consecutive Months, according to the Gregorian Calendar, counted from a specific date. 
  

	1.3	Contract Area 

  
 The area described in Annex “A” and shown in Annex “B”, called Block 95 located between the Provinces of Requena the Department of
Loreto of comprising an area of 515.731,13 ha. 
  
 The Contract
Area shall be redefined after excluding the areas to be relinquished by the Contractor, pursuant to the terms of the Contract. 
  
 Should there be any discrepancy between what is shown in Annex “B” and described in Annex “A”, the latter shall prevail. 

 

	1.4	Barrel 

  
 Unit used to measure Fiscalized Liquid Hydrocarbons, consisting of forty-two (42) United States of America gallons capacity, corrected to a temperature of
sixty degrees Fahrenheit (60°F) at sea level pressure, without water, mud or other sediments (BS&W). 
  

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	1.5	Btu 

  
 British thermal unit. The amount of heat needed to raise the temperature of one (1) pound of water, equivalent to 1055.056 joules, by one degree Fahrenheit (1 °F). 
  

	1.6	Acts of God or Force Majeure 

  
 This term shall be understood to include, among others: fire, temblors, earthquakes, sea quakes, landslides, avalanches, floods, hurricanes, storms,
explosions, unforeseeable acts of God, wars, guerrillas, terrorist acts, acts of sabotage, civil unrest, blockades, uncontrollable transportation delays, strikes, stoppages, impossibility to obtain, in spite of having been foreseen, appropriate
facilities for the transportation of materials, licenses, permits, equipment and services, or any other cause, whether similar to or different from those specifically listed herein, which are beyond reasonable control and cannot be foreseen or, in
spite of having been foreseen, cannot be avoided. 
  

	1.7	Supervisory Committee 

  
 A body made up of the Parties through which PERUPETRO supervises and coordinates the fulfillment and performance of the Contract, its structure and powers
being described in clause seven hereof. 
  

	1.8	Technical Conciliation Committee 

  
 A non-permanent body created with the aim of issuing an opinion on any discrepancy that may arise in relation to the Operations. It will be set up in
accordance with the provisions set forth in point 21.2 of the Contract. 
  

	1.9	Condensates 

  
 Liquid Hydrocarbons that result from the condensation of Hydrocarbons separated from the Natural Gas, due to changes in pressure and temperature at the
time the Natural Gas is produced from the Reservoirs or released from one or more of the Natural Gas compression stages. They remain in a liquid state at atmospheric temperature and pressure. 
  

	1.10	Fiscalized Condensates 

  
 Condensates produced from the Contract Area, measured at a Production Fiscalization Point. 
  

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	1.11	Contractor 

  
 Harken del Peru Limitada, registered on the Public Register of Hydrocarbons, on Entry No. 11309147 of the Book of Contractors of Operations. 

 

	1.12	Contract 

  
 This agreement, which has been reached by the Parties and includes the terms and conditions set forth in this document and in the annexes hereto, and the
additional agreements to which the Parties may come hereunder, including any amendment hereto according to law. 
  

	1.13	Development 

  
 The performance of any activity required for the Production of Hydrocarbons, such as drilling, completion and deepening of wells, as well as the design,
construction, and installation of equipment, piping, storage tanks and other means and facilities, including the use of artificial Production and enhanced primary recovery methods, in the Contract Area and outside of the Contract Area, if required.

  
 It includes the construction of the Transportation and
Storage System, the Production Fiscalization Point facilities, the Main Pipeline facilities and, if applicable, topping plants for the manufacture of products to be used in the Operations or Natural Gas processing plants. 
  

	1.14	Commercial Discovery 

  
 The discovery of Hydrocarbon reserves which, in the opinion of the Contractor, justify their commercial exploitation. 
  

	1.15	Day 

  
 A period of twenty-four (24) hours, starting at zero (0.00) hours and ending at twenty-four (24.00) hours. 
  

	1.16	Business Day 

  
 All working Days from Monday to Friday inclusive, except for those Days declared non-working, whether in whole or in part, in the city of Lima by the
competent authority. 
  

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	1.17	Dollar or US$ 

  
 The US legal tender. 
  

	1.18	Main Pipeline 

  
 The main pipeline that may be constructed and operated by the Contractor and that, starting from the end of the Transportation and Storage System,
transports the Hydrocarbons produced from the Contract Area to a pipeline owned by third parties, to a sales or export point, or to a Production Fiscalization Point, without prejudice to the approval referred to in point 2.3, if applicable, and may
include measurement points connected to the pipeline, the necessary storage and shipping areas, smaller pipes, pumping or compression stations, communication systems, access and maintenance roads, and any other facilities that may be necessary and
required for the transportation of Hydrocarbons on an uninterrupted and timely basis; including the design, construction, maintenance and equipping of all of the foregoing. The open access to any Main Pipeline will start on the beginning of the
fifth Year, counted as from the Date of Commencement of Commercial Extraction. 
  

	1.19	Exploration 

  
 The planning, performance and evaluation of all types of geological, geophysical, geochemical and other studies, the drilling of Exploratory Wells and
related activities required to discover Hydrocarbons, including the drilling of Confirmation Wells for the purpose of evaluating the Reservoirs discovered. 
  

	1.20	Exploitation 

  
 Development and/or Production. 
  

	1.21	Date of Commencement of Commercial Extraction 

  
 The date of the first measurement of Hydrocarbons at a Production Fiscalization Point, resulting in the payment of the royalty. 
  
 For purposes of this definition, the volumes produced for tests or other
purposes specifically agreed upon by the Parties are not considered in this definition. 
  

	1.22	Date of Signing 

  
 April 7, 2004, date on which PERUPETRO and the Contractor sign the Contract. 
  

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	1.23	Effective Date 

  
 Date on which the Contractor must start the Operations, which will be fixed within the sixty (60)-Day period following the Date of Signing. 
  

	1.24	Fiscalization 

  
 The actions taken by OSINERG (the Entity in charge of Supervising Investment in the Energy Sector), in accordance with the legal rules and technical
standards, in relation to the Exploration and Exploration operations conducted by the Contractor. 
  

	1.25	Natural Gas 

  
 A mixture of Hydrocarbons that, at the initial Reservoir conditions, is found in a gaseous state or dissolved with Petroleum. It includes Associated
Natural Gas and Non-Associated Natural Gas. 
  

	1.26	Associated Natural Gas 

  
 Natural Gas produced with the Liquid Hydrocarbons from the Reservoir. 
  

	1.27	Fiscalized Natural Gas 

  
 Natural Gas produced from the Contract Area, measured at a Production Fiscalization Point. 
  

	1.28	Non-Associated Natural Gas 

  
 Natural Gas occurring in a Reservoir where, under the initial Reservoir conditions, there are no Liquid Hydrocarbons. 
  

	1.29	Hydrocarbons 

  
 Every organic, gaseous, liquid or solid compound, consisting mainly of carbon and hydrogen. 
  

	1.30	Fiscalized Hydrocarbons 

  
 Hydrocarbons produced from the Contract Area, measured at a Production Fiscalization Point. 
  

	1.31	Liquid Hydrocarbons 

  
 Petroleum, Condensates and, in general, all Hydrocarbons which at atmospheric conditions of temperature and pressure are in a liquid state at their place
of measurement, including Hydrocarbons that are in a liquid state at a temperature higher than the atmospheric temperature. 
  

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	1.32	Fiscalized Liquid Hydrocarbons 

  
 Liquid Hydrocarbons produced from the Contract Area and measured at a Production Fiscalization Point. 
  

	1.33	Law No. 26221 

  
 The Organic Hydrocarbon Law No. 26221, and any and all amplifying, regulatory and amending legislation. 
  

	1.34	NGLs or Natural Gas Liquids 

  
 Liquid Hydrocarbons obtained from Natural Gas, consisting of a mixture of ethane, propane, buthane and other heavier Hydrocarbons. 
  

	1.35	Fiscalized NGLs or Fiscalized Natural Gas Liquids 

  
 Natural Gas Liquids measured at a Production Fiscalization Point. 
  

	1.36	Month 

  
 Period counted as from any given Day of a calendar month, ending on the Day prior to the same Day of the following calendar month or, if there is no such
Day, the last Day of that month. 
  

	1.37	SCF 

  
 Means one thousand (1,000) standard cubic feet (“SCF”). One (1) “SCF” is the volume of gas required to fill a space of one (1) cubic feet at 14.695 pounds per square inch of absolute pressure, at a
base temperature of sixty degrees Fahrenheit (60° F). 
  

	1.38	Operations 

  
 All Exploration and Exploitation activities, and all other activities that are the subject matter of or are related to the performance of the Contract.

  

	1.39	Parties 

  
 PERUPETRO and the Contractor 
  

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	1.40	PERUPETRO 

  
 PERUPETRO S.A., a State Company of Private Law of the Energy and Mines Sector, created by Law No. 26221. 
  

	1.41	Petroleum 

  
 Hydrocarbons that, at the initial Reservoir conditions of pressure and temperature, are in a liquid state and basically remain in a liquid state under
atmospheric conditions; do not include Condensates, Natural Gas Liquids or Liquefied Natural Gas. 
  

	1.42	Fiscalized Petroleum 

  
 Petroleum produced from the Contract Area, measured at a Production Fiscalization Point. 
  

	1.43	Heavy Oil 

  
 Liquid Hydrocarbons that, in order to be Exploited, because of their density and viscosity, require the use of non-conventional methods and, in order to
be transported, require heating or other procedures, excluding their mixture with Petroleum produced from the same Field, resulting in light Petroleum. 
  

	1.44	Confirmation Well 

  
 A well drilled to evaluate the Hydrocarbon Reservoirs discovered. 
  

	1.45	Development Well 

  
 A well drilled for purposes of Producing the Hydrocarbons discovered. 
  

	1.46	Exploratory Well 

  
 A well drilled to discover a new Reservoir or determine the stratigraphic conditions of a given area, including the wells drilled in structural
culminations that are geologically separated from that portion of the same structure that was previously investigated. 
  

	1.47	Production 

  
 Any activity carried out in the Contract Area or outside of the Contract Area, as required, for the purpose of extracting and handling Hydrocarbons from
the Contract Area, including the operation and reconditioning of wells, the installation and operation of equipment, piping, the Transportation and Storage System, the Main Pipeline, the treatment and measurement of Hydrocarbons, and all primary and
enhanced recovery methods. 
  

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	1.48	Production Fiscalization Point 

  
 The place or places designated by the Contractor in the Contract Area, or outside of the Contract Area by agreement between the Parties, where all
measurements and volumetric determinations, as well as determinations of water and sediment contents and other measurements are made, in order to establish the volume and quality of Fiscalized Hydrocarbons, according to the corresponding API and
ASTM standards. 
  

	1.49	Reservoir 

  
 Underground stratuim or strata which form(s) part of a Field and is(are) currently producing, or has(have) proved to be capable of producing Hydrocarbons,
and share a single pressure system all along their length. 
  

	1.50	Transportation and Storage System 

  
 All pipes, pumping stations, compression stations, storage tanks, river facilities, delivery systems, roads, and other facilities and means required and
useful for the transportation of Hydrocarbons produced from the Contract Area to a Production Fiscalization Point, to the Main Pipeline or to a pipeline owned by third parties, including the design, construction, maintenance and equipping of the
foregoing. 
  

	1.51	Subcontractor 

  
 Every natural or juridical person, whether national or foreign, contracted by the Contractor to render services related to the Operations. 
  

	1.52	Supervision 

  
 The actions taken by PERUPETRO to verify compliance with Contractor’s contractual obligations. 
  

	1.53	Tributes 

  
 Includes taxes, contributions and rates, in accordance with the provisions set forth in the Tax Cod(;. 
  

	1.54	Contract Term 

  
 Period between the Date of Signing and the expiration of the relevant term set forth in point 3.1 hereof. 
  

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	1.55	Field 

  
 A surface area underlaid by one or more Reservoirs that are producing or have proved to be capable of producing Hydrocarbons. 
  
 CLAUSE TWO - OBJECT OF THE CONTRACT 
  

	2.1	The Contractor is hereby authorized by PERUPETRO to carry out the Operations, in accordance with the provisions set forth in Law No. 26221, in the pertinent legislation, and in the
Contract, for the common purpose of discovering and producing Hydrocarbons from the Contract Area. 

  

	2.2	The Contractor shall enjoy ownership rights to the Hydrocarbons extracted from the Contract Area, in accordance with the provisions set forth in item II of the preliminary clause
hereof. 

  

	2.3	The Contractor shall conduct the Operations according to the terms set forth herein, whether directly or through Subcontractors. If field operations are to be carried out outside of
the Contract Area, the approval of PERUPETRO shall be required. 

  

	2.4	PERUPETRO is in charge of the Supervision work, according to law and in keeping with the provisions of the Contract. 

  
 OSINERG will be responsible for the Fiscalization work, according to law.

  

	2.5	The representatives of PERUPETRO will cant’ out their Supervisory function at any time, subject to prior notice, for which purpose they must identify themselves and be
expressly authorized by PERUPETRO. The Contractor shall provide all the necessary facilities that may reasonably be within its reach at the place where its Operations are carried out, to enable said representatives to comply with their mission,
which will be complied with without interfering with the Operations. 

  
 The costs and expenses incurred by the representatives of PERUPETRO shall be for the cost and account of PERUPETRO. 
  

	2.6	The Contractor shall furnish and be responsible for all the technical, economic and financial resources that may be required for the performance of the Operations.

  

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 CLAUSE THREE - TERM, CONDITIONS AND GUARANTY 
  

	3.1	The term of the Hydrocarbon exploration phase is seven (7) Years, which can be extended according to law. This term is calculated as from the Efective Date, unless said term is
modified pursuant to the provisions set out elsewhere in the Contract. 

  
 The term of the Petroleum exploitation phase is the term left after the end of the exploration phase, until completing the term of thirty (30) Years counted as from the Efective Date, unless said term is modified
pursuant to the provisions set out elsewhere in the Contract. 
  
 The term for the exploitation of Non-Associated Natural Gas and Non-Associated Natural Gas and Condensates is the term left after the end of the exploration phase, until completing the term of forty (40) Years counted as from the Efective
Date, unless said term is modified pursuant to the provisions set out elsewhere in the Contract. 
  

	3.2	The exploration phase is divided into six (6) periods, as follows: 

  
 3.2.1 A first period of twelve (12 ) Months, counted as from the Efective Date. 
  
 3.2.2 A second period of twelve (12) Months, counted as from the end of the term set forth in subpoint 3.2.1. 
  
 3.2.3 A third period of twenty four (24) Months, counted as from the end of
the term set forth in subpoint 3.2.2. 
  
 3.2.4 A fourth period
of twelve (12) Months, counted as from the end of the term set forth in subpoint 3.2.3. 
  
 3.2.5 A fifth period of twelve (12 ) Months counted as from the end of the term set forth in subpoint 3.2.4. 
  
 3.2.6 A sixth period of twelve (12) Months counted as from the end of the term set fifth in subpoint 3.2.5. 
  

	3.3	During the exploration phase the Contractor can move on to the next period, to the extent it gives PE:RUPETRO notice thereof thirty (30) Days in advance of the expiration of the
then current period, as long as the Contractor is not included in the grounds for termination contemplated under subpoint 22.3.1. Termination on these grounds will result in execution of the corresponding guaranty. 

  

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	3.4	If during any of the periods referred to in point 3.2 above, the Contractor, due to duly proven technical or economic reasons, is unable to complete the respective minimum work
programs, it will be entitled to extend such period up to a maximum terrm of six (6) Months, provided it has requested PERUPETRO’s authorization for said extension at least thirty (30) Days in advance of the expiration of the then current
period and the reasons in support of said request have been verified and approved by PERUPETRO. In such event, prior to the expiration of the then current period, the Contractor will furnish a new guaranty or extend the existing one for the new
agreed term, pursuant to the requirements set forth in point 3.10. If the extensions granted extinguish the term of the last period of the exploration phase and the Contractor decides to move on with the exploration work, the obligations of said
period will be fulfilled through an extension of the exploration phase to be agreed upon by the Parties, according to law. 

  
 After complying with the minimum work program of the period then underway within the corresponding term established in point 3.2, if the Contractor has
made use of the extension referred to in the preceding paragraph, if applicable, provided the work has consisted in the drilling of at least one Exploratory Well, the Contractor can request the approval by PERUPETRO of an extraordinary term of up to
six (6) months to reassess all the information and results obtained until the period then underway, for the purpose of conducting a study and thus be able to make the decision to move on to the following period. 
  
 The approvals referred to in this point will be granted at the sole
discretion of PERUPETRO. 
  

	3.5	The exploration phase may continue, at Contractor’s option, after the Date of Commencement of Commercial Extraction until the end of the term of said phase set forth in point
3.1. In such event, the tax exemption set forth in point 10.3 shall be in force until the expiration of the exploration phase, while the straight-line amortization method referred to in point 9.6 shall apply as from the Date of Commencement of
Commercial Extraction, according to law. 

  

	3.6	If, during any period of the exploration phase, the Contractor makes a discovery or discoveries of Hydrocarbons which is/are non-commercial only for transportation reasons, it may
request a retention period of up to five (5) Years for the Field or Fields discovered, in order to make the transportation of production feasible. 

  
 The retention right shall be subject to the concurrence of at least the following requirements: 
  

	 	a)	The Contractor must prove, to PERUPETRO’s satisfaction, that the volumes of Hydrocarbons discovered from the Contract Area are insufficient to economically justify the
construction of the Main Pipeline; 

  

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	 	b)	Both the discoveries made in adjacent areas as well as the discoveries made by the Contractor are insufficient to economically justify the construction of a main pipeline; and

  

	 	c)	The Contractor must prove, on an economic basis, that the Hydrocarbons discovered cannot be transported from the Contract Area to the place where they will be marketed, through any
means of transportation. 

  

	3.7	Should the Contractor make a discovery of Non-Associated Natural Gas or Non-Associated Natural Gas and Condensates during any period of the exploration phase, it may request a
retention period of up to ten (10) Years for the Field or Fields discovered, for the purpose of developing the market. 

  

	3.8	If the Contractor makes a discovery of Petroleum and a discovery of Non-Associated Natural Gas or Non-Associated Natural Gas and Condensates during any period of the exploration
phase, and the assumptions described in points 3.6 and 3.7 above take place, the Contractor may request a retention period for Petroleum and another retention period for Non-Associated Natural Gas or Non-Associated Natural Gas and Condensates, for
the purposes referred to in said points. 

  

	3.9	The retention period referred to in points 3.6 and 3.7 above shall extend the Contract Term for a period equivalent to the retention period granted by PERUPETRO.

  
 The retention period shall be authorized in
writing. For this purpose, the Contractor shall file an application with PERUPETRO, attaching thereto the relevant supporting evidence and the schedule of activities to be carried out. 
  
 The exploration phase will end upon the commencement of the retention period. The exploitation phase will start upon the
declaration of Commercial Discovery in the retention period. 
  
 The granting of the retention period referred to in points 3.6 and 3.7 and the term thereof will be determined by PERUPETRO in its sole discretion, without affecting or reducing the Contractor’s obligation to comply with the minimum
work program of the period of the exploration phase then under way. 
  

	3.10	 The Contractor must guarantee the fulfillment of the minimum work program of each period of the exploration phase, pursuant to points 3.2 and 4.6, through a joint
and several, unconditional, and irrevocable bank guaranty that may be automatically executed in Peru without the benefit of 

  

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exclusion, issued by a duly qualified entity of the financial system domiciled in Peru and accepted by PERUPETRO. At the request of PERUPETRO, the Contractor
will replace any guaranty already delivered by a new guaranty within a term of fifteen (15) Business Days following the date of receipt of PERUPETRO’s request by the Contractor. 
  
 The amount of the guaranty for the minimum work program of each period of the exploration phase is the amount shown in
annexes “C-1” through “C-6”, which is obtained by multiplying the dollar equivalence, which for purposes hereof is established in Annex “F” hereto, by the number of Exploration Work Units corresponding to each period,
according to the provisions of point 4.6. 
  
 The guaranties will
be issued for each minimum work program, as per the form shown in annexes “C-1” through “C-6”, as the case may be. 
  
 The guaranties for the minimum work program of each period of the exploration phase under point 4.6 will be delivered to PERUPETRO before the commencement
of each period; otherwise, the provisions set forth in subpoint 22.3.3 shall be applicable. The guaranty for the minimum work program of the first period will be delivered on the Date of Signing. 
  
 The guaranties to be furnished in the event the terms of the periods of the
exploration phase are extended, must be replaced or extended by the Contractor before the commencement of the corresponding extension. Otherwise, PERUPETRO’s approval of the extension requested by the Contractor will be invalidated. 

 
 The guaranty to be furnished for the minimum work program of each period
of the exploration phase shall remain in force during a term that shall exceed by thirty (30) Business Days the term of such period. 
  
 If any of the guaranties delivered by the Contractor is not kept in full force and effect during the agreed term, the Contractor will deliver a new
guaranty or extend the existing one within a term of fifteen (15) Business Days following receipt by the Contractor of PERUPETRO’s notice. Otherwise, the provisions set forth in subpoin’t 22.3.3 shall apply. 
  
 Upon compliance with the obligation backed up by each guaranty, PERUPETRO
shall immediately return the corresponding guaranty to the guarantor, through the Contractor. 
  
 The execution of any guaranty will result in the extinction of Contractor’s obligation to perform the minimum work program, without prejudice to the application of the provisions set forth in subpoint 22.3.1.

  

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	3.11	Global Energy Development PLC participates in this Contract for the purpose of furnishing the corporate guaranty shown as annex “D”. 

  
 The corporate guaranty shall remain in full force and effect as long as the
obligations of the Contractor contained in annex “D” hereto are demandable. The provisions set forth in subpoint 22.3.5 shall apply if, following the occurrence of any event contemplated in said point, the Contractor fails to replace it
within a maximum term of fifteen (15) Business Days following receipt by the Contractor of the notice sent by PERUPETRO, asking for the replacement. 
  
 CLAUSE FOUR - EXPLORATION 
  

	4.1	The Contractor shall start Exploration activities as from the Effective Date. 

  

	4.2	The Contractor may relinquish the full Contract Area, without being subject to any sanction whatsoever, by giving notice thereof to PERUPETRO at least thirty (30) Days in advance,
provided it has complied with the minimum work program of the then current period of the exploration phase. 

  
 If the Contractor relinquishes the full Contract Area, abandons it, or allows the term of the then current period to expire before complying with the
corresponding minimum work program, without being supported by technical reasons approved by PERUPETRO, PERUPETRO will execute the guaranty, without prejudice to the application of the provisions set forth in subpoint 22.3.3. 
  
 The Contractor may partially relinquish the Contract Area by giving notice
thereof to PERUPETRO at least thirty (30) Days in advance, without being subject to any sanction whatsoever, and without said partial relinquishment affecting or reducing the Contractor’s obligation to comply with the minimum work program of
the then current period of the exploration phase. 
  
 The areas
relinquished by the Contractor will be recorded by the Parties onto the minutes of the Supervisory Committee meetings. 
  
 The Contractor may continue using the surface land of relinquished areas where it has constructed facilities related to the Operations. 
  

	4.3	During the performance of the Contract, the Contract Area will be relinquished as follows: 

  

	 	a)	At least thirty percent (30%) of the original Contract Area will be relinquished at the end of the fourth period described in subpoint 3.2.4. 

  

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	 	b)	At the end of the fourth period described in subpoint 3.2.4, the Contractor should have relinquished at least fifty percent (50%) of the original Contract Area, including for this
purpose the relinquishment made in accordance with the provisions set forth in item a) above; unless the Contractor expressly commits itself to carry out additional exploration work in accordance with the provisions set forth in item c) below.

  

	 	c)	At the end of the exploration phase, the Contractor can keep the Contract Area that it has not relinquished and is not included in item d) below, for which purpose it should commit
itself to drill one (1) Exploratory Well or to perform five (5) Exploration Work Units (EWUs) for every ten thousand hectares (10,000.00 ha) of Contract Area, every two (2) Years. 

  

	 	d)	If the Contractor decides not to continue carrying out the exploration work described in item c), or in the event of non-compliance with said commitment, and without prejudice to
the application of the respective contractual provisions, it will keep only the Fields discovered, plus a surrounding area of five (5) kilometers, up to the boundaries of the Contract Area. 

  

	4.4	For purposes of the provisions set forth in points 4.2 and 4.3, the Contract Area has been divided, to the extent possible, into rectangular parcels of twenty thousand (20,000)
hectares and, where this is not possible, into parcels of a different area. The areas to be relinquished by the Contractor must not necessarily be adjacent areas. 

  

	4.5	Any area relinquished by the Contractor, including the Fields located within the area relinquished by the Contractor, shall revert to the State at no cost to it or to PERUPETRO.

  

	4.6	The minimum work program of each period of the exploration phase shall include the following: 

  

	4.6.1	First Period: 

  
 A pre-feasibility study involving technical, economical, market, regulatory and environmental aspects related to the development of the Plot (including
EIA). 
  

	4.6.2	Second Period: 

  
 90 EWUs or, recording, processing and interpretation 4500 km of aero gravimetrics. 
  

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	4.6.3	Third Period: 

  
 400 EWUs or, drill one (1) Exploratory Well. 
  

	4.6.4	Fourth Period: 

  
 225 EWUs or recording, processing and interpretation 75 km2 of 3D seismic line. 
  

	4.6.5	Fifth Period: 

  
 400 EWUs or, Drill one (1) Exploratory Well 
  

	4.6.6	Sixth Period: 

  
 400 EWUs or, Drill one (1) Exploratory Well 
  
 For the fulfillment of the obligations described in this point, the following provisions shall be borne in mind: 
  

	 	a)	For the recording of 2D seismic lines, the corresponding kilometers will be counted from the initial shooting point to the final shooting point on each seismic line.

  
 To record 31) seismic lines, square kilometers
will be determined on the basis of the surface area covered by the program carried out. 
  

	 	b)	The Exploration Work Units referred to in this point will be performed in accordance with the table of equivalences contained in Annex “F”. 

  

	 	c)	Only the Exploration Work Units resulting from 2D or 3D seismic line recording work, and from the drilling of Exploratory Wells, carried out in excess of the minimum work program
during any period of the exploration phase, in relation to the provisions set forth in point 4.6, will be acknowledged against the fulfillment of the minimum work programs of the subsequent periods, and it will not be necessary to furnish the
corresponding guaranty for the period in which said Exploration Work Units are acknowledged, provided the minimum work program of the relevant period has been fully complied with. 

  
 If Exploratory Wells are drilled, the Exploration Work Units to be
acknowledged against future work will be determined in accordance with the provisions set forth in Annex “F”, based on the difference between the final depth reached and the depth established in point 4.7. 
  

	 	d)	Before the commencement of each period of the exploration phase, the 

  

 18 

 Contractor must provide PERUPETRO with the program of exploration activities that have been scheduled in
order to comply with the number of Exploration Work Units it has committed itself to perform during said period. Any change in the contents of said program must be reported by the Contractor to PERUPETRO before the corresponding change is made, by
filing a supporting technical report. 
  

	 	e)	If the Contractor has opted to record seismic lines to comply with the minimum work program of the second period, then the minimum work program of the third period must consist in
the drilling of one (1) Exploratory Well. 

  

	 	f)	If before the commencement of the fourth or fifth periods of the exploration phase, the Contractor has partially relinquished the area, as provided for in point 4.2, and opts to
perform Exploratory Work Units to comply with the minimum work program of said periods, then the Exploratory Work Units referred to in points 4.6.4 and 4.6.5 will be reviewed and adjusted at the beginning of said periods, and the Contractor must
perform the number of Exploratory Work Units obtained by applying the following criteria: (i) a total of two hundred (200) EWUs or four (4) EWUs for every ten thousand hectares (10,000 ha), whichever is greater, for the fourth period; and (ii) a
total of two hundred (200) EWUs or five (5) EWUs for every ten thousand hectares (10,000 ha.), whichever is greater, for the fifth period. 

  

	4.7	The Exploratory Wells to be drilled in compliance with the minimum work program referred to in point 4.6 shall be deemed drilled and, consequently, Contractor’s obligation
fulfilled, once the Contractor reaches a minimum vertical depth (TVD) of two thousand eighty hundred (2800) meters, measured from the surface, or a minimum of one hundred meters (100 m.) into the Chonta formation whichever occurs earlier in time.

  
 If before beginning the drilling of any
Exploratory Well drilled in compliance with the minimum work programs referred to in point 4.6, the Contractor proves, to PERUPETRO’s satisfaction, based on the results of the geological and geophysical evaluations conducted, that it is not
possible to comply with the objectives agreed upon in the first paragraph of this point, the Parties may agree on a new geological objective and/or depth target. 
  
 Furthermore, if insurmountable geological or mechanical problems arise during the drilling of any Exploratory Well drilled
in compliance with the minimum work programs referred to in point 4.6, the Contractor may request that the drilling obligation be considered fulfilled by filing a supporting technical report, which will be subject to the approval of PERUPETRO.

  

	4.8	If the Contractor decides to make a declaration of Commercial Discovery, it shall give notice thereof to PERUPETRO, submitting, within one hundred and eighty (180) Days following
such declaration of Commercial Discovery, 

  

 19 

 an “Initial Development Plan” for the Exploitation of the Hydrocarbons discovered, which shall
include, among other things, the following: 
  

	 	a)	Physical and chemical characteristics of the Hydrocarbons discovered, and percentage of associated products and impurities that they contain. 

  

	 	b)	Estimated production profiles for the Field or Fields during the Contract Term. 

  

	 	c)	Estimated number of Development Wells, and their productive capacity. 

  

	 	d)	Transportation and Storage System, and forecasted Production Fiscalization Points. 

  

	 	e)	Forecasted Main Pipeline, if applicable. 

  

	 	f)	Safety measures. 

  

	 	g)	Tentative schedule of all the activities to be performed. 

  

	 	h)	Estimated Date of Commencement of Commercial Extraction. 

  
 The “Initial Development Plan” must include investments, specific costs and expenses estimated for the Exploitation of the Commercial Discovery,
as well as any other information that the Contractor may deem convenient. 
  

	4.9	PERUPETRO must provide the Contractor with its comments on the “Initial Development Plan” within sixty (60) Days following receipt thereof, and may object to the Date of
Commencement of Commercial Extraction, if it is not reasonably appropriate. Should a discrepancy arise, the provisions set forth in point 21.2 shall be applicable. 

  

	4.10	Should the Contractor make a declaration of Commercial Discovery, it will be obliged to start Development within one hundred and eighty (180) Days following the expiration of the
sixty (60)-Day term referred to in point 4.9 hereof. 

  
 The declaration of Commercial Discovery will not imply a reduction in or the suspension of the obligations of the minimum work program of the then current period. 
  

	4.11	The Development of the Hydrocarbons discovered shall be carried out in accordance with the work programs submitted by the Contractor to PERUPETRO, as provided for in point 5.3.

  

 20 

 The Parties agree that whenever it is deemed necessary and appropriate, the terms for the submission of
the “Initial Development Plan”, or the annual work programs, as the case may be, may be adjusted, extended, or modified. For this purpose, the Contractor shall submit the necessary proposals to PERUPETRO in order to agree on any such
adjustment, extension, or modification. 
  

	4.12	The expiration of the exploration phase shall not affect the terms and conditions of the above-described procedures that may be in progress at that time. 

 

	4.13	In exceptional cases that make the fulfillment of the obligations and/or terms of the periods of the minimum work programs agreed upon in points 4.6 and 3.2, respectively,
unfeasible, and at the request of the Contractor, which shall file a supporting report therefor, the obligations of the periods of the minimum work program can be replaced and their terms extended, to the extent PERUPETRO accepts and approves the
request made by the Contractor. The change will in no event modify the initial commitment agreed upon in Exploration Work Units for the exploration phase, reducing obligations. 

  
 Furthermore, when the results of exploration justify a new configuration of
the Contract Area, at the request of the Contractor, which shall file a supporting report therefor with PERUPETRO, the Contract Area can be delimited again, provided the provisions set forth in point 4.3 are fulfilled, the Contractor files work
proposals for the new area, and PERUPETRO accepts and approves the new delimitation requested. The new delimitation will in no event expand the original Contract area. 
  
 The changes accepted and approved by PERUPETRO in application of the preceding paragraphs will result in the review of the
amounts and terms of the agreed guaranties; for which reason, if applicable, the Parties will calculate the new amounts of the guaranties and the Contractor will deliver a new guaranty or extend the existing one, for the new agreed term, in
accordance with the requirements set forth in points 3.4 and 3.10. The Exploration Work Units for the new area incorporated will also be calculated. 
  
 CLAUSE FIVE - EXPLOITATION 
  

	5.1	The exploitation phase starts on the Day following the end of the exploration phase, provided a declaration of Commercial Discovery has been made during the exploration phase.
However, at the Contractor’s option, the exploitation phase may start ahead of time and the exploration phase will end on the Date of Commencement of Commercial Extraction. For the retention period, the exploitation phase will start once the
declaration of Commercial Discovery has been made. 

  

 21 

	5.2	The Contractor will take reasonable action to ensure that the Date of Commencement of Commercial Extraction takes place on the date to be established in accordance with the
provisions set forth in points 4.8 and 4.9. 

  

	5.3	At least sixty (60) Days prior to the end of each calendar year as from the filing of the Initial Development Plan, the Contractor shall submit the following documents to PERUPETRO:

  

	 	a.	An annual work program and a detailed budget of revenues, costs, expenses and investments corresponding to the following calendar year. 

  

	 	b.	An annual work program and a detailed budget of revenues, costs, expenses and investments for the Exploration work to be carried out for the purpose of finding additional reserves,
if applicable. 

  

	 	C.	A work program and a forecast of revenues, costs, expenses and investments for the Development and/or Production work to be carried out during the next five (5) calendar years.

  
 The Contractor may adjust or change said
programs at the Supervisory Committee. 
  

	5.4	To carry out each ‘work program, the Contractor shall use any equipment and/or method that may be necessary and appropriate for the evaluation and follow-up of the Operations.

  

	5.5	The Contractor shall be obliged to Exploit and economically recover the Hydrocarbon reserves of the Contract Area, in accordance with the programs referred to in this clause five
and in keeping with the technical and economic principles generally, accepted and used by the international
Hydrocarbon industry. 

  

	5.6	The Contractor has the right to use the Hydrocarbons produced from the Contract Area in its Operations, at no cost whatsoever, for which reason said Hydrocarbons will riot be taken
into account at the time of calculating the royalty. Said Hydrocarbons can be processed at the topping plants of the Contractor in order -to be exclusively used in the Operations. 

  
 If the topping plant is located outside of the Contract Area, the Parties
will measure the volume of Hydrocarbons produced from the Contract Area that will be processed in the topping plant, including the volume of products to be used as fuel and the, surplus volume returned to the Operations; the difference between the
volumes that enter and leave the topping plant will be taken into account for the calculation of the royalty in the corresponding valuation period and will be deducted from the petroleum fiscalized outside of the Contract Area.

  

 22 

	5.7	The Contractor shall have the right to recover Liquid Hydrocarbons from any Natural Gas produced from the Contract Area, and to extract the Liquid Hydrocarbons in any stage in which
said Natural Gas is being handled. 

  
 Liquids so
separated shall be considered Condensates for purposes of calculating Contractor’s royalty, unless it is not possible, for economic or operating reasons, to collect said liquids and they can be commingled with Petroleum and fiscalized together.

  

	5.8	The Natural Gas not used by the Contractor in the Operations as provided for in point 5.6 above may be sold, reinjected into the Reservoir, or both, by the Contractor. To the extent
the Natural Gas is not used, sold or reinjected, the Contractor may flare it, with the prior approval of the Ministry of Energy and Mines. 

  

	5.9	When a commercially exploitable Field or Fields extend(s) continuously from the Contract Area into another area or areas, the Contractor and the contractors who may have these areas
must agree on the implementation of a single Exploitation plan, or a common Exploitation plan. If no such agreement is reached, the Ministry of Energy and Mines shall refer the differences to the technical conciliation committee referred to in
Article 32 of Law No. 26221, whose resolution shall be binding upon the Parties. 

  
 Furthermore, when a commercially exploitable Field or Fields continuously extends from the Contract Area to adjacent areas that have not been assigned to
a contractor or are not being negotiated or included in a competitive bidding or tender process or in a process to select a contractor, and no limitation exists as to the protection of the environment, then, with the prior approval of
Contractor’s request by Perupetro, said adjacent areas will be incorporated into the Contract Area. 
  
 When a Reservoir or Reservoirs can be declared as a commercial development, they extend continuously into the Contract Area towards unassigned adjacent
areas, limited by environmental regulations or for being protected natural areas, the Contractor, prior approval of PERUPETRO, may carry out directional drilling activities, with a point of origin within the Contract Area and bottomhole underneath
the aforementioned adjacent area, in order to develop all of the reserves in the Reservoir or Reservoirs that are commercially exploitable. 
  

	5.10	Once the drilling of one (1) well is completed, the Contractor shall give PERUPETRO notice of the date on which the well will be tested, if appropriate. The well must be tested
within three (3) Months following the end of drilling, unless, for technical reasons, the Contractor requires a longerterm to carry out the test. 

  

 23 

	5.11	PERUPETRO may inspect and test at all times the measuring equipment and instruments used to measure the volume and determine the quality of the Fiscalized Hydrocarbons.

  
 The measuring equipment and instruments shall
be gauged from time to time pursuant to the applicable standards. PERUPETRO’s representatives may be present in the gauging. 
  

	5.12	Prior to the Date of Commencement of Commercial Extraction, and in order to determine the volume and quality of Fiscalized Hydrocarbons, the Parties shall agree on the corresponding
measuring equipment, methods and procedures. 

  

	5.13	In order to produce Heavy Petroleum from the Contract Area, Heavy Petroleum can be commingled with light Petroleum produced outside of the Contract Area. Said light Petroleum will
be measured and fiscalized by the Parties at a measurement point cat the time of entering the Contract Area. 

  
 The volume of Hydrocarbons produced outside of the Contract Area will be deducted from the volume of Hydrocarbons Fiscalized in the Contract Area for
purposes of calculating the royalty to be paid by the Contractor. 
  
 CLAUSE
SIX - FILING OF INFORMATION AND STUDIES 
  

	6.1	The Contractor shall keep PERUPETRO informed of the Operations on a permanent and timely basis, and shall provide it with all the information in the manner described in this clause
and in the applicable regulations, as per the forms to be established by PERUPETRO. Moreover, the Contractor shall provide information regarding any other natural resources or archaeological remains it may find or discover at the time of carrying
out the Operations during the Contract Term. 

  
 The technical information, studies, processed and non-processed data, and results provided by the Contractor to PERUPETRO under this clause will be of the best possible quality obtained by the Contractor. If at the time of obtaining
information and results, methods or systems that are the exclusive property of the Contractor have! been used, then THE Contractor will not be obliged to disclose said methods or systems at the time of furnishing the information. 
  

	6.2	The Contractor must provide a copy of all the geological, geophysical and reservoir studies prepared with the technical information obtained from the 

  

 24 

 Contract Area, in relation to the development of the Fields. The Contractor shall
also provide any explanation that PERUPETRO might request concerning said studies. 
  

	6.3	The information and studies on the obligations of the minimum work program will be submitted by the Contractor to PERUPETRO before the date of expiration of each of the periods of
the exploration phase referred to in point 3.2. 

  
 Additionally, within ninety (90) Days following the end of each period of the exploration phase, the Contractor must provide PERUPETRO with a consolidated evaluation report that will include, if appropriate, studies and/or an interpretation
of ‘the geological, geophysical, geochemical, petrophysical and Reservoir analyses made in relation to the exploration activities carried out in the period that has just ended, including those of the corresponding minimum work program.

  

	6.4	The Contractor shall submit a “Monthly Production Report” and a “Monthly Report of Revenues and Expenditures” to PERUPETRO. Both reports will be filed in the
forms to be delivered by PERUPETRO to the Contractor for such purpose, on or before a term of thirty (30) Days after the end of each calendar month. 

  

	6.5	The Contractor shall give PERUPETRO a copy of all the information furnished by the Contractor to the Central Reserve Bank of Peru, in accordance with clause eleven, when so
requested by PERUPETRO. 

  

	6.6	Within thirty (30) Days following the end of each calendar month, the Contractor shall submit to PERUPETRO the list of contracts signed with its Subcontractors during said Month
and, when so requested by PERUPETRO, the Contractor shall give it a copy of the contracts required by PERUPETRO. 

  

	6.7	PERUPETRO or the Contractor may disclose the information obtained from the Operations without the other Party’s approval, in the following cases: 

  

	 	a)	To an Affiliate of said Party; 

  

	 	b)	In relation to financing or when taking out insurance policies, obtaining a confidentiality commitment; 

  

	 	c)	To the extent required by law or by regulations or resolutions issued by the competent authority, including, without limitation, regulations or resolutions issued by governmental
authorities, underwriters, or the stock exchange where the securities of said Party, or of the Affiliates of said Party, are listed; 

  

 25 

	 	d)	To consultants, accountants, auditors, financiers, professionals, potential buyers or assignees of the Parties or of a participating interest in the Contract, to the extent
necessary in relation to the Operations, obtaining a confidentiality commitment. 

  
 In those cases where the Parties agree to disclose certain confidential or restricted information to third parties, they must expressly place on record
that said information is confidential or restricted so that it will not be disclosed by said third parties. 
  

	6.8	PERUPETRO S.A. is entitled to publish or otherwise disclose the geological, scientific, and technical data and reports related to the areas relinquished by the Contractor.

  
 For operating areas, the right referred to in
the preceding paragraph shall be exercised at the end of the second year counted as from the date of receipt of the information, or earlier if so agreed upon by the Parties. 
  
 CLAUSE SEVEN - SUPERVISORY COMMITTEE 
  

	7.1	The Supervisory Committee shall be made up of three (3) representatives of the Contractor or their alternates, as one party, and three (3) representatives of PERUPETRO or their
alternates, as the other party. The Supervisory Committee shall be presided over by a representative of PERUPETRO S.A. 

  
 The Supervisory Committee shall be installed and shall approve its operating regulations within a period of sixty (60) Days following the Date of Signing.

  

	7.2	The Supervisory Committee shall have the following functions: 

  

	 	a)	Exchange and discuss among its members all the information related to the Operations; 

  

	 	b)	Evaluate the performance of the minimum Exploration work programs referred to in point 4.6; 

  

	 	c)	Evaluate the work plans and programs referred to in points 4.8 and 5.3, including their implementation; 

  

	 	d)	Verify the performance of the Operations, for which purpose the representatives of the Parties accredited to the Supervisory Committee may obtain the necessary advice;

  

	 	e)	Verify the fulfillment of all the obligations related to the Operations, as set forth in the Contract or agreed upon by the Parties in any other document; arid,

  

 26 

	 	f)	Discharge any other function provided for in the Contract or agreed upon by the Parties. 

  

	7.3	The Supervisory Committee shall meet at the request of any of the Parties and at the times set forth in its regulations. At least one representative of each Party must be present in
order for the Supervisory Committee to be validly installed. 

  
 Each Party shall bear the expenses involved in maintaining its respective members in the Supervisory Committee. 
  

	7.4	Should a conflict arise and continue between the Parties at the Supervisory Committee, each Party may request the technical or legal opinions it may deem appropriate and shall
submit them for the consideration of the Supervisory Committee at an extraordinary meeting. If no agreement is reached at the extraordinary meeting, the conflict will be referred to the general management of the Parties in order to be resolved. If
the conflict still cannot be resolved, the provisions set forth in point 21.2 shall be applicable. 

  
 CLAUSE EIGHT - ROYALTY AND VALUATION 
  

	8.1	The Contractor will pay the royalty in cash, based on the Fiscalized Hydrocarbons valued at one or more Production Fiscalization Points, in accordance with the provisions set forth
in points 8.3, 8.4 and 8.5 hereof. In the event of loss of Hydrocarbons, the provisions set forth in point 14.2 shall be applicable. 

  

	8.2	For purposes of this clause, the following terms shall have the following meanings: 

  

	 	8.2.1	Transportation and Storage Cost: is the cost, expressed in Dollars per Barrel or Dollars per MMBtu, as the case may be, that includes: 

  

	 	a)	The rate paid to third parties or the Estimated Rate, expressed in Dollars per Barrel or Dollars per million Btu, as the case may be, for the! transportation and storage of
Fiscalized Hydrocarbons from a Production Fiscalization Point to a sales or export point, including storage at that point; and 

  

	 	b)	Expenses incurred for handling, dispatching and shipping the Fiscalized Hydrocarbons to the fixed connection flange of the ship or to the facilities required to carry out the sale.

  

 27 

	 	8.2.2	Valuation Period: each fortnight of a calendar month, it being understood that the first fortnight is the period between the first and the fifteenth Day, of said calendar month, and the second fortnight is the period still to run until the end of said calendar month.

  
 The Valuation Period can be extended or
shortened by agreement between the Parties, if so allowed by the corresponding legal rules. 
  

	 	8.2.3	Basket Price: is the price, expressed in Dollars per Barrel, which represents the FOB value at Peruvian port of export, determined in accordance with the provisions set forth
in subpoint 8.4.1 for Fiscalized Petroleum, in subpoint 8.4.2 for Fiscalized Condensates, and in subpoint 8.4.3 for Fiscalized Natural Gas Liquids. 

  

	 	8.2.4	Realized Price: is the price, expressed in Dollars per MMBtu, actually paid or payable by a buyer to the Contractor for the Fiscalized Natural Gas, which should include any
other item directly derived from the sale of Fiscalized Natural Gas and from the volume of Fiscalized Natural Gas actually delivered. 

  
 The following will not be taken into account for the calculation of the Realized Price: 
  

	 	a)	Any payment resulting from the reconciliation of volumes of Natural Gas contained in the respective purchase-sale contracts. 

  

	 	b)	The Value Added Tax (IGV), the Selective Consumption Tax, the Municipal Promotion Tax and/or any other consumption tax. 

  

	 	8.2.5	Estimated Rate: is the transportation cost, expressed in Dollars per Barrel or Dollars per MMBtu, as the case may be, from a Production Fiscalization Point to a sales or
export point, or to another pipeline owned by third parties. This cost shall take into account the items, methodology, and procedures referred to in the “Regulations for the Transportation of Hydrocarbons by Pipeline”, any amendment
thereto, or any other rule that may replace these regulations. 

  

	 	8.2.6	Value of Fiscalized Petroleum: is the figure obtained by multiplying the Fiscalized Petroleum of any given Valuation Period by the Basket Price of Fiscalized Petroleum for
said period, after the corresponding Transportation and Storage Cost, if applicable, has been deducted from said price. 

  

	 	8.2.7	Value of Fiscalized Condensates: is the figure obtained by 

  

 28 

 multiplying the Fiscalized Condensates of any given Valuation Period by the Basket Price of Fiscalized
Condensates for said period, after the corresponding Transportation and Storage Cost, if applicable, has been deducted from said price. 
  

	 	8.2.8	Value of the Fiscalized Natural Gas Liquids: is the figure obtained by multiplying the Fiscalized Natural Gas Liquids of any given Valuation Period by the Basket Price of
Fiscalized Natural Gas Liquids for said period, after the corresponding Transportation and Storage Cost, if applicable, has been deducted from said price. 

  

	 	8.2.9	Value of Fiscalized Natural Gas: is the figure obtained by multiplying the Fiscalized Natural Gas, in terms of its calorific content, in million Btu, of any given Valuation
Period by the Realized Price for said period, after the corresponding Transportation and Storage Cost, if applicable, has been deducted from said price. 

  

	8.3	The Contractor, at the time of making a declaration of Commercial Discovery of Hydrocarbons, will opt for one of the two methodologies described in subpoints 8.3.1 and 8.3.2,
whereupon it will not be allowed to change the methodology during -the remaining Contract Term. 

  

	 	8.3.1	Methodology based on Production Scales: According to this methodology, a royalty percentage will be established for Fiscalized Liquid Hydrocarbons and for Fiscalized Natural
Gas Liquids, and another royalty percentage will be established for Fiscalized Natural Gas, for each Valuation Period, according to the following table: 

  

			
	 Fiscalized
 Production
 MBCD

	  	Royalty
Percentage %

	 < 5
	  	5
	 5 - 10
	  	5 - 20
	 > 100
	  	20

  
 MBCD: Thousands of
Barrels per calendar day 
  
 When the total average Fiscalized
Liquid Hydrocarbons and Fiscalized Natural Gas Liquids is less than or equal to 5 MBCD, the 5% royalty percentage will be applied. When said average is equal to or higher than 100 MBCD, the 20% royalty percentage will be applied. When said average
fluctuates between 5 MBCD and 100 MBCD, the royalty percentage obtained by applying the linear interpolation method shall be applied. 
  

 29 

 The royalty to be paid by the Contractor for Fiscalized Liquid Hydrocarbons and Fiscalized Natural Gas
Liquids will be the amount obtained by applying the royalty percentage obtained for said Hydrocarbons to the addition of the Value of Fiscalized Petroleum, the Value of Fiscalized Natural Gas Liquids, and the Value of Fiscalized Condensates, in the
Valuation Period. 
  
 To determine the average Fiscalized
Natural Gas, in barrels per day, the following equivalence will be used: Barrels will be equivalent to the volume of Fiscalized Natural Gas expressed in standard cubic feet, divided by a factor of five thousand six hundred twenty six (5,626).

  
 The royalty to be paid by the Contractor for Fiscalized
Natural Gas will be the amount obtained by applying the royalty percentage obtained for said Hydrocarbons to the Value of Fiscalized Natural Gas, in the Valuation Period. 
  

	 	8.3.2	Methodology based on the Economic Result (RRE): According to this methodology, the royalty percentage will be the one obtained by adding the 5% fixed royalty percentage to
the variable royalty percentage, in the manner shown below: 

  
 RRE    =    5% + RV 
  
 

 
  
 Where: 
  
 RV : Variable Royalty %1 
  
 FRT-1 : Factor R 
  
 The Variable Royalty is applied when FRt-1 > 1.15 and within the following range: 
  
 0% < Variable Royalty < 20% 
  
 For negative RV results, 0% is considered; for RV results higher than 20%, 20% is considered. 
  

			
	 Xt-1 :
	  	Revenues corresponding to the annual period immediately preceding the time at which the calculation of the Variable Royalty is made. They include the items applicable to Factor Rt_1.

  

 30 

			
	 Y t-1 :
	  	Expenditures corresponding to the annual period immediately preceding the time at which the calculation of the Variable Royalty is made. They include the items applicable to Factor
Rt_1.
		
	 Factor Rt-1:
	  	Is the quotient between the revenues and expenditures accumulated from the Date of Signing until period t-1, inclusive.
		
	 Period t-1 :
	  	Annual period immediately preceding the time at which the
calculation of the Variable Royalty is made.

  
 Where: 
  
 Accumulated revenues: 
  
 Accum[PFP*(PCP-CTAP)] + Accum[PFC*(PCC-CTAC)] + Accum[PFG*I;PRG-CTAG)] +
Accum[PFL*(PCL-CTAL)] + Accum[OI] 
  

			
	 PFP =
	  	 Fiscalized Production of Petroleum

	 PCP =
	  	 Basket Price for Petroleum

	 CTAP =
	  	 Transportation and Storage Costs for Petroleum

	 PFC =
	  	 Fiscalized Production of Condensates

	 PCC =
	  	 Basket Price for Condensates

	 CTAC =
	  	 Transportation and Storage Cost for Condensates

	 PFG =
	  	 Fiscalized Production of Natural Gas

	 PRG =
	  	 Realized Price of Natural Gas

	 CTAG =
	  	 Transportation and Storage Cost for Natural Gas

	 PFL =
	  	 Fiscalized Production of Natural Gas Liquids

	 PCL =
	  	 Basket Price for Natural Gas Liquids

	 CTAL =
	  	 Transportation and Storage Costs for Natural Gas Liquids

	 OI =
	  	 Other revenues

  
 Accumulated
disbursements: 
  
 Accum (Investment + Expenses + Royalty + Other
Expenditures) 
  
 The breakdown of revenues and expenditures, as
well as the time of registration of the Factor R t_1 components, are shown in annex “E”, Accounting
Procedure. 
  

 31 

 The calculation of the Variable Royalty percentage is made twice a year: the first time in January, based
on the information on Revenues and Expenditures corresponding to the period included between January and December of the preceding calendar year, and the second time in July, based on the information on Revenues and Expenditures corresponding to the
period included between July of the preceding calendar year and June of the then current calendar year. 
  

	8.4	For purposes of the Contract, the price of each class of Fiscalized Hydrocarbon will be expressed in Dollars per Barrel or in Dollars per million Btu, as the case may be, and
determined as follows: 

  

	 	8.4.1	To determine the Basket Price of Fiscalized Petroleum, the following procedure will be followed: 

  

	 	a)	No less than ninety (90) Days prior to the Date of Commencement of Commercial Extraction, the Parties will determine the quality of Petroleum to be produced from the Contract Area.

  

	 	b)	Within thirty (30) Days following the determination referred to in the preceding item, the Parties will select a Petroleum basket that will include a maximum of four (4) components
that must meet the following requirements: 

  

	 	1.	Their quality must be similar to the quality of the Petroleum to be measured at a Production Fiscalization Point; 

  

	 	2.	They must be regularly quoted at the “Platt’s Oilgram Price Report” or another source recognized by the oil industry and agreed upon by the Parties; and

  

	 	3.	They must be competitive on the market or markets where the Petroleum to be measured at a Production Fiscalization Point could be sold. 

  

	 	c)	Once the determinations referred to in the preceding items have been made, the Parties will sign a “Valuation Agreement” establishing terms and conditions additional to
those set forth in this subpoint, as required for its correct application. 

  
 The “Valuation Agreement” will define the adjustment procedures that may be required by reason of quality. The quality adjustments shall consider prizes and/or penalties for any improvement and/or
degradation concerning the quality of the Fiscalized Petroleum in relation to the quality of the classes 
  

 32 

 of Petroleum that make up the basket. Likewise, the “Valuation Agreement” will define its
effective term and the periodicity to review the agreed methods and procedures, so as to always guarantee a realistic determination of the price of the Fiscalized Petroleum. If any of the Parties considers at any time that the application of the
methods and procedures established in the “Valuation Agreement” does not result in a realistic determination of the FOB value, Peruvian port of export, of the Fiscalized Petroleum, the Parties may agree upon the application of other
methods and procedures that actually give such result. 
  

	 	d)	Every six (6) Months, or earlier if so requested by any of the Parties, the Parties may review the basket established for the valuation of Fiscalized Petroleum, in order to check
whether the conditions listed above are still met. If it is determined that any such condition is no longer met, the Parties must modify the basket within thirty (30) Days following the date on which the review of the basket started. If after the
expiration of this term the Parties have not agreed upon a new basket, the procedure set forth in subpoint 8.4.5 shall be followed. 

  
 If it is determined that the API gravity (weighted average), sulphur content, or any other element which measures the quality of Fiscalized Petroleum has
changed significantly with respect to the quality of the components that make up the basket (simple arithmetic mean), the Parties must modify the composition of the basket so that it will reflect the quality of the Fiscalized
Petroleum. 
  

	 	e)	In the event that in the future the price of one or more of the classes of Petroleum that make up the basket were quoted in a currency other than Dollars, such prices shall be
converted into Dollars at the exchange rates in force on the dates of each such quotation. The exchange rates to be used will be the average exchange rates quoted by Citibank N.A. of New York, New York. In the absence of this banking institution,
the Parties will agree on the institution that will properly replace it. 

  

	 	f)	The Basket Price to be used for the valuation of Fiscalized Petroleum during a Valuation Period will be determined as follows: 

  

	 	1.	The average price of each class of Petroleum that makes up the basket shall be determined by calculating the arithmetic mean of its quotations published during the

  

 33 

 Valuation Period. Only the Days in which all basket components have been quoted shall be considered. It
is hereby understood that if in a regular edition of the “Platt’s Oilgram Price Report” two or more quotations are listed for the same basket component, the quotation that is closer to the publication date will be used as a basis
(“Prompt Market”); and 
  

	 	2.	The average prices resulting from the above-mentioned procedure, for each basket component, shall be in turn averaged in order to obtain the Basket Price corresponding to the value
of the Fiscalized Petroleum. 

  

	 	8.4.2	To calculate the Basket Price of Fiscalized Condensates, the procedure described in subpoint 8.4.1 shall be followed, to the extent applicable. The Parties may agree to make the
necessary adjustments in order for the Basket Price to reflect in the best possible manner the value of the Fiscalized Condensates. 

  

	 	8.4.3	To calculate the Basket Price of Fiscalized Natural Gas Liquids, the procedure described in subpoint 8.4.1 shall be followed, to the extent applicable. The Parties may agree to make
the necessary adjustments in order for the Basket Price to reflect in the best possible manner the value of the Fiscalized Natural Gas Liquids. 

  

	 	8.4.4	The price of Fiscalized Natural Gas will be represented by the Realized Price, which must reflect the sales price on the local market or at an export point in the national
territory, as the case may be. The minimum value to be applied as Realized Price will be 0.60 US$/MMBtu. 

  

	 	8.4.5	In the event -the Parties are unable to reach any of the agreements contemplated by this point, the provisions set forth in point 21.2 shall be applicable. 

 

	8.5	Without prejudice to the provisions set forth in point 2.5, item d), of annex “E”, Accounting Procedure, if at anytime the Parties determine that there has been a mistake
in the calculation of factor Rt_1
and, as a result, it is determined that a different factor Rt_1 should be applied or that factort_1 should have been applied
at a different time, the corresponding correction will be made and will affect the period in which the mistake was made, and the royalty percentage will be adjusted as from said period. Every adjustment resulting from a smaller royalty payment shall
accrue interest in favor of the aggrieved Party as from the moment the mistake was made. Refunds made to the Contractor for a higher royalty payment shall be drawn from the balances that PERUPETRO is to transfer to the Treasury.

  

 34 

	8.6	The amount of the royalty will be calculated for each Valuation Period. The respective payment will be made in Dollars on or before the second Business Day after the end of the
corresponding fortnight, and PERUPETRO must issue the respective certificate in the name of the Contractor, according to law. The volume of Fiscalized Hydrocarbons of each fortnight shall be supported by the fiscalization slips to be delivered by
PERUPETRO to the Contractor, duly signed as an indication of agreement. 

  

	8.7	On the contrary, if the Contractor fails to pay to PERUPETRO, whether in whole or in part, the amount of the royalty within the term set forth in point 8.6, the Contractor will make
available to PERUPETRO the Hydrocarbons owned by it and extracted from the Contract Area, by the amount required to cover the amount of the debt, the expenses incurred, and the corresponding interest pursuant to point 19.6. 

 
 CLAUSE NINE – TRIBUTES 
  

	9.1	The Contractor is subject to the common tax regime of the Republic of Peru, which includes the common Income Tax regime, as well as the specific rules contained in Law No. 26221, in
force on the Date of Signing. 

  
 The State,
through the Ministry of Economy and Finance, guarantees the benefit of tax stability to the Contractor during the Term of the Contract, for which reason the Contractor shall only be subject to the tax regime in force on the Date of Signing, in
accordance with the provisions set forth in the “Regulations governing the Tax Stability Guaranty and the Tax rules of the Organic Hydrocarbon Law No. 26221”, approved by means of Supreme Decree No. 32-95-EF, in the “Law that
regulates Stability Agreements signed with the State under Sectorial Laws – Law No. 27343”, to the extent applicable, and in the “Hydrocarbon Updating Law’ Law No. 27377’. 
  

	9.2	The export of Hydrocarbons produced from the Contract Area by the Contractor is exempt from every Tribute, including those that need to be expressly mentioned.

  

	9.3	The payment of the surface tax (canon), extra surface tax (sobrecanon) and participation in the income shall be borne by PERUPETRO. 

  

	9.4	In accordance with the legal rules in force, the Contractor shall pay the Tributes levied on the import of goods and inputs required by the Contractor to carry out the Operations,
according to law. 

  

	9.5	Pursuant to the provisions set forth in Article 87 of the Tax Code, the Contractor may keep its accounting in Dollars and, therefore, the determination of the taxable base of the
Tributes payable by the Contractor, as well as the amount of said Tributes and their corresponding payment, shall abide by the law. 

  

 35 

	9.6	The Contractor shall use the linear amortization method for a five (5)-Year term, counted as from the Year on which the Date of Commencement of Commercial Extraction takes place.

  
 The linear amortization in reference shall
apply to all Exploration and Development expenses and to all investments made by the Contractor from the Date of Signing of the Contract until the Date of Commencement of Commercial Extraction. 
  
 It is hereby agreed that the aforesaid amortization period shall be
extended, but in no event beyond the Contract Term, if due to price reasons or any other factor agreed upon by the Parties after the application of the linear amortization method referred to in the foregoing paragraph, the Contractor’s
financial statements show a negative result or a tax loss which, in the opinion of the Contractor, may not be offset for tax purposes pursuant to the tax rules in force. The extension of the amortization period shall be previously notified to the
National Superintendency of Tax Administration. 
  
 CLAUSE TEN - CUSTOMS DUTIES

  

	10.1	The Contractor shall be authorized to import on a definitive or temporary basis, pursuant to the legal rules in force, any good required for the economical and efficient performance
of the Operations. 

  

	10.2	The Contractor may temporarily import, for a two (2)-Year term, any good required for its activities, enjoying the suspension of import Tributes, including those that need to be
expressly mentioned; and, in the event of requiring an extension, it will request it to PERUPETRO for periods of one (1)-Year each, up to two (2) times, and PERUPETRO will take the necessary steps with the General Hydrocarbons Bureau for purposes of
the issuance of the corresponding Directorial Resolution. Supported by the aforesaid documents, the National Superintendency of Tax Administration shall authorize the extension of the temporary import regime. 

  
 The procedure, requirements and guaranties required for the application of
the temporary import regime shall be subject to the provisions set forth in the General Customs Law, and any amendments thereto and regulations thereunder. 
  

	10.3	The import of goods and inputs required by the Contractor in the exploration phase, for Exploration activities, is exempt from every Tribute, 

  

 36 

 including those that need to be expressly mentioned, provided they are included in the list of tax-exempt
goods, in accordance with the provisions set forth in Article 56 of Law No. 26221. The benefit shall apply during the term of said phase. 
  

	10.4	The Tributes levied on the import of goods and inputs required by the Contractor for Exploitation activities and for Exploration activities during the exploitation phase, shall be
borne and paid by the importer. 

  

	10.5	PERUPETRO may inspect the goods imported on a definitive basis or on a temporary basis under this clause for Exploration activities during the exploration phase, in order to
determine whether said goods have been exclusively imported for the Operations. 

  

	10.6	The Contractor must inform PERUPETRO from time to time of any goods and inputs covered by the Tribute exemption benefit, in accordance with the provisions set forth in Article 56 of
Law No. 26221. 

  
 The Contractor may not re-export
or dispose for other purposes of the goods and inputs referred to in the preceding paragraph, without PERUPETRO’s authorization. With said authorization, the Contractor must apply the corresponding Tributes, in accordance with the provisions
set forth in Article 57 of Law No. 26221. 
  
 CLAUSE ELEVEN - FINANCIAL RIGHTS

  

	11.1	State Guaranty 

  
 The Central Reserve Bank of Peru participates in the Contract to grant to the Contractor on behalf of the State, pursuant to the provisions set forth in
Law No. 26221 and in Legislative Decree No. 668, the guaranties described in this clause, according to the legal regime in force on the Date of Signing. 
  
 The guaranties grainted hereby shall also apply to an eventual assignment, subject to the provisions set forth in the Organic Hydrocarbon Law No. 26221
and in this Contract. 
  

	11.2	Exchange Regime 

  
 The Central Reserve Bank of Peru, on behalf of the State and in compliance with the legal rules in force on the Date of Signing, guarantees that the
Contractor will enjoy the exchange regime in force on the Date of Signing and, consequently, that -the Contractor shall have the right to have available and freely possess, use and dispose of foreign currency both in the country and abroad, as well
as the right to freely convert local currency into foreign currency in the supply and demand exchange market, under the terms and conditions set forth in this clause. 
  

 37 

 Accordingly, the Central Reserve Bank of Peru, on behalf of the State, guarantees the following to the
Contractor, in accordance with the legal regime in force on the Date of Signing: 
  

	 	a)	Free disposal by the Contractor of up to one hundred percent (100%) of the foreign currency generated from its exports of Fiscalized Hydrocarbons, which is freely available to the
Contractor in its bank accounts in the country or abroad. 

  

	 	b)	Free disposal by the Contractor and the right to freely convert into foreign currency up to one hundred percent (100%) of the local currency obtained from its sales of Fiscalized
Hydrocarbons to the domestic market, and -the right to directly deposit in its bank accounts in the country or abroad both the foreign currency as well as the local currency. 

  

	 	c)	The right to maintain, control and operate bank accounts in any currency, both in the country as well as abroad, control and freely use such accounts, and freely maintain abroad and
use the funds of such accounts, without any restriction whatsoever. 

  

	 	d)	Without prejudice to the foregoing, the right to freely dispose of, distribute, remit or withhold abroad, subject to no restriction whatsoever, its annual net profits determined
according to law. 

  

	11.3	Foreign Currency Availability and Conversion 

  
 It is hereby agreed that the Contractor will resort to the entities of the financial system established in the country to make the conversion into foreign
currency referred to in item b) of point 11.2. 
  
 In the event
the foreign currency referred to in the preceding paragraph cannot be provided in whole or in part by the above-mentioned entities, the Central Reserve Bank of Peru guarantees that it will provide the necessary foreign currency. 
  
 To this end, the Contractor must submit a written notice to the Central
Bank, attaching thereto a photocopy of the notices received from at least three (3) entities of the financial system, advising it that they cannot provide, whether in whole or in part, the foreign currency it needs. 
  
 The notices sent by the entities of the financial system shall be valid for
a period of two Business Days following their date of issuance. 
  

 38 

 Before 11.00 a.m. of the Business Day following the date of filing of the above-mentioned documents, the
Central Bank shall advise the Contractor of the exchange rate to be used for the conversion requested, which will be valid provided the Contractor delivers the countervalue in national currency on the same day. 
  
 If, for any reason whatsoever, the Contractor fails to provide the
countervalue on the same day, the Central Reserve Bank of Peru shall advise the Contractor, on the following Business Day, and subject to the same time limitation, of the exchange rate to be used for the conversion, provided it is made on that same
day. 
  
 Without prejudice to the foregoing, if the Central
Reserve Bank of Peru timely finds out that the foreign currency cannot be provided, whether in whole or in part, by the aforementioned entities, it will give notice thereof to the Contractor, asking it to take the corresponding local currency to the
Central Reserve Bank of Peru in order to make the conversion. 
  

	11.4	Modification to the Exchange Regime 

  
 The Central Reserve Bank of Peru, on behalf of the State, guarantees that the regime set forth in this clause will continue being applied to the
Contractor during the Contract Term. 
  
 If due to any reason,
the exchange rate were not determined by supply and demand, the exchange rate applicable to the Contractor will be the following: 
  

	 	a)	If a single official exchange rate were established, with the same value for all foreign currency or foreign currency-related transactions, said exchange rate will be used under the
Contract as from the date it becomes effective. 

  

	 	b)	If a regime of different and multiple exchange rates were established, or if different values were given to a single exchange rate, the exchange rate to be used for all of
Contractor’s operations will be the highest exchange rate. 

  

	11.5	Application of Other Legal Rules 

  
 The guaranties granted by the Central Reserve Bank of Peru to the Contractor shall remain in force during the Contract Term. 
  
 The Contractor shall have the right to resort in whole or in part, when
appropriate, to new legal exchange provisions or exchange rules to be issued during the Contract Term, including those dealing with exchange matters not contemplated in this clause, provided such rules are of general application or 
  

 39 

 apply to the Hydrocarbon activity. Resorting to the aforementioned new rules will not affect the
effectiveness of the guaranties referred to in this clause, nor will it affect the exercise of the guaranties related to aspects other than those contemplated in the new rules to which the Contractor may have resorted. 
  
 It is expressly agreed that the Contractor may resume at any time the
guaranties it decided not to use on a temporary basis, and that resuming such guaranties does not create rights or obligations for the Contractor with respect to the period in which it resorted to the aforementioned new rules. 
  
 Furthermore, it is hereby agreed that resuming such guaranties does not
affect at all such guaranties or the remaining guaranties, nor does it create additional rights or obligations for the Contractor. 
  
 If the Contractor resorts to the new legal exchange provisions or exchange rules, or decides to resume the guaranties it decided not to use on a temporary
basis, it must give notice thereof in writing to the Central Reserve Bank of Peru and to PERUPETRO. 
  
 The provisions contained in this point apply without prejudice to the provisions contained in the first paragraph of point 11.4. 
  

	11.6	Economic Information 

  
 The Contractor shall provide the Central Reserve Bank of Peru on a monthly basis with information regarding its economic activities, in accordance with
the provisions set forth in Article 74 of the Organizational Law of the Bank, approved by means of Decree Law No. 26123. 
  
 CLAUSE TWELVE - WORKERS 
  

	12.1	The Parties agree that at the end of the fifth Year counted as from the Date of Commencement of Commercial Extraction, the Contractor shall have replaced all its foreign personnel
by Peruvian personnel with equivalent professional qualifications. Foreign personnel who fill management positions and are required for the performance of specialized technical work in relation to the Operations are excepted from the above
requirement. The Contractor agrees to train its Peruvian personnel in the performance of specialized technical work, in order for said Peruvian personnel to gradually replace the foreign personnel in the performance of said work.

  

	12.2	At the commencement of the Operations and at the end of each calendar year, the Contractor shall deliver to PERUPETRO a statistical chart of its personnel working for the
Operations, as per the form to be delivered by PERUPETRO to the Contractor. 

  

 40 

 CLAUSE THIRTEEN - ENVIRONMENTAL PROTECTION AND COMMUNITY RELATIONS 
  

	13.1	The Contractor, according to law, shall comply with the rules and provisions set forth in the “Environmental Protection Regulations for Hydrocarbon Activities” approved by
means of Supreme Decree No. 046-93-EM, and amending legislation, with Legislative Decree No. 613, “Environment and Natural Resources Code”, and with other relevant rules. To this end, if necessary, PERUPETRO will facilitate coordination
between the Contractor and the competent authorities. 

  
 CLAUSE
FOURTEEN - HYDROCARBON CONSERVATION AND LOSS PREVENTION 
  

	14.1	The Contractor shall adopt every reasonable measure to avoid losing or wasting Hydrocarbons in any manner on the surface or subsurface during the Exploration and Exploitation
activities. 

  

	14.2	In the case of surface Hydrocarbon spills, either in the Contract Area or outside of the Contract Area, that are to be reported in accordance with the legal rules in force, the
Contractor shall give immediate notice thereof to PERUPETRO, indicating the estimated volume of the spill and the actions taken to correct the causes thereof. PERUPETRO shall have the right to check the volume of the spill and analyze the causes.

  
 If a surface loss occurs, either in the
Contract Area or outside of the Contract Area, before reaching the Production Fiscalization Point, due to Contractor’s gross negligence or willful misconduct, the volume lost shall be valued according to clause eight and included in the
calculation of the royalty, without prejudice to the provisions set forth in point 13.1. 
  
 If a loss occurs before reaching the Production Fiscalization Point due to reasons other than those described in the preceding paragraph, resulting in a compensation to the Contractor by third parties, the amount of
the compensation received for the Hydrocarbons lost, multiplied by the factor obtained by dividing the amount of the royalty paid for the Hydrocarbons Fiscalized at the Production Fiscalization Point to which the Hydrocarbons lost in the
“Fortnight” in which the loss occurred correspond, by the value of said Fiscalized Hydrocarbons, determined in accordance with point 8.2 in the same fortnight, will be the amount of the royalty to be paid by the Contractor 
  

 41 

 for the Hydrocarbons lost, on or before the second Business day following receipt of said compensation,
without prejudice to the provisions set forth in point 13.1. 
  
 CLAUSE FIFTEEN
- TRAINING AND TRANSFER OF TECHNOLOGY 
  

	15.1	In compliance with the provisions contained in Article 29 of Law No. 26221, the Contractor commits itself to make available to PERUPETRO, every calendar year during the Contract
Term, the following amount: 

  

					
	 	  	 	  	 Annual
 Contribution
in US

	 a)
	  	Until the calendar year in which the Date of Commencement of Commercial Extraction takes place:	  	50,000.00
			
	 b)
	  	As from the calendar year following that of the Date of Commencement of Commercial Extraction:	  	 
			
	 	  	Barrels per Day	  	 
	 	  	 From 0 to 30,000
	  	80,000.00
	 	  	 From 30,001 to 50,000
	  	120,000.00
	 	  	 From 50,001 upwards
	  	180,000.00

  
 The first payment will
be made on the Date of Signing, and will be equivalent to the amount obtained by multiplying the annual contribution under item a) by the fraction obtained by dividing the number of Days still to run to complete the then current calendar year by
three hundred sixty-five (365). 
  
 For item b), the annual
training contribution will be the one corresponding to the section in which the daily average production of the Hydrocarbons Fiscalized in the previous calendar year is included, which will be determined by dividing the total volume of Hydrocarbons
Fiscalized in said Year by the corresponding number of Days. 
  
 To determine the Barrel/Day equivalence for the Natural Gas production, the following formula shall be used: Barrels shall be equivalent to the volume of Natural Gas expressed in standard cubic feet, divided by a factor of five thousand six
hundred twenty-six (5,626). 
  

 42 

 The payments referred to in this point, except for the first one, shall be made in the Month of January
in each calendar year. 
  

	15.2	The Contractor shall comply with the obligations set forth in point 15.1 hereof, by depositing the corresponding contribution in the account to be designated by PERUPETRO.

  
 PERUPETRO shall give the Contractor notice of
its conformity with the payment, within a term of five (5) Business Days following receipt of the corresponding contribution. 
  

	15.3	The Contractor and PERUPETRO shall agree upon the implementation of technical cooperation programs for research and development on subjects of mutual interest.

  
 Within a period of ninety (90) Days before the
end of each calendar year, the Parties shall submit: to the Supervisory Committee the projects to be implemented in the following calendar year. 
  

	15.4	The training programs to be established by the Contractor for its personnel, both in the country as well as abroad, shall be made known to PERUPETRO. 

  
 CLAUSE SIXTEEN – ASSIGNMENT AND ASSOCIATION 
  

	16.1	If the Contractor reaches an agreement to assign its contractual position to or become associated with a third party in the Contract, it shall give notice thereof to PERUPETRO. The
application for the qualification of the assignee or third party shall be attached to the above notice, and the assignee or third party must attach the complementary information that might be required in order to be qualified as a petroleum
contractor, according to law. 

  
 If PERUPETRO
grants the qualification requested, the assignment or association shall take place through an amendment to the Contract, according to law. 
  

	16.2	The Contractor, by giving prior notice thereof to PERUPETRO, can assign its contractual position or become associated with an Affiliate, according to law. 

 

	16.3	The assignee shall grant all the guaranties and shall take over all of the assignor’s rights, responsibilities, and obligations. 

  

 43 

 CLAUSE SEVENTEEN -ACTS OF GOD OR FORCE MAJEURE 
  

	17.1	None of the Parties hereto shall be held liable for any non-compliance with an obligation, or for the partial, late, or defective compliance therewith, during the time said Party is
affected by an Act of God or Force Majeure, provided it proves that such cause prevents it from duly meeting said obligation. 

  

	17.2	The Party affected by an Act of God or Force Majeure shall give written notice thereof to the other Party within five (5) Days following its occurrence, and shall prove the manner
in which it affects the fulfillment of the corresponding obligation. The other Party shall answer in writing, accepting or rejecting said event, within fifteen (15) Days following receipt of the aforementioned notice. If said Party fails to answer
within this term, its failure to answer shall be understood as its acceptance of the grounds invoked. 

  
 In the event of partial, late or defective compliance with an obligation due to an Act of God or Force IMajeure, the Party obliged to comply with said
obligation will make its best efforts to fulfill it in accordance with the Parties’ common intention expressed in the Contract, and the Parties shall continue complying with the contractual obligations not affected in any manner by said event.

  
 The Party affected by an Act of God o Force Majeure must
resume compliance with the contractual obligations and conditions within a reasonable period of time after said cause or causes have disappeared, for which purpose it must give notice thereof to the other Party within five (5) Days following the end
of said cause. The Party not affected shall cooperate with the affected Party in this effort. 
  
 In the event of strikes, work stoppages or other similar events, none of the Parties hereto may impose upon the other Party a solution contrary to its will. 
  

	17.3	The period during which the effects of an act of God or Force Majeure affect compliance with the contractual obligations shall be added to the term fixed to comply with said
obligations and, if applicable, to the term of the corresponding phase of the Contract and to the Contract Term. 

  
 If the Act of God or Force Majeure affects the performance of any of the minimum work programs referred to in point 4.6, the guaranty furnished for such
program shall be kept in force without being executed during the time such reason affects the aforesaid performance, or during the time PERUPETRO does not issue its opinion on the reason invoked by the 
  

 44 

 Contractor and, should there be any discrepancy regarding the existence of such reason, while such
discrepancy is resolved. For this purpose, the Contractor must extend or replace said guaranty, as necessary. 
  
 Furthermore, while PERUPETRO does not issue its opinion on the reason invoked by the Contractor, or while the discrepancy which may have arisen on its
existence is not resolved, the calculation of the term for the performance of the respective minimum work program shall be suspended. If PERUPETRO accepts the existence of the Act of God or Force Majeure invoked by the Contractor, the Contractor
shall resume the performance of the minimum work program as soon as the effects of the aforesaid reason have disappeared. 
  

	17.4	PERUPETRO shall make all the necessary efforts to obtain the support and cooperation of the relevant governmental authorities, so that the necessary measures be taken to guarantee
the continuous and safe implementation and performance of the activities to be carried out hereunder. 

  
 It is hereby agreed that if any of the Parties considers, in its sole discretion, that its personnel or that of its subcontractors cannot work safely in
the Contract Area as regards their physical integrity, the event of Force Majeure or Act of God invoked by either Party on these grounds shall not be questioned by the other Party. 
  

	17.5	If the Contractor is affected by an Act of God or Force Majeure that prevents it from completing the minimum work program of the then current period, upon expiration of a term of
twelve (12) consecutive Days counted as from the occurrence of said Act of God or Force Majeure, the Contractor may terminate the Contract, for which purpose it must give PERUPETRO notice of its decision at least thirty (30) Days in advance of the
date on which it will relinquish the Contract Area. 

  

	17.6	The provisions of this clause seventeen are not applicable to obligations related to the payment of money. 

  
 CLAUSE EIGHTEEN - ACCOUNTING 
  

	18.1	The Contractor shall keep its accounting in accordance with the accounting principles and practices established and accepted in Peru. Moreover, the Contractor shall keep any and all
books, detailed records and documents that may be required to account for and control the activities it carries out in the country and abroad in relation to the object of the Contract, as well as to properly support its revenues, investments, costs,
expenses, and Tributes 

  

 45 

 incurred in each tax year. On the other hand, within one hundred and twenty (120) Days counted as from
the Date of Signing, the Contractor shall submit to PERUPETRO a copy of the “Accounting Procedures Manual” that it has decided to propose to record its operations. 
  
 The Contractor delivered to PERUPETRO a copy in Spanish of the “Accounting Procedures Manual” to record its
operations. 
  
 The “Accounting Procedures Manual”
shall contain, among other things, the following information: 
  

	 	a)	Language and currency in which the accounting records will be kept; 

  

	 	b)	Applicable accounting principles and practices; 

  

	 	c)	Account Structure and Plan, in accordance with the requirements of the Peruvian Securities and Exchange Commission (CONASEV); 

  

	 	d)	Mechanisms to identify the accounts of the Contract, of other Hydrocarbon contracts, of related activities, and of other activities; 

  

	 	e)	Mechanisms for the allocation of revenues, investments, costs and common expenses to the Contract, to other Hydrocarbon contracts, to related activities, and to other activities;
and, 

  

	 	f)	Determination of the income and expenditure accounts and of the detailed records for purposes of the calculation of factor “Rt_j”, including a
breakdown of the procedures described in Annex “E” to the Contract, if applicable. 

  

	18.2	If the information referred to in item f) above has been included in the “Accounting Procedures Manual”, PERUPETRO, within a term not to exceed thirty (30) Days following
receipt of the “Accounting Procedures Manual”, will submit a notice to the Contractor, approving the accounting procedure for factor “Ft_j” referred to in said item or otherwise making any suggestion
it may deem convenient to improve and/or expand said procedure. If no such notice is sent by PERUPETRO within the above term, the procedure referred to in item f) of point 18.1 shall be deemed to have been approved for all relevant purposes thereof.

  
 Also within the aforementioned term of thirty
(30) Days following receipt of the “Accounting Procedures Manual”, PERUPETRO may make suggestions and/or observations to improve, expand or eliminate one or more of the remaining accounting procedures proposed in said manual. 

 

 46 

 Any change with respect to the approved accounting procedure to be used for factor “Rt_1” will be previously proposed to PERUPETRO for approval, following for such purpose the procedure described in the first paragraph of this point. 
  

	18.3	The accounting books of the Contractor, the financial statements and their supporting documents shall be made available to the duly authorized representatives of PERUPETRO, for
their inspection, at the offices of the Contractor, subject to prior notice. 

  

	18.4	The Contractor shall keep the records of the real and personal properties used in the Operations under the Contract, in accordance with the accounting rules in force in Peru and in
keeping with the accounting practices generally accepted in the international petroleum industry. 

  
 PERUPETRO may ask the Contractor to provide it with information on its properties each time it deems it convenient. Furthermore, PERUPETRO can ask the
Contractor to provide it with its schedule of physical inventories to be taken in relation to the goods subject matter of the Operations, classifying said goods based on whether they are owned by the Contractor or third parties, and can participate
in said inventory-taking processes, should it deem it convenient. 
  

	18.5	Within thirty (30) Days following its issuance, the Contractor must submit a copy of the report issued by its external auditors on its financial statements for the previous business
year. If the Contractor has entered into more than one contract with PERUPETRO, or performs activities other than those provided for in the Contract, it commits itself to keep separate accounts in order to prepare financial statements for each
contract and/or activity and, therefore, the report prepared by its external auditors must also include financial statements for each contract and/or activity. 

  

	18.6	The Contractor must send to PERUPETRO, whenever requested to do so by PERUPETRO, the information contained in the Annual Income Tax Return filed with the National Superintendency of
Tax Administration or the entity that may replace it. 

  
 CLAUSE
NINETEEN - MISCELLANEOUS 
  

	19.1	If in one or more cases any of the Parties fails to invoke or insist on the fulfillment of any of the provisions contained in the Contract, or on the exercise of any of the rights
granted under the Contract, it shall not be construed as a waiver of said provision or right. 

  

	19.2	In performing the Operations, the Contractor shall comply with all the resolutions issued by the competent authorities exercising their legal faculties. 

  
 Moreover, the Contactor binds itself to comply with all the rules issued by
the competent authorities in relation to national defense and security. 
  

 47 

	19.3	The Contractor shall have free access to and exit from the Contract Area. 

  

	19.4	Pursuant to the current legislation, the Contractor shall have the right to use, for the purpose of carrying out the Operations, the water, timber, gravel, and any other
construction materials located within the Contract Area, honoring the rights of third parties, if applicable. 

  

	19.5	The license for the use of technical information on the Contract Area or other areas that the Contractor may wish to acquire from PERUPETRO will be granted in accordance with
PERUPETRO’s Policy on the Handling of Technical Exploration-Production Information. For this purpose, the Parties shall sign a “Letter-Agreement”. 

  

	19.6	If any of the Parties hereto fails to make any payment within the agreed term, the amount of the payment shall be subject to the interest rates set forth below, as from the Day
following the due date: 

  

	 	a)	For accounts expressed and payable in local currency, the rate to be used shall be the interest rate on loans in local currency (TAMN) for credits with a term of up to three hundred
and sixty (360) Days, published by the Superintendency of Banking and Insurance, or whichever rate may replace it, applicable to the period elapsed between the maturity date and the actual date of payment; and, 

  

	 	b)	For accounts expressed in Dollars, and payable in local currency or in Dollars, the rate to be used shall be the US prime rate plus three (3) percentage points, published by the US
Federal Reserve, applied to the period elapsed between the maturity date and the actual date of payment. In the absence of this rate, the Parties shall agree on another rate that will properly replace it. 

  

	19.7	The provisions contained in point 19.6 shall apply to all accounts between the Parties arising out of the Contract or any other agreement or settlement between the Parties. A
different rule may be established between the Parties for the payment of interest, by means of a written agreement. The provisions contained herein concerning interest shall in no way modify the Parties’ legal rights and remedies to enforce
payment of amounts due. 

  

	19.8	If by virtue of a national emergency declared by law, the State is obliged to buy Hydrocarbons from local producers, the purchase shall be made at the prices obtained by applying
the valuation mechanisms set forth in clause eight, and payment shall be made in Dollars within thirty (30) Days following the date of delivery. 

  

 48 

	19.9	The State, through the Ministry of Defense and the Ministry of the Interior, shall provide the Contractor with all the necessary security measures in the Operations, to the extent
possible. 

  

	19.10	The Contractor shall release and, if appropriate, indemnify PERUPETRO and the State, as the case may be, from any claim, legal action, or other third-party burden or encumbrance
that could be levied as a result of the Operations carried out and relationships developed under the Contract, originating from any contractual or extracontractual relationship, except for those originating from acts performed by PERUPETRO itself or
the State. 

  

	19.11	The Hydrocarbons that correspond to the Contractor under the Contract shall be freely available to the Contractor. 

  
 CLAUSE TWENTY - NOTICES AND COMMUNICATIONS 
  

	20.1	Every notice or communication regarding the Contract shall be considered validly sent if delivered in writing with acknowledgment of receipt, or if received by registered mail,
facsimile or other means agreed upon by the Parties, addressed to the addressee, on a Business Day, to the following addresses: 

  
 PERUPETRO:  
 PERUPETRO S.A.

 Gerencia General 
 Av. Luis
Aldana 320 
 Lima 41 - Peru 
 Fax: 475-7722 / 475-9644 
  
 Contractor:

 Harken del Peru Limitada 
 Legal Representative 
 Bernardo Monteagudo 201 
 Lima-27, Peru 
 Fax: 264-4040 
  
 Corporate Guarantor: 
 Global Energy Development plc 
 580 Westlake Park Blvd. Ste. 750 
 Houston, Texas 77079 
  

	20.2	Any of the Parties shall have the right to change its address or fax number for purposes of the notices and communications, by giving notice thereof to the other Party at least five
(5) Business Days in advance of the effective date of such change. 

  
 The provisions set forth in the first paragraph of this point shall also apply to the Corporate Guarantor. 
  

 49 

 CLAUSE TWENTY-ONE - SUBMISSION TO PERUVIAN LAW AND CONFLICT RESOLUTION 
  

	21.1	Submission to Peruvian Law 

  
 The Contract has been negotiated, drawn up and signed in accordance with Peruvian law, and its contents, performance, and any consequence derived
therefrom shall be governed by the domestic laws of the Republic of Peru. 
  

	21.2	Technical Conciliation Committee 

  
 The Technical Conciliation Committee shall be set up within fifteen (15) Business Days following the date it is summoned by any of the Parties, and shall
be composed of three (3) members specialized in the issues to be dealt with thereat. Each Party shall select one (1) member, and the third one shall be selected by the members designated by the Parties. If any of the Parties fails to designate its
representative within the agreed term, or if the members designated by the Parties cannot reach an agreement on the designation of the third member within the agreed term, or if the Technical Conciliation Committee fails to issue its opinion within
the agreed term, any of the Parties may decide to resolve the conflict in the manner described in point 21.3 of the Contract. 
  
 The Parties, within sixty (60) Days counted as from the Date of Signing, will agree on the procedure to be followed for the functioning of this committee.

  
 The resolutions issued by the Technical Conciliation
Committee must be issued within a term of thirty (30) Days following its installation and will be binding upon the Parties, as long as an arbitration award, if applicable, does not resolve the conflict on a definitive basis. Without prejudice
to the fulfillment of the resolution issued by the Technical Conciliation Committee, any of the Parties can resort to arbitration in accordance with the provisions set out in point 21.3 within a term of sixty (60) Days following the date of receipt
of the service of notice of the respective resolution. 
  

	21.3	Arbitration Agreement 

  
 Any suit, controversy, discrepancy or claim arising out of or related to the Contract, such as the interpretation, fulfillment, termination, efficacy or
validity of the Contract, which arises between the Contractor and PERUPETRO and cannot be resolved by mutual agreement between the Parties, shall be settled by international de Jure arbitration, pursuant to the provisions contained in Article 68 of
Law No. 26221. 
  
 The arbitration process shall be carried out
in the Spanish language and in accordance with the! terms and conditions agreed upon in this clause. The 
  

 50 

 arbitration process shall be managed by the International Chamber of Commerce, hereinafter referred to as
the “ICC”. As to all matters not contemplated in this clause, the arbitration shall be organized and carried out in accordance with ICC’s Arbitration Regulations in force on the Date of Signing. In addition to the provisions set forth
in this clause and in the aforementioned Regulations, the provisions contained in the General Arbitration Law No. 26572 or in any law that may replace it, shall be applicable on a supplementary basis. 
  
 There will be three (3) arbitrators. Each Party will appoint one arbitrator
and the third one will be appointed by the arbitrators designated by the Parties. If the arbitrators appointed by the Parties fail to appoint the third arbitrator within thirty (30) Days following their designation, any of the Parties may request
the ICC to appoint said arbitrator. 
  
 The subject matter of the
dispute, controversy, difference or claim shall be defined by the complaint, the answer to the complaint and, eventually, if any, the counterclaim and the answer to the counterclaim. At the request of any of the Parties, if the complaint or the
counterclaim has not been answered within a term of fifteen (15) business Days counted as from the respective notice, the arbitrators will be authorized to define the controversy should any of the Parties refuse to do it. 
  
 To solve the dispute, controversy, difference or claim referred to
arbitration, the arbitrators shall abide by the domestic laws of the Republic of Peru. 
  
 The arbitration shall take place in the city of Lima, Peru, unless the Arbitration Court cannot meet in this city for reasons beyond the control of its members. In such event, the Parties will agree on another place
to carry out the arbitration process. If within a term of fifteen (15) Days counted as from the notice sent to the Parties regarding the obstacle faced by the arbitrators, the Parties are unable to reach an agreement on the new place of arbitration,
the ICC will fix the place. 
  
 If the amount of the issue
referred to arbitration exceeds Five Hundred Thousand US Dollars (US$500,000.00) and one of the Parties considers that the arbitration should be held in another city or country, it must express its opinion, proposing a new city or country in the
first written notice addressed to the other Party advising it of its decision to resort to arbitration. If within fifteen (15) Days following delivery of the above-mentioned notice, the Parties are unable to reach an agreement on the new place of
arbitration, the ICC will fix it. 
  
 Should a discrepancy arise
regarding the amount of the controversy, or if the amount cannot be determined, the ICC will establish the place of arbitration, taking into account the provisions set forth in the preceding paragraph. 
  

 51 

 The Parties hereby waive any remedy of appeal, appeal for annulment, or any other appeal against the
arbitration award. An appeal for annulment against the arbitration award will only be admissible in the cases provided for in the law. The Parties represent that the arbitration award will be final and binding upon the parties, and shall be
immediately enforced. 
  
 The parties commit themselves to
perform any act required to carry out the arbitration process until it is completed and the award enforced. 
  
 The maximum term of the arbitration process shall be one hundred and eighty (180) Business Days counted as from the date of installation of the
Arbitration Court, or of the date of a similar event. If it is necessary to extend the term, the provisions set forth in the ICC Arbitration Regulations shall be applicable. 
  
 If the arbitration award is issued outside of Peru, it shall be acknowledged and enforced in accordance with the
“Agreement on the Acknowledgment and Enforcement of Foreign Arbitration Awards” signed in New York on June 10, 1958 (the New York Convention), or the “Inter American Agreement on International Commercial Arbitration” signed in
Panama on January 30, 1975 (the Panama Agreement), or with the relevant rules contained in the General Arbitration Law No. 26572, or in any rule that may replace it, as determined by the Party requesting the acknowledgment and enforcement of the
arbitration award. 
  
 During the arbitration process, the
Parties will continue discharging their contractual obligations, to the extent possible, even those that are the subject matter of the arbitration process. 
  
 Without prejudice to the foregoing, if the subject matter of the arbitration process were the fulfillment of the contractual obligations guaranteed by the
guaranties referred to in point 3.10, the calculation of the respective term will be suspended and said guarantees will not be executed and will remain in full force and effect during the arbitration process. To this end, the Contractor must extend
or replace said guaranties, as necessary. 
  

	21.4	The Parties waive any diplomatic claim. 

  

	21.5	This Contract is drawn up and construed in the Spanish language and, therefore, the Parties hereto hereby agree that this is the only official version. 

  

 52 

 CLAUSE TWENTY-TWO - TERMINATION 
  

	22.1	The termination of the Contract shall be governed by the provisions set forth herein and, on a complementary basis, by the provisions contained in Law No. 26221 and, as to matters
not contemplated therein, by the provisions set out in the Civil Code. 

  
 Except for the cases referred to in point 22.3, if any of the Parties fails to comply with any of the obligations provided for in the Contract due to reasons other than acts of God or Force Majeure or other
non-imputable causes, the other Party may give notice thereof to said Party, informing it of the default and of its intention to terminate the Contract at the end of a sixty (60)-Day period, unless said Party corrects the default within said period
or proves that the default is in the process of being corrected. 
  
 If the Party that receives the notice of default questions or denies its existence, it may refer the issue to arbitration, in accordance with the provisions set forth in clause twenty-one, within thirty (30) Days following the notice. In
such event, the calculation of the sixty (60)-Day term will be suspended until the Parties have been served notice of the arbitration award, and the Contract will be terminated if, even though the default has been confirmed, said Party does not
correct the default or does not prove to the other Party that the default is in the process of being corrected, within said term. 
  
 The Contract can be terminated before the end of the Contract Term by express agreement between the Parties. 
  

	22.2	Upon termination of the Contract, all the rights and obligations of the Parties specified in the Contract will fully cease, and the following provisions will be taken into account:

  

	 	a)	The rights and obligations of the Parties arising out of this Contract prior to the date of termination of the Contract, including, inter alia, the Contractor’s right to the
Hydrocarbons extracted and the guaranties agreed upon in the Contract, shall be honored; and 

  

	 	b)	Any default incurred by any of the Parties prior to the date of termination hereof regarding any of the obligations provided for in the Contract shall be remedied by the Party in
default, except for obligations that, by their very nature, become extinguished upon termination of the Contract. 

  

	22.3	The Contract shall be terminated as a matter of law, without any prior procedure, in the following cases: 

  

	 	22.3.1	In the event the Contractor fails to comply with the performance of the minimum work program of any period of the exploration phase, 

  

 53 

 after having used the extensions provided for in point 3.4, if appropriate, and without being supported
by reasons satisfactory to PERUPETRO, unless the provisions set forth in points .4.7 and 4.13 are complied with.

  

	 	22.3.2	If upon expiration of the exploration phase or of the retention period, whichever occurs later in time, no declaration of Commercial Discovery has been made.

  

	 	22.3.3	In the specific cases described in points 3.10, 4.2 and 17.5. 

  

	 	22.3.4	In the event the Contractor is declared insolvent, under dissolution or liquidation, or bankrupt, and the Contractor does not send the notice referred to in point 16.1 hereof within
a term of fifteeen (15) Business Days, identifying the third party that will assume its contractual position. 

  

	 	22.3.5	In the event the corporate guaranty referred to in point 3.11 is not kept in force and the Contractor fails to replace it within a maximum term of fifteen (15) Business Days
following receipt by the Contractor of PERUPETRO’s notice asking for said replacement; or in the event the entity that granted the guaranty referred to in point 3.11 is declared insolvent, under dissolution or liquidation, or bankrupt, and the
Contractor fails to give PERUPETRO notice thereof within a maximum term of fifteen (15) Business Days following receipt of PERUPETRO’s request, identifying the third party that will assume the corporate guaranty, subject to PERUPETRO’s
prior qualification and acceptance. 

  

	 	22.3.6	In the event an arbitration award declares, in the cases referred to in point 22.1, a default and said default is not rectified in accordance with the provisions set forth in said
point, or by means of an arbitration award declaring the termination of the Contract. 

  

	22.4	In accordance with the provisions set out in Article 87 of Law No. 26221, if the Contractor fails to comply with the Environmental provisions, OSINERG will impose the pertinent
sanctions, and the Ministry of Energy and Mines can even terminate the Contract, subject to OSINERG’s previous report. 

  

	22.5	If the Contractor, or the entity that furnished the guaranty referred to in point 3.11, requests protection against the actions taken by creditors, PERUPETRO may terminate the
Contract should it deem that its rights under the Contract are no being properly protected. 

  

	22.6	 Upon termination of the Contract, the Contractor shall assign to the State, through PERUPETRO, unless it does not require them, at no cost or charge 

  

 54 

 
whatsoever and in a good state of repair, maintenance and operation, except for normal wear and tear, all real property, power facilities, camps,
communication facilities, pipes, and other production equipment and facilities owned by the Contractor, which will allow the continuation of the Operations. 
  
 If Petroleum, Non-Associated Natural Gas and/or Non-Associated Natural Gas and Condensates were Exploited together, upon completion of the term referred
to in point 13.1 for the Petroleum exploitation phase, the Contractor shall assign to the State, through PERUPETRO,
unless it does not require them, at no cost or charge whatsoever, in a good state of repair, maintenance and operation, except for normal wear and tear, the goods and facilities involved in the Exploitation of Petroleum, which are not required for
the Exploitation of Non-Associated Natural Gas and/or Non-Associated Natural Gas and Condensates. 
  
 The goods and facilities kept by the Contractor for the Exploitation of Non-Associated Natural Gas and/or Non-Associated Natural Gas and Condensates,
which have also been used in the Exploitation of Petroleum, even though they may continue being owned by the Contractor, shall be used for both Exploitation operations. To this end, a contract shall be entered into between the Parties. 

 
 If the Contractor has been using the goods and facilities described in
the first paragraph of this point, but said goods and facilities are not related, nor exclusively accessory, to the Operations, that is, they have also been used for operations in other areas of the country under Hydrocarbon Exploration or
Exploitation contracts still in effect, the Contractor shall continue being the owner of and using said goods. 
  

	22.7	For purposes of the provisions set forth in point 22.6, during the last Year of the Contract Term, the Contractor shall contribute and cooperate with PERUPETRO so that, without
interfering with the Operations, PERUPETRO may perform all acts and enter into all agreements required for an orderly and uninterrupted transition of the Operations carried out as of the date of termination of the Contract. 

 

 55 

 ATTACHMENT “A” 
 DESCRIPTION OF PLOT 95 
  
 LOCATION 
  
 Plot 95 is located in the
province of Requena in the department of Loreto, and is delimited as illustrated in Attachment “B” (Map) in accordance with the following description: 
  

REFERENCE POINT 
  
 The Point of Reference (PR) is the Rio Blanco Station, located in the province of Requena in the department of Loreto. 
  
 POINT OF DEPARTURE 
  
 Starting in the Point of Reference (PR) measurements of 3,463.911 m South and then 12,758.607 m West are taken until reaching Point (23), which is the Point of Departure (PD) of the Plot’s perimeter. 

 
 STRUCTURE OF THE PLOT 
  
 From Point (23) or (PD) is measured 84,300.059 m Southeast, in a straight line with an
Azimuth of 143°11’53” until reaching Point (49). 
  
 From Point (49)
are measured 71,805.292 m Northeast in a straight line with an Azimuth of 282°52’30” until reaching Point (44). 
  
 From Point (44) 76,690.387 m Northeast in a in a straight line with an Azimuth of 341°19’57”97 until reaching Point (14). 
  
 From Point (14) it continues in a Northeast direction on the right margin of the Puinahua
Channel and the Ucayali River until reaching Point (1) 
  
 From Point (1)
3,371.762 m are measures, in a straight line with an Azimuth of 90°00’00” until reaching Point (2). 
  
 From Point (2) 62,193.780 m South are measured, in a straight line with an Azimuth of 180°00’00” until reaching Point (23) or the Point of Departure (P.D.),
thus closing the perimeter of the Plot. 
  
 BORDERS 
  
 In the North, East, South and West with free areas. 

	

  

 56 

 PLOT DEFINITION 
  
 Plot 1 surrounded by corner points 1,2,5,4 and 3 
 Plot 2 surrounded by corner
points 3,4,7 and 6 
 Plot 3 surrounded by corner points 6,7,9 and 8 
 Plot a 4 surrounded by corner points 4,5,10,9 and 7 
 Plot 5 surrounded by corner points 8,9,12 and 11 
 Plot 6 surrounded by corner points 9,10,13 and 12 
 Plot 7 surrounded by
corner points 11,12,16,15 and 14 
 Plot 8 surrounded by corner points 12,13,17 and 16 
 Plot 9 surrounded by corner points 15,16,19 and 18 
 Plot 10 surrounded by corner points 16,17,20 and 19 
 Plot 11 surrounded by corner points 18,19,22 and 21 
 Plot 12 surrounded by
corner points 19,20,23 and 22 
 Plot 13 surrounded by corner points 21,22,25 and 24 
 Plot 14 surrounded by corner points 22,23,26 and 25 
 Plot 15 surrounded by corner points 24,25,28 and 27 
 Plot 16 surrounded by corner points 25,26,29 and 28 
 Plot 17 surrounded by
corner points 23,30,29 and 26 
 Plot 18 surrounded by corner points 27,28,32,36 and 35 
 Plot 19 surrounded by corner points 28,29,33 and 32 
 Plot 20 surrounded by corner points 29,30,31,34 and 33 
 Plot 21 surrounded by corner points 32,33,38,37 and 36 
 Plot 22 surrounded by
corner points 33,34,39 and 38 
 Plot 23 surrounded by corner points 31,40,39 and 34 
 Plot 24 surrounded by corner points 35,36,37,45 and 44 
 Plot 25 surrounded by corner points 37,38,41,46 and 45 

Plot 26 surrounded by corner points 38,39,42 and 41 
 Plot 27 surrounded by
corner points 39,40,43 and 42 
 Plot 28 surrounded by corner points 41,42,47 and 46 
 Plot 29 surrounded by corner points 42,43,48 and 47 
 Plot 30 surrounded by corner points
43,49 and 48 
  
 COORDINATES LIST PSAD 56 OF POINT OF REFERENCE AND PLOT
CORNERS 
  

			
	GEOGRAPHICAL COORDINATES	 	UTM FLAT COORDINATES PLANAS UTM

  

									
	 Point

	  	South Latitude

	  	West Longitude

	  	Meters North

	  	Meters East

	  
	 Est. Rio Blanco (PR)
	  	05o38’07”720	  	73o52’40”970	  	9’376,963.911	  	624,258.607
	 23 o (PP)
	  	05°40’01”269	  	73°59’35”448	  	9’373,500.000	  	611,500.000
	 49
	  	06°16’35”281	  	73°32’08”308	  	9’306,000.000	  	662,000.000
	 44
	  	06°07’59”272	  	74°10’06”791	  	9’322,000.000	  	592,000.000
	 14
	  	05°28’34”325	  	74°23’27”921	  	9’394,655.855	  	567,453.263
	 1
	  	05°06’16”283	  	74°01’28”275	  	9’435,693.780	  	608,128.238
	 2
	  	05°06’16”114	  	73°59’38”780	  	9’435,693.780	  	611,500.000

  

 57 

 COORDENTATES LIST OF THE PLOTS CORNERS 
  

					
	 POINT

	  	UTM FLAT COORDINATES M

	 1
	  	9’435,693.780 m N	  	608,128.238 m E
	 2
	  	9’435,693.780 m N	  	611,500.000 m E
	 3
	  	9’429,521.178 m N	  	591,500.000 m E
	 4
	  	9’423,500.000 m N	  	591,500.000 m E
	 5
	  	9’423,500.000 m N	  	611,500.000 m E
	 6
	  	9’420,782.000 m N	  	575,956.625 m E
	 7
	  	9’419,850.000 m N	  	591,500.000 m E
	 8
	  	9’413,500.000 m N	  	572,476.554 m E
	 9
	  	9’413,500.000 m N	  	591,500.000 m E
	 10
	  	9’413,500.000 m N	  	611,500.000 m E
	 11
	  	9’403,500.000 m N	  	573,263.875 m E
	 12
	  	9’403,500.000 m N	  	591,500.000 m E
	 13
	  	9’403,500.000 m N	  	611,500.000 m E
	 14
	  	9’394,655.855 m N	  	567,453.263 m E
	 15
	  	9’393,500.000 m N	  	567,843.768 m E
	 16
	  	9’393,500.000 m N	  	591,500.000 m E
	 17
	  	9’393,500.000 m N	  	611,500.000 m E
	 18
	  	9’383,500.000 m N	  	571,222.262 m E
	 19
	  	9’383,500.000 m N	  	591,500.000 m E
	 20
	  	9’383,500.000 m N	  	611,500.000 m E
	 21
	  	9’373,500.000 m N	  	574,600.756 m E
	 22
	  	9’373,500.000 m N	  	591,500.000 m E
	 23
	  	9’373,500.000 m N	  	611,500.000 m E
	 24
	  	9’363,500.000 m N	  	577,979.250 m E
	 25
	  	9’363,500.000 m N	  	591,500.000 m E
	 26
	  	9’363,500.000 m N	  	611,500.000 m E
	 27
	  	9’353,500.000 m N	  	581,357.744 m E
	 28
	  	9’353,500.000 m N	  	591,500.000 m E
	 29
	  	9’353,500.000 m N	  	611,500.000 m E
	 30
	  	9’353,500.000 m N	  	626,462.963 m E
	 31
	  	9’346,767.326 m N	  	631,500.000 m E
	 32
	  	9’343,500.000 m N	  	591,500.000 m E
	 33
	  	9’343,500.000 m N	  	611,500.000 m E
	 34
	  	9’343,500.000 m N	  	631,500.000 m E
	 35
	  	9’333,500.000 m N	  	588,114.732 m E
	 36
	  	9’333,500.000 m N	  	591,500.000 m E
	 37
	  	9’333,500.000 m N	  	600,000.000 m E
	 38
	  	9’333,500.000 m N	  	611,500.000 m E
	 39
	  	9’333,500.000 m N	  	631,500.000 m E
	 40
	  	9’333,500.000 m N	  	641,425.925 m E
	 41
	  	9’323,500.000 m N	  	611,500.000 m E
	 42
	  	9’323,500.000 m N	  	631,500.000 m E
	 43
	  	9’323,500.000 m N	  	648,907.407 m E
	 44
	  	9’322,000.000 m N	  	592,000.000 m E
	 45
	  	9’320,171.428 m N	  	600,000.000 m E
	 46
	  	9’317,542.857 m N	  	611,500.000 m E
	 47
	  	9’312,971.428 m N	  	631,500.000 m E
	 48
	  	9’308,992.592 m N	  	648,907.407 m E
	 49
	  	9’306,000.000 m N	  	662,000.000 m E

  
  

 58 

 EXTENSION (AREA BY PLOTS) 
  

			
	 PLOT

	  	AREA

	 1
	  	18,482.697 hectares
	 2
	  	11,687.415 hectares
	 3
	  	13,443.883 hectares
	 4
	  	20,000.000 hectares
	 5
	  	18,637.001 hectares
	 6
	  	20,000.000 hectares
	 7
	  	22,059.106 hectares
	 8
	  	20,000.000 hectares
	 9
	  	21,966.984 hectares
	 10
	  	20,000.000 hectares
	 11
	  	18,588.491 hectares
	 12
	  	20,000.000 hectares
	 13
	  	15,209.997 hectares
	 14
	  	20,000.000 hectares
	 15
	  	11,831.503 hectares
	 16
	  	20,000.000 hectares
	 17
	  	14,962.963 hectares
	 18
	  	13,527.524 hectares
	 19
	  	20,000.000 hectares
	 20
	  	18,304.364 hectares
	 21
	  	20,000.000 hectares
	 22
	  	20,000.000 hectares
	 23
	  	6,584.525 hectares
	 24
	  	12,165.458 hectares
	 25
	  	16,839.286 hectares
	 26
	  	20,000.000 hectares
	 27
	  	13,666.667 hectares
	 28
	  	16,485.714 hectares
	 29
	  	21,790.574 hectares
	 30
	  	9,496.979 hectares
	 	  	

	 Total
	  	515,731.131 ha

  

					
	 11 regular plots 20,000.000 hectares each
	  	=	  	220,000.000 hectares
	 19 irregular plots in different areas
	  	=	  	295,731.131 hectares
	 	  	 	  	

	 TOTAL 30 PLOTS
	  	=	  	515,731.131 hectares

  
 The Coordinates, Distances, Areas and
Azimuths mentioned in this Attachment are referred to the International Spheroid Universal Transversal Mercator Projection System (U.T.M), Zona 18 (Central Meridian 75o00’00”). 
  
 The Geodesia Datum is provisional for South America, La Canoa of 1956, located in Venezuela
(PSAD 56) 
  
 Should there be any discrepancies between the U.T.M. Coordinates and
the Geographical Coordinates or with the distances, Areas and Azimuths, the U.S.T. coordinates will be considered correct. 
  

 59 

 ANNEX “B” 
 MAP OF THE CONTRACT AREA - BLOCK 
 

 
  
  

 60 

 ANNEX “C-1” 
  
 LETTER OF GUARANTY FOR THE FIRST PERIODO 
 OF THE MINIMUM WORK PROGRAM 
  
 LETTER OF
GUARANTY 
  
 No. Lima, 
  
 PERUPETRO 
 S.A. LIMA 
  
 Gentlemen, 
  
 We, the(entity of the Financial System), hereby constitute ourselves as joint and several
guarantors for hereinafter referred to as the Contractor, in favor of PERUPETRO S.A., hereinafter referred to as PERUPETRO, in the amount of one hundred thousand and 00/100 US Dollars (US$.100.000.) in order to guarantee the faithful compliance with
Contractor’s obligations under the minimum work program of the first period of the exploration phase, contained in clause four of the License Contract for the Exploration and Exploitation of Hydrocarbons in Block 95 signed with PERUPETRO
(hereinafter referred to as the Contract). 
  
 The obligation assumed by (entity
of the Financial System) hereunder is limited to the payment to PERUPETRO of the amount of one hundred thousand and 00/100 US Dollars (US$.100.000) required in its payment request. 
  

	1.	This is a joint and several, irrevocable, unconditional, and automatically executable guaranty, without benefit of exclusion, payable upon presentation, during the effective term
hereof, of a notarial letter addressed by PERUPETRO to (Entity of the Financial System) requesting payment of one hundred thousand and 00/100 US Dollars (US$100.000), declaring that the Contractor has 

  

 61 

 not complied in whole or in part with the obligation referred to above and attaching to said letter, as
sole surety and justification, a notarially certified copy of the notarial letter sent by PERUPETRO to the Contractor, requiring compliance with the aforesaid obligation and giving notice of its intention of executing the guaranty. Said notarial
letter from PERUPETRO to the Contractor must have been delivered to the latter at least twenty (20) calendar Days before the date on which PERUPETRO files the payment claim with (entity of the Financial System) 
  

	2.	This guaranty shall expire no later than              unless before that date (entity of the Financial System)
receives a letter from PERUPETRO releasing (entity of the Financial System) and the Contractor from every responsibility hereunder, in which case this guaranty shall be canceled on the date of the said letter from PERUPETRO.

  

	3.	Any delay by us in honoring this guaranty in your favor shall accrue interest at a rate equivalent to Rate on Foreign Currency Loans (TAMEX rate) charged by the Entities of the
Financial System, published by the Superintendency of Banking and Insurance, applicable during the period of the delay, or the rate that may replace it. Interest shall be calculated as from the date of the above-mentioned notarial letter sent by
PERUPETRO to              (entity of the Financial System). 

  
 As from the date of expiration or cancellation no claim may be filed regarding this guaranty and (entity of the Financial System) and the Contractor shall be released
from every responsibility or obligation hereunder. 
  

	
	Sincerely yours,
	
	  

	Entity of the Financial System

  

 62 

 ANNEX “C-2” 
  
 LETTER OF GUARANTY FOR THE SECOND PERIOD OF THE 
 MINIMUM WORK PROGRAM 
  
 LETTER OF GUARANTY 
  
 No. Lima, 
  
 PERUPETRO 
 S.A. LIMA 
  
 Gentlemen, 
  
 We, the (entity of the Financial System), hereby constitute ourselves as joint and several
guarantors for                      hereinafter referred to as the Contractor, in favor of PERUPETRO S.A., hereinafter referred to as
PERUPETRO, in the amount of four hundred fifty thousand and 00/100 US Dollars (US$.450.000) in order to guarantee the faithful compliance with Contractor’s obligations under the minimum work program of the second period of the exploration
phase, contained in clause four of the License Contract for the Exploration and Exploitation of Hydrocarbons in Block 95 signed with PERUPETRO (hereinafter referred to as the Contract). 
  
 The obligation assumed by entity of the Financial System) hereunder is limited to the payment to PERUPETRO of the amount of four hundred
fifty thousand and 00/100 US Dollars (US$.450.000.) required in its payment request. 
  

	1.	This is a joint and several, irrevocable, unconditional, and automatically executable guaranty, without benefit of exclusion, payable upon presentation, during the effective term
hereof, of a notarial letter addressed by PERUPETRO to (Entity of the Financial System) requesting payment of four hundred fifty thousand and 00/100 US Dollars (US$ 450.000), declaring that the Contractor has not complied in whole or in part with
the obligation referred to above and attaching to said letter, as sole surety and justification, a notarially certified copy 

  

 63 

 of the notarial letter sent by PERUPETRO to the Contractor requiring compliance with the aforesaid
obligation and giving notice of its intention of executing the guaranty. Said notarial letter from PERUPETRO to the Contractor must have been delivered to the latter at least twenty (20) calendar Days before the date on which PERUPETRO files the
payment claim with (entity of the Financial System). 
  

	2.	This guaranty shall expire no later than                     unless before
that date (entity of the Financial System) receives a letter from PERUPETRO releasing (entity of the Financial System) and the Contractor from every responsibility hereunder, in which case this guaranty shall be canceled on the date of the said
letter from PERUPETRO. 

  

	3.	Any delay by us in honoring this guaranty in your favor shall accrue interest at a rate equivalent to Rate on Foreign Currency Loans (TAMEX rate) charged by the Entities of the
Financial System, published by the Superintendency of Banking and Insurance, applicable during the period of the delay, or the rate that may replace it. Interest shall be calculated as from the date of the above-mentioned notarial letter sent by
PERUPETRO to (entity of the Financial System). 

  
 As from the date
of expiration or cancellation no claim may be filed regarding this guaranty and (entity of the Financial System) and the Contractor shall be released from every responsibility or obligation hereunder. 
  

	
	Sincerely yours,
	
	  

	Entity of the Financial System

  

 64 

 ANNEX “C-3” 
  
 LETTER OF GUARANTY FOR THE THIRD PERIOD 
 OF THE MINIMUM WORK PROGRAM 
  
 LETTER OF
GUARANTY 
  
 No. Lima, 
  
 PERUPETRO 
 S.A. LIMA 
  
 Gentlemen, 
  
 We, the (entity of the Financial System), hereby constitute ourselves as joint and several
guarantors for              hereinafter referred to as the Contractor, in favor of PERUPETRO S.A., hereinafter referred to as PERUPETRO, in the amount of two millions and 00/100 US
Dollars (US$.2,000.000) in order to guarantee the faithful compliance with Contractor’s obligations under the minimum work program of the third period of the exploration phase, contained in clause four of the License Contract for the
Exploration and Exploitation of Hydrocarbons in Block 95 signed with PERUPETRO (hereinafter referred to as the Contract). 
  
 The obligation assumed by (entity of the Financial System) hereunder is limited to the payment to PERUPETRO of the amount of two millions and 00/100 US Dollars (US$
2,000.000) required in its payment request. 
  

	1.	This is a joint and several, irrevocable, unconditional, and automatically executable guaranty, without benefit of exclusion, payable upon presentation, during the effective term
hereof, of a notarial letter addressed by PERUPETRO to (Entity of the Financial System) requesting payment of two millions and 00/100 US Dollars (US$ 2’000.000), declaring that the Contractor has not complied in whole or in part with the
obligation referred to above and attaching to said letter, as sole surety and justification, a notarially certified copy of the notarial letter sent by PERUPETRO to the Contractor requiring compliance with 

  

 65 

 the aforesaid obligation and giving notice of its intention of executing the guaranty. Said notarial
letter from PERUPETRO to the Contractor must have been delivered to the latter at least twenty (20) calendar Days before the date on which PERUPETRO files the payment claim with
                        (entity of the Financial System) 
  

	2.	This guaranty shall expire no later than             unless before that date (entity of the Financial System)
receives a letter from PERUPETRO releasing (entity of the Financial System) and the Contractor from every responsibility hereunder, in which case this guaranty shall be canceled on the date of the said letter from PERUPETRO.

  

	3.	Any delay by us in honoring this guaranty in your favor shall accrue interest at a rate equivalent to Rate on Foreign Currency Loans (TAMEX rate) charged by the Entities of the
Financial System, published by the Superintendency of Banking and Insurance, applicable during the period of the delay, or the rate that may replace it. Interest shall be calculated as from the date of the above-mentioned notarial letter sent by
PERUPETRO to (entity of the Financial System). 

  
 As from the date
of expiration or cancellation no claim may be filed regarding this guaranty and (entity of the Financial System) and the Contractor shall be released from every responsibility or obligation hereunder. 
  

	
	Sincerely yours,
	
	  

	Entity of the Financial System

  

 66 

 ANNEX “C-4” 
  
 LETTER OF GUARANTY FOR THE THIRD PERIOD 
 OF THE MINIMUM WORK PROGRAM 
  
 LETTER OF
GUARANTY 
  
 No. Lima, 
  
 PERUPETRO 
 S.A. LIMA 
  
 Gentlemen, 
  
 We, the (entity of the Financial System), hereby constitute ourselves as joint and several
guarantors for              hereinafter referred to as the Contractor, in favor of PERUPETRO S.A., hereinafter referred to as PERUPETRO, in the amount of one millions one hundred
twenty five thousand and 00/100 US Dollars (US$.1,125.000) in order to guarantee the faithful compliance with Contractor’s obligations under the minimum work program of the third period of the exploration phase, contained in clause four of the
License Contract for the Exploration and Exploitation of Hydrocarbons in Block 95 signed with PERUPETRO (hereinafter referred to as the Contract). 
  
 The obligation assumed by (entity of the Financial System) hereunder is limited to the payment to PERUPETRO of the amount of one millions one hundred twenty five thousand
and 00/100 US Dollars (US$ 1,125.000) required in its payment request. 
  

	1.	This is a joint and several, irrevocable, unconditional, and automatically executable guaranty, without benefit of exclusion, payable upon presentation, during the effective term
hereof, of a notarial letter addressed by PERUPETRO to (Entity of the Financial System) requesting payment of one millions one hundred twenty five thousand and 00/100 US Dollars (US$ 1,125.000), declaring that the Contractor has not complied in
whole or in part with the obligation 

  

 67 

 referred to above and attaching to said letter, as sole surety and justification, a notarially certified
copy of the notarial letter sent by PERUPETRO to the Contractor requiring compliance with the aforesaid obligation and giving notice of its intention of executing the guaranty. Said notarial letter from PERUPETRO to the Contractor must have been
delivered to the latter at least twenty (20) calendar Days before the date on which PERUPETRO files the payment claim with (entity of the Financial System). 
  

	2.	This guaranty shall expire no later than      unless before that date (entity of the Financial System) receives a letter from PERUPETRO releasing (entity
of the Financial System) and the Contractor from every responsibility hereunder, in which case this guaranty shall be canceled on the date of the said letter from PERUPETRO. 

  

	3.	Any delay by us in honoring this guaranty in your favor shall accrue interest at a rate equivalent to Rate on Foreign Currency Loans (TAMEX rate) charged by the Entities of the
Financial System, published by the Superintendency of Banking and Insurance, applicable during the period of the delay, or the rate that may replace it. Interest shall be calculated as from the date of the above-mentioned notarial letter sent by
PERUPETRO to      (entity of the Financial System). 

  
 As from the date of expiration or cancellation no claim may be filed regarding this guaranty and (entity of the Financial System) and the Contractor shall be released from every responsibility or obligation hereunder.

  

	
	Sincerely yours,
	
	  

	Entity of the Financial System

  

 68 

 ANNEX “C-5” 
  
 LETTER OF GUARANTY FOR THE THIRD PERIOD 
 OF THE MINIMUM WORK PROGRAM 
  
 LETTER OF
GUARANTY 
  
 No. Lima, 
  
 PERUPETRO 
 S.A. LIMA 
  
 Gentlemen, 
  
 We, the (entity of the Financial System), hereby constitute ourselves as joint and several
guarantors for              hereinafter referred to as the Contractor, in favor of PERUPETRO S.A., hereinafter referred to as PERUPETRO, in the amount of two millions and 00/100 US
Dollars (US$.2,000.000) in order to guarantee the faithful compliance with Contractor’s obligations under the minimum work program of the third period of the exploration phase, contained in clause four of the License Contract for the
Exploration and Exploitation of Hydrocarbons in Block 95 signed with PERUPETRO (hereinafter referred to as the Contract). 
  
 The obligation assumed by (entity of the Financial System) hereunder is limited to the payment to PERUPETRO of the amount of two millions and 00/100 US Dollars (US$
2,000.000) required in its payment request. 
  

	1.	This is a joint and several, irrevocable, unconditional, and automatically executable guaranty, without benefit of exclusion, payable upon presentation, during the effective term
hereof, of a notarial letter addressed by PERUPETRO to (Entity of the Financial System) requesting payment of two millions and 00/100 US Dollars (US$ 2,000.000), declaring that the Contractor has not complied in whole or in part with the obligation
referred to above and attaching 

  

 69 

 to said letter, as sole surety and justification, a notarially certified copy of the notarial letter sent
by PERUPETRO to the Contractor requiring compliance with the aforesaid obligation and giving notice of its intention of executing the guaranty. Said notarial letter from PERUPETRO to the Contractor must have been delivered to the latter at least
twenty (20) calendar Days before the date on which PERUPETRO files the payment claim with (entity of the Financial System). 
  

	2.	This guaranty shall expire no later than              unless before that date (entity of the Financial System)
receives a letter from PERUPETRO releasing (entity of the Financial System) and the Contractor from every responsibility hereunder, in which case this guaranty shall be canceled on the date of the said letter from PERUPETRO.

  

	3.	Any delay by us in honoring this guaranty in your favor shall accrue interest at a rate equivalent to Rate on Foreign Currency Loans (TAMEX rate) charged by the Entities of the
Financial System, published by the Superintendency of Banking and Insurance, applicable during the period of the delay, or the rate that may replace it. Interest shall be calculated as from the date of the above-mentioned notarial letter sent by
PERUPETRO to (entity of the Financial System). 

  
 As from the date
of expiration or cancellation no claim may be filed regarding this guaranty and (entity of the Financial System) and the Contractor shall be released from every responsibility or obligation hereunder. 
  

	
	Sincerely yours,
	
	  

	Entity of the Financial System

  

 70 

 ANNEX “C-6” 
  
 LETTER OF GUARANTY FOR THE THIRD PERIOD OF THE 
 MINIMUM WORK PROGRAM 
  
 LETTER OF GUARANTY 
  
 No. Lima, 
  
 PERUPETRO 
 S.A. LIMA 
  
 Gentlemen, 
  
 We, the (entity of the Financial System), hereby constitute ourselves as joint and several
guarantors for hereinafter referred to as the Contractor, in favor of PERUPETRO S.A., hereinafter referred to as PERUPETRO, in the amount of two millions and 00/100 US Dollars (US$.2,000.000) in order to guarantee the faithful compliance with
Contractor’s obligations under the minimum work program of the third period of the exploration phase, contained in clause four of the License Contract for the Exploration and Exploitation of Hydrocarbons in Block 95 signed with PERUPETRO
(hereinafter referred to as the Contract). 
  
 The obligation assumed by (entity
of the Financial System) hereunder is limited to the payment to PERUPETRO of the amount of two millions and 00/100 US Dollars (US$ 2,000.000) required in its payment request. 
  

	1.	This is a joint and several, irrevocable, unconditional, and automatically executable guaranty, without benefit of exclusion, payable upon presentation, during the effective term
hereof, of a notarial letter addressed by PERUPETRO to (Entity of the Financial System) requesting payment of two millions and 00/100 US Dollars (US$ 2,000.000), declaring that the Contractor has not complied in whole or in part with the obligation
referred to above and attaching to said letter, as sole surety and justification, a notarially certified copy of the notarial letter sent by PERUPETRO to the Contractor requiring compliance with 

  

 71 

 the aforesaid obligation and giving notice of its intention of executing the guaranty. Said notarial
letter from PERUPETRO to the Contractor must have been delivered to the latter at least twenty (20) calendar Days before the date on which PERUPETRO files the payment claim with (entity of the Financial System) 
  

	2.	This guaranty shall expire no later than              unless before that date (entity of the Financial System)
receives a letter from PERUPETRO releasing (entity of the Financial System) and the Contractor from every responsibility hereunder, in which case this guaranty shall be canceled on the date of the said letter from PERUPETRO.

  

	3.	Any delay by us in honoring this guaranty in your favor shall accrue interest at a rate equivalent to Rate on Foreign Currency Loans (TAMEX rate) charged by the Entities of the
Financial System, published by the Superintendency of Banking and Insurance, applicable during the period of the delay, or the rate that may replace it. Interest shall be calculated as from the date of the above-mentioned notarial letter sent by
PERUPETRO to      (entity of the Financial System). 

  
 As from the date of expiration or cancellation no claim may be filed regarding this uaranty and (entity of the Financial System) and the Contractor shall be released from every responsibility or obligation hereunder.

  

	
	Sincerely yours,
	
	  

	Entity of the Financial System

  

 72 

 ANNEX “D” 
 CORPORATE GUARANTY 
  
 Señores:

 PERUPETRO S.A. 
  
 Av. Luis 
 Aldana 320 
 Lima 41 
 PERU 
  
              in accordance with point 3.11 of the License Contract for
the Exploration and Exploitation of Hydrocarbons in Block 95 to be entered into between PERUPETRO S.A. (“PERUPETRO”) and          hereby jointly and severally guarantees to PERUPETRO
compliance by              with all the obligations assumed by it under the minimum work program described in point 4.6 of the Contract, as well as the implementation by
         of each annual Exploitation program, as adjusted or modified, that it may submit to PERUPETRO in compliance with point 5.3 of the Contract. 
  
 This guarantee shall remain in full force and effect while the obligations of
             under the Contract are exigible. For purposes of this guaranty,
                     submits itself Ito the laws of the Republic of Peru, expressly waives every diplomatic claim, and submits itself
to the arbitration procedure for the solution of conflicts established in clause twenty-one of the Contract. 
  
 Very truly yours, 
  
 Corporate Guarantor

 (Legally authorized officer) 
  

 73 

 ANNEX “E” 
 ACCOUNTING PROCEDURE 
  

	1.	GENERAL PROVISIONS 

  

	 	1.1	OBJECT 

  
 The object of this annex is to set out the accounting rules and procedures to help determine the revenues, investments, expenses and operating costs of
the Contractor for purposes of the calculation of Factor Rt_1 referred to in clause eight of the Contract. 
  

	 	1.2	DEFINITIONS 

  
 The terms used heroin, which have been defined in clause one of the Contract, shall have the meaning given to them therein. The accounting terms used
herein shall have the meaning given to them by the accounting standards and practices accepted in Peru and in the international petroleum industry. 
  

	 	1.3	ACCOUNTING STANDARDS 

  

	 	a)	The Contractor shall keep its accounts in accordance with the legal rules in force, with the accounting principles and practices established and accepted in Peru and in the
international petroleum industry, and with the provisions set forth in this Accounting Procedure. 

  

	 	b)	The “Accounting Procedures Manual” referred to in point 18.1 of the Contract must consider the provisions contained in this annex. 

  

	2.	ACCOUNTING RECORDS, AUDIT AND ADJUSTMENTS 

  

	 	2.1	ACCOUNTING SYSTEMS 

  
 In order to determine Factor Rt_1, the Contractor shall keep a special system of accounts to record therein, in Dollars, the
revenues received and expenditures made in relation to the Operations carried out under the Contract. This system will have two main accounts: the Factor Rt_1 Revenue Account, and the Factor Rt_1 Expenditure Account. 
  

 74 

 2.2 EXCHANGE RATE 
  
 Transactions made in local currency shall be recorded at the selling exchange rate in force on the Day the disbursement was made or the revenues were received.
Transactions made in Dollars and the appraisal of production shall be recorded in accordance with the provisions set forth in point 3.3 of this annex. 
  

	2.3	SUPPORTING DOCUMENTATION 

  
 The Contractor shall keep in its files the original documents that support the charges made to the Factor Rt_1 accounts. 
  

	2.4	STATEMENT OF FACTOR Rt.1 ACCOUNTS 

  
 During the exploration phase, the Contractor shall submit within a term of
thirty Days following the end of each period, a detailed Monthly Statement of the Factor Rt_1 revenue and expenditure accounts corresponding to said period. 
  
 If the Contractor has opted for the application of the methodology described in point 8.3.2 for the calculation of the
royalty, it will file with PERUPETRO, within a term of thirty (30) Days following the date of Declaration of Commercial Discovery, a detailed Monthly Statement of the Factor Rt_1 revenue and expenditure
accounts coresponding to the period elapsed between the last Statement filed and the month of July or December of the previous year, as the case may be. 
  
 Thereafter, the Contractor shall submit to PERUPETRO, within fifteen (15) Days following the end of January and July in every calendar year, a detailed
Monthly Statement of the Factor Rt_1
Revenue and Expenditure Accounts corresponding to the previous semester. 
  

	 	a)	Monthly Statement of the Factor Rt_1 Revenue Account 

  
 The Monthly Statement of the Factor Rt_1 Revenue Account includes the appraisal of the Fiscalized Production corresponding to the semester
being reported. It shall also contain, in detail and classified by type, all the transactions for which the Contractor has received revenues, including the date on which such revenues were actually received, a short description of the transaction,
number of accounting voucher, amount in Dollars, or in local currency and Dollars if the revenues were received in local currency, and the relevant exchange rate. 
  

 75 

	 	b)	Monthly Statement of the Factor Rt_1 Expenditure Account 

  
 The Monthly Statement of the Factor Rt_1 Expenditure Account shall contain, in detail and classified by type, all the transactions for
which the Contractor has made disbursements, including the date on which the disbursement was actually made, a short description of the transaction, number of accounting voucher, amount in Dollars, or in local currency and Dollars if the disbursement was made in local currency, and the relevant exchange rate. 
  

	2.5	ACCOUNTING AUDIT AND ADJUSTMENTS 

  

	 	a)	The accounting books and original documents supporting the transactions included in each Monthly Statement shall be made available to the authorized representatives of PERUPETRO,
during business hours, for them to be inspected whenever said representatives may require so. 

  
 The audit of accounting books and supporting documents shall be carried out pursuant to generally accepted audit standards, including sampling
procedures, when required. 
  

	 	b)	The Monthly Statements of the Factor Rt_1 Accounts shall be deemed to have been accepted if PERUPETRO does not object to them in writing
within a maximum term of twenty-four (24) Months, counted as from their date of filing with PERUPETRO. 

  
 The Contractor must answer the observations made by PERUPETRO within a term of three (3) Months following receipt of the notice in which PERUPETRO made
the observations. If the Contractor fails to abide by the aforementioned time limit, the observations made by PERUPETRO shall be deemed to have been accepted. 
  

	 	c)	All disagreements arising from an accounting audit must be resolved by the Parties within a maximum term of three (3) Months, counted as from the date on which PERUPETRO received
the answer from the Contractor. After the said time limit has expired, the disagreement shall be submitted for the consideration of the Supervisory Committee, so that it may proceed as provided for in Point 7.4 of the Contract. If the disagreement
continues, the Parties may agree to have it reviewed by an external audit firm previously accepted by PERUPETRO, or may agree to proceed as provided for in point 21.3 of the Contract. The arbitration award or the opinion of the external auditors
shall be considered final. 

  

 76 

	 	d)	If, as a result of the accounting audit, it is determined that a Factor Rt_t other than the one used should have been applied in a given period, the corresponding
adjustments will be made. All adjustments shall accrue interest in accordance with the provisions set forth in point 8.5 of the Contract. 

  

	3.	REVENUES AND EXPENDITURES IN THE FACTOR Rt_1ACCOUNTS

  

	 	3.1	REVENUES 

  
 The following shall be considered revenues and shall be recorded in the Factor Rt_1 Revenue Account:

  

	 	a)	The valuation of the Fiscalized Production of Hydrocarbons, as per the provisions set forth in clause eight of the Contract. 

  

	 	b)	Disposal of assets acquired by the Contractor for the Contract Operations, the cost of which was recorded in the Factor Rt_1 Expenditure Account.

  

	 	c)	Services provided to third parties in which personnel whose remunerations and benefits are recorded in the Factor Rt_1 Expenditure Account
participate and/or in which goods the acquisition cost of which has been recorded in the Factor Rt_1 Expenditure Account are used. 

  

	 	d)	Rental of goods owned by the Contractor, the acquisition cost of which was recorded in the Factor Rt_1 Expenditure Account, or
sub-lease of goods the rental of which is charged to the Factor Rt_1 Expenditure Account. 

  

	 	e)	Indemnities obtained from insurance policies taken out with regard to the activities performed under the Contract and to goods that have suffered a loss, including insurance
indemnities for loss of profit. Revenues derived from hedging agreements are not considered. 

  

	 	f)	Other revenues that represent a credit applicable to charges made to the Factor Rt_1 Expenditure Account. 

  

	3.2	EXPENDITURES 

  
 As from the Date of Signing, all investments, expenditures and operating costs duly supported by the corresponding payment voucher will be acknowledged.
However, such an acknowledgment will be subject to the following limitations: 
  

 77 

	 	a)	With regard to personnel: 

  
 The remunerations and benefits granted to Contractor’s personnel assigned on a permanent or temporary basis to the Operations. To ths end, the
Contractor shall make available to PERUPETRO S.A., upon its irequest, the company’s payroll and personnel policy. 
  
 In general, all remunerations and benefits of Contractor’s operating and administrative personnel, granted during the performance of the Operations,
shall be recorded and classified according to their nature. 
  
 In the event the Contractor performs activities other than those set forth in the Contract, the costs of the personnel assigned on a temporary or partial basis to the Operations will be charged to the Expenditure Account, pursuant to the
provisions set forth in item h) of this point 3.2. 
  

	 	b)	With regard to Services provided by Affiliates: 

  
 As regards services received from Affiliates, the charges shall be competitive with those of other companies that may provide the same services.

  

	 	c)	With regard to materials and equipment: 

  
 Materials and equipment acquired by the Contractor shall be recorded in the Factor Rt-1 Expenditure Account, as
indicated below: 
  

	 	•	 	New materials and equipment (Condition “A”) 

  
 Condition “A” materials and equipment shall be those that are now and are ready to be used without any reconditioning whatsoever. These shall
be recorded at the price shown on the pertinent commercial invoice, plus costs generally accepted in accounting practices, including additional import costs, if applicable. 
  

	 	•	 	Used materials and equipment (Condition “B”) 

  
 Condition “B” materials and equipment shall be those that are not new but are ready to be used without any reconditioning whatsoever. These
shall be recorded at seventy-five percent (75%) of the price then quoted for 
  

 78 

 
the same materials and equipment if new, or at the purchase price shown on the pertinent commercial invoice, whichever is less. 
  
 • Materials and Equipment (Condition “C”) 
  
 Condition “C” materials and equipment shall be those that can be
used for their original purpose after proper reconditioning. These shall be recorded at fifty percent (50%) of the price then quoted for the same materials and equipment if new, or at the purchase price shown on the pertinent commercial invoice,
whichever is less. 
  

	 	d)	With regard to freight and transportation expenses Only the travel expenses of Contractor’s personnel and their family members, as well as the cost of transporting their
personal and household effects, will be acknowledged, according to the company’s internal policy. 

  
 In the transportation of equipment, materials and supplies required for the Operations, the Contractor shall avoid paying “false freight”. If
such freight is paid, the corresponding disbursements shall be subject to the express written acceptance of PERUPETRO. 
  

	 	e)	With regard to insurance 

  
 The premiums and net costs of insurance placed totally or partially in the Affiliates of the Contractor, shall be recognized solely to the extent their
charges are competitive with those of other insurance companies that have no relationship with the Contractor. 
  
 Payments made as a result of hedging agreements should not be considered. 
  

	 	f)	With regard to tributes 

  
 Only tributes paid in relation to Contract Operations shall be acknowledged. 
  

	 	g)	With regard to research expenditures 

  
 Research expenditures for the development of new equipment, materials, procedures and techniques to be used in the search for, development and production
of Hydrocarbons, as well as expenditures for perfecting them, shall be acknowledged upon obtaining the prior written approval of PERUPETRO. 
  

	 	h)	With regard to the proportional assignment of expenditures in general 

  

 79 

 If the Contractor performs other activities in addition to those of the Contract, or has signed more
than one contract with PERUPETRO, the costs of the technical and administrative personnel, including expenditures for maintenance of administrative offices, expenditures and costs for the operation of warehouses, as well as other indirect expenses
and costs, will be charged to the Factor Rt_1
Expenditure Account on the basis of a proportional assignment of costs, in accordance with a policy previously proposed by the Contractor and accepted by PERUPETRO. 
  

	 	3.3	TIME OF RECORDING REVENUES AND EXPENDITURES 

  

	 	a)	Revenues corresponding to the valuation of the Fiscalized Production of Hydrocarbons in a given calendar month will be recorded as revenues of the calendar month in which the
Hydrocarbons were fiscalized. 

  

	 	b)	The revenues referred to in points b), c), d), e) and f) of point 3.1 hereof will be charged to the Revenue Account at the time they are actually received. 

 

	 	c)	Expenditures will be recorded at the time the corresponding payment is made. 

  

	4.	REVENUES AND EXPENDITURES NOT ACKNOWLEDGED 

  

	 	4.1	REVENUES NOT ACKNOWLEDGED 

  
 For purposes of the calculation of Factor Rt_1, the following revenues will not be acknowledged: 
  

	 	a)	Financial revenues in general. 

  

	 	b)	Revenues derived from the provision of services or disposal of goods owned by the Contractor, made before the Date of Signing of the Contract. 

  

	 	c)	Revenuers received from activities not related to the Operations under the Contract. 

  

	 	4.2	EXPENDITURES NOT ACKNOWLEDGED 

  
 For purposes of the calculation of Factor Rt_1, the following disbursements will not be acknowledged as expenditures: 
  

	 	a)	Investments, expenses and costs incurred by the Contractor before the Date of Signing of the Contract. 

  

 80 

	 	b)	Interest on loans, including interest on credits from suppliers. 

  

	 	c)	Financial expenses in general. 

  

	 	d)	Costs incurred in taking inventories in the event of assignment of any of Contractor’s rights under the Contract. 

  

	 	e)	Depreciation and amortization of assets. 

  

	 	f)	Sums paid as a result of any non-compliance with obligations under the Contract, as well as fines, penalties and indemnities imposed by authorities, including those imposed as a
result of lawsuits. 

  

	 	g)	Fines, surcharges and adjustments arising from late payment of tributes in force in the country. 

  

	 	h)	Income Tax applicable to the Contractor and the Tax levied on the profits available to the titleholder abroad, if applicable. 

  

	 	i)	Value Added Tax (IGV) and Municipal Promotion Tax, except when it constitutes an expense according to the Income Tax Law. 

  

	 	j)	Donations in general, except for those previously approved by PERUPETRO. 

  

	 	k)	Advertising expenditures, except for those previously approved by PERUPETRO. 

  

	 	I)	Costs and expenditures for transporting and marketing the Hydrocarbons beyond the Production Fiscalization Point. 

  

	 	m)	Investments in facilities for the transportation and storage of Hydrocarbons produced from the Contract Area beyond the Production Fiscalization Point. 

  

	 	n)	Other expenses and investments not related to the Operations under the Contract. 

  

	5.	REVISION OF THE ACCOUNTING PROCEDURE 

  
 The rules contained in this Accounting Procedure may be modified by agreement between the Parties, indicating the date on which the modification will
become effective. 
  

 81 

 ANNEX “F” 
  
 EXPLORATION WORK UNITS (EWUs) 
 TABLE OF EQUIVALENCES 
  

			
	 Activity

	  	Equivalent Work Units

	 2D seismic — km.
	  	1,00
	 3D seismic — Km2
	  	3,00
	 2D reprocessing — km
	  	0,02
	 Gravimet — km
	  	0,02
	 Magnetometry — km
	  	0,02
	 Studies per period 20

		
	 Wells: Depth - m

	  	Equivalent Work Units

	 0000 - 1000
	  	0,10 x m
	 1001 - 2000
	  	0,13 x m
	 2001 - 3000
	  	0,18 x m
	 3001 - 4000
	  	0,22 x m
	 Over 4001
	  	0,25 x m

  
 Note: For purposes of the appraisal of
the guaranties referred to in point 3.10, the following equivalence should be used: 1 Equivalent Work Unit = US$5,000. 
  

 82Credit Agreement

 Exhibit 10.1 
  
 EXECUTION COPY 
  

  
 U.S. $100,000,000 
  
 CREDIT AGREEMENT 
  
 Dated as of April 7, 2005 
  
 Among 
  
 COCA-COLA BOTTLING CO. CONSOLIDATED 
 as Borrower 
  
 THE BANKS NAMED HEREIN 
  
 CITIGROUP GLOBAL MARKETS INC., and 
 WACHOVIA CAPITAL MARKETS LLC 
 as Joint Lead
Arrangers 
  
 WACHOVIA BANK, NATIONAL ASSOCIATION 
 as Syndication Agent 
  
 and 
  
 CITIBANK, N.A. 
 as Administrative Agent 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS
	  	1
	 	  	SECTION 1.01. Certain Defined Terms.	  	1
	 	  	SECTION 1.02. Computation of Time Periods.	  	15
	 	  	SECTION 1.03. Accounting Terms.	  	15
		
	 ARTICLE 2 AMOUNTS AND TERMS OF THE ADVANCES
	  	15
	 	  	SECTION 2.01. The Advances.	  	15
	 	  	SECTION 2.02. Making the Advances.	  	16
	 	  	SECTION 2.03. Certain Fees.	  	17
	 	  	SECTION 2.04. Reduction of the Commitments.	  	18
	 	  	SECTION 2.05. Repayment of Advances.	  	18
	 	  	SECTION 2.06. Interest.	  	18
	 	  	SECTION 2.07. Additional Interest on Eurodollar Rate Advances.	  	19
	 	  	SECTION 2.08. Interest Rate Determinations; Changes in Rating Systems.	  	19
	 	  	SECTION 2.09. Voluntary Conversion and Continuation of Advances.	  	21
	 	  	SECTION 2.10. Prepayments of Advances.	  	21
	 	  	SECTION 2.11. Increased Costs.	  	22
	 	  	SECTION 2.12. Illegality.	  	22
	 	  	SECTION 2.13. Payments and Computations.	  	23
	 	  	SECTION 2.14. Taxes.	  	24
	 	  	SECTION 2.15. Set-Off; Sharing of Payments, Etc.	  	26
	 	  	SECTION 2.16. Right to Replace a Lender.	  	26
	 	  	SECTION 2.17. Evidence of Indebtedness.	  	27
	 	  	SECTION 2.18. Extension of Commitments.	  	27
	 	  	SECTION 2.19. Increase of Commitments.	  	28
		
	 ARTICLE 3 CONDITIONS OF LENDING
	  	30
	 	  	SECTION 3.01. Conditions Precedent to Initial Borrowing.	  	30
	 	  	SECTION 3.02. Conditions Precedent to Each Borrowing.	  	31
		
	 ARTICLE 4 REPRESENTATIONS AND WARRANTIES
	  	31
	 	  	SECTION 4.01. Representations and Warranties of the Borrower.	  	31
		
	 ARTICLE 5 COVENANTS OF THE BORROWER
	  	35
	 	  	SECTION 5.01. Covenants.	  	35
		
	 ARTICLE 6 EVENTS OF DEFAULT
	  	43
	 	  	SECTION 6.01. Events of Default.	  	43
		
	 ARTICLE 7 THE ADMINISTRATIVE AGENT
	  	46
	 	  	SECTION 7.01. Authorization and Action.	  	46
	 	  	SECTION 7.02. Administrative Agent’s Reliance, Etc.	  	46

  

 i 

					
	 	  	SECTION 7.03. Citibank and Affiliates.	  	46
	 	  	SECTION 7.04. Lender Credit Decision.	  	47
	 	  	SECTION 7.05. Indemnification.	  	47
	 	  	SECTION 7.06. Successor Administrative Agent.	  	47
	 	  	SECTION 7.07. Arrangers.	  	48
		
	 ARTICLE 8 MISCELLANEOUS
	  	48
	 	  	SECTION 8.01. Amendments, Etc.	  	48
	 	  	SECTION 8.02. Notices, Etc.	  	48
	 	  	SECTION 8.03. No Waiver; Remedies.	  	51
	 	  	SECTION 8.04. Costs, Expenses and Indemnification.	  	51
	 	  	SECTION 8.05. Binding Effect.	  	52
	 	  	SECTION 8.06. Assignments and Participations.	  	52
	 	  	SECTION 8.07. Governing Law; Submission to Jurisdiction.	  	55
	 	  	SECTION 8.08. Severability.	  	55
	 	  	SECTION 8.09. Execution in Counterparts.	  	55
	 	  	SECTION 8.10. Survival.	  	56
	 	  	SECTION 8.11. Waiver of Jury Trial.	  	56
	 	  	SECTION 8.12. Confidentiality.	  	56
	 	  	SECTION 8.13. Nonliability of Lenders.	  	56
	 	  	SECTION 8.14. USA PATRIOT Act.	  	56

  

 ii 
  
 Credit Agreement 

 SCHEDULES 
  

			
	Schedule I	 	- Banks, Commitments and Lending Offices
	Schedule II	 	- Existing Liens Securing Indebtedness, in each case, of $5,000,000 or more
	Schedule III	 	- Litigation
	Schedule IV	 	- Subsidiaries
	Schedule V	 	- Material Agreements
	Schedule VI	 	- Permitted Investments
	Schedule VII	 	- Existing Contingent Obligations
	
	EXHIBITS
		
	Exhibit A	 	- Form of Notice of Borrowing
	Exhibit B	 	- Form of Assignment and Acceptance
	Exhibit C	 	- Form of Opinion of Special Counsel to the Borrower
	Exhibit D	 	- Form of Opinion of Special New York Counsel to the Administrative Agent
	Exhibit E	 	- Form of Compliance Certificate of Borrower

  
  

 iii 
  
 Credit Agreement 

 CREDIT AGREEMENT dated as of April 7, 2005 among COCA-COLA BOTTLING CO. CONSOLIDATED, a corporation
organized under the laws of Delaware (the “Borrower”), the banks (each a “Bank” and, collectively, the “Banks”) listed on the signature pages hereof, and CITIBANK, N.A., a national banking
association, as administrative agent (in such capacity, the “Administrative Agent”). 
  
 The Borrower has requested that the Lenders (as hereinafter defined) make loans to it in an aggregate principal amount not exceeding $100,000,000 at any
one time outstanding for the general corporate purposes of the Borrower, and the Lenders are prepared to make such loans on and subject to the terms and conditions hereof. Accordingly, the parties hereto agree as follows: 
  
 ARTICLE 1 
 DEFINITIONS AND ACCOUNTING TERMS 
  
 SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms
defined): 
  
 “Acquisition Cash
Flow” means, with respect to any Person or assets, franchises or businesses acquired by the Borrower or any of its Consolidated Subsidiaries, operating income for any period of determination plus any amounts deducted for depreciation,
amortization and operating lease expense in determining operating income during such period (to the extent not included in Consolidated Operating Income for such period), all determined using historical financial statements of such Person, assets,
franchises or businesses acquired with appropriate adjustments thereto in order to reflect such operating income, depreciation, amortization and operating lease expense on an actual historical combined pro forma basis as if such Person, assets,
franchises or businesses acquired had been owned by the Borrower or one of its Consolidated Subsidiaries during the applicable period. Operating income as used in the preceding sentence will be determined for the acquired Person, assets, franchises
or businesses using the same method prescribed for determining Consolidated Operating Income. 
  
 “Administrative Agent” has the meaning set forth in the introduction hereto. 
  
 “Advance” has the meaning set forth in Section 2.01. 
  
 “Affiliate” means, as to any Person, any other Person (other than a Subsidiary) which,
directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors or other persons performing similar functions of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

  

 Credit Agreement 

 “Applicable Facility Fee Rate” means, for any Rating Level Period, the
rate per annum set forth below opposite the reference to such Rating Level Period: 
  

				
	 Rating Level Period

	  	Applicable Facility Fee Rate

	 
	 Rating Level 1 Period
	  	0.0850	%
	 Rating Level 2 Period
	  	0.100	%
	 Rating Level 3 Period
	  	0.125	%
	 Rating Level 4 Period
	  	0.175	%
	 Rating Level 5 Period
	  	0.250	%

  
 Each change in the
Applicable Facility Fee Rate resulting from a Rating Level Change shall be effective on the date of such Rating Level Change. 
  
 “Applicable Lending Office” means, with respect to any Lender, such Lender’s Domestic Lending Office in the case of
a Base Rate Advance and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance. 
  
 “Applicable Margin” means: 
  
 (a) for any Advance that is a Base Rate Advance, 0.000% per annum; and 
  
 (b) for any Advance that is a Eurodollar Rate Advance, for any Rating Level Period, the rate per annum set
forth below opposite the reference to such Rating Level Period: 
  

				
	 Rating Level Period

	  	Applicable Margin

	 
	 Rating Level 1 Period
	  	0.240	%
	 Rating Level 2 Period
	  	0.275	%
	 Rating Level 3 Period
	  	0.375	%
	 Rating Level 4 Period
	  	0.450	%
	 Rating Level 5 Period
	  	0.625	%

  
 Each change in the
Applicable Margin resulting from a Rating Level Change shall be effective on the date of such Rating Level Change. 
  

 2 
  
 Credit Agreement 

 “Applicable Utilization Fee Rate” means, for any Rating Level Period,
the rate per annum set forth below opposite the reference to such Rating Level Period: 
  

				
	 Rating Level Period

	  	 Applicable
 Utilization
 Fee Rate

	 
	 Rating Level 1 Period
	  	0.100	%
	 Rating Level 2 Period
	  	0.125	%
	 Rating Level 3 Period
	  	0.125	%
	 Rating Level 4 Period
	  	0.250	%
	 Rating Level 5 Period
	  	0.375	%

  
 Each change in the
Applicable Utilization Fee Rate resulting from a Rating Level Change shall be effective on the date of such Rating Level Change. 
  
 “Arrangers” means Citigroup Global Markets Inc. and Wachovia Capital Markets LLC, as Joint Lead Arrangers. 
  
 “Assignment and Acceptance” means an
assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit B hereto. 
  
 “Bank” has the meaning set forth in the introduction hereto. 
  
 “Base Rate” means, for any period, a
fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of: 
  
 (a) the rate of interest announced publicly by Citibank in New York, New York from time to time as Citibank’s base rate; and

  
 (b) 1/2 of one percent per annum above the
Federal Funds Rate for such period. 
  
 “Base Rate Advance” means, at any time, an Advance which bears interest at rates based upon the Base Rate. 
  
 “Borrower” has the meaning set forth in the introduction hereto. 
  
 “Borrowing” means a borrowing consisting of
simultaneous Advances of the same Type made by each of the Lenders pursuant to Section 2.01. 
  

 3 
  
 Credit Agreement 

 “Business Day” means a day of the year on which banks are not required
or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advance, on which dealings are carried on in the London interbank market. 
  
 “Capitalized Lease” of a Person means any lease of Property by such Person as lessee which
would be capitalized on a balance sheet of such Person prepared in accordance with GAAP. 
  
 “Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person under Capitalized Leases
which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP. 
  
 “Change in Control” means that: 
  

(a) The Coca-Cola Company and any of its wholly-owned Subsidiaries shall cease to own, beneficially and of record, at least 10% of the
outstanding capital stock of the Borrower; or 
  
 (b) any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable, except that for purposes of this paragraph (b) such person or group shall be
deemed to have “beneficial ownership” of all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), other than (i) The Coca-Cola Company, (ii) other
shareholders of the Borrower as of the date hereof and (iii) J. Frank Harrison III, his spouse and the lineal descendants of either of the foregoing (or trusts, corporations, partnerships, limited partnerships, limited liability companies or other
estate planning vehicles for the benefit thereof), is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly or indirectly, of more than 50% of the aggregate voting power
of all voting shares of the Borrower; or 
  
 (c)
during any period of 25 consecutive calendar months, a majority of the Board of Directors of the Borrower shall no longer be composed of individuals (i) who were members of said Board on the first day of such period, (ii) whose election or
nomination to said Board was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of said Board and (iii) whose election or nomination to said Board was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of said Board. 
  
 “Citibank” means Citibank, N.A., a national banking association. 
  

 4 
  
 Credit Agreement 

 “Closing Date” means the date as of which the Administrative Agent
notifies the Borrower that the conditions precedent set forth in Section 3.01 have been satisfied or waived. 
  
 “Code” means the Internal Revenue Code of 1986, as amended from time to time. 
  
 “Commitment” has the meaning set forth in
Section 2.01(a). 
  
 “Commitment
Termination Date” means the date five years after the date of this Agreement, as such date may be extended pursuant to Section 2.18; provided that if such date is not a Business Day, the Commitment Termination date shall be the
immediately preceding Business Day. 
  
 “Compliance Certificate” mean a certificate in substantially the form of Exhibit E. 
  
 “Consolidated” refers to the consolidation of accounts of the Borrower and its Subsidiaries in accordance with GAAP.

  
 “Consolidated Cash Flow”
means, for any period, Consolidated Operating Income for such period plus any amounts deducted for depreciation, amortization and operating lease expense in determining Consolidated Operating Income. 
  
 “Consolidated Cash Flow/Fixed Charges
Ratio” means, at any time, the ratio of (i) Consolidated Cash Flow for the then most recently concluded period of four consecutive fiscal quarters of the Borrower to (ii) Consolidated Fixed Charges for such period. 
  
 “Consolidated Fixed Charges” shall mean,
for any period, the sum of (i) Consolidated Net Interest Expense for such period, (ii) the amount of obligations of the Borrower and its Consolidated Subsidiaries as lessees, on leases other than Capitalized Leases, accrued during such period and
(iii) payments made or required to be made by the Borrower and its Consolidated Subsidiaries during such period under agreements providing for or containing covenants not to compete. 
  
 “Consolidated Funded Indebtedness” shall mean, at any time, the aggregate outstanding
principal amount of all Funded Indebtedness of the Borrower and its Consolidated Subsidiaries, determined and consolidated in accordance with GAAP. 
  
 “Consolidated Funded Indebtedness/Cash Flow Ratio” shall mean, at any time, the ratio of (a) the aggregate amount of (i)
Consolidated Funded Indebtedness and (ii) 50% of every Contingent Obligation of the Borrower and its Consolidated Subsidiaries, determined and consolidated in accordance with GAAP to (b) the aggregate of (i) Consolidated Cash Flow for the then most
recently concluded period of four consecutive fiscal quarters of the Borrower and (ii) Acquisition Cash Flow for such period. 
  

 5 
  
 Credit Agreement 

 “Consolidated Net Interest Expense” shall mean, for any period, the
aggregate net amount of interest payments of the Borrower and its Consolidated Subsidiaries, determined and consolidated in accordance with GAAP, excluding, however, such amounts as arise from the amortization of capitalized interest, discount and
fees reflected as an asset on the Borrower’s books and records on the date hereof. 
  
 “Consolidated Operating Income” shall mean, for any period, the net income of the Borrower and its Consolidated
Subsidiaries, before any deduction in respect of interest or taxes, determined and consolidated in accordance with GAAP, excluding, however, extraordinary items in accordance with GAAP (which shall include without limitation, in any event, any
income, net of expenses, or loss realized by the Borrower or any Consolidated Subsidiary from any sale of assets outside the ordinary course of business, whether tangible or intangible, including franchise territories and securities). 
  
 “Contingent Obligation” of a Person means
any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the financial obligation or
liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort
letter, operating agreement, take-or-pay contract or application for a Letter of Credit, but excluding the endorsement of instruments for deposit or collection in the ordinary course of business. 
  
 “Continuation”, “Continue”
and “Continued” each refers to a continuation of Eurodollar Rate Advances from one Interest Period to the next Interest Period pursuant to Section 2.09(b). 
  
 “Controlled Group” means all members of a controlled group of corporations and all trades
or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. 
  
 “Convert”, “Conversion”
and “Converted” each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.08 or Section 2.09(a). 
  
 “Default” means an event that, with notice or lapse of time or both, would become an Event
of Default. 
  
 “Dollars” means
the lawful currency of the United States of America. 
  
 “Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” in Schedule I or in the Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. 
  

 6 
  
 Credit Agreement 

 “Eligible Assignee” means: 
  
 (a) a Lender and any Affiliate of such Lender; 

 
 (b) a commercial bank organized under the laws of the
United States, or any State thereof, and having total assets in excess of $1,000,000,000; 
  
 (c) a savings bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000;

  
 (d) a commercial bank organized under the
laws of any other country which is a member of the OECD or a political subdivision of any such country, and having total assets in excess of $1,000,000,000; and 
  
 (e) a finance company or other financial institution or fund (whether a corporation, partnership or other
Person) which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business, and having total assets in excess of $500,000,000. 
  
 “Environmental Law” means any Federal, state or local governmental law, rule, regulation,
order, writ, judgment, injunction or decree relating to pollution or protection of the environment or the treatment, storage, disposal, release, threatened release or handling of Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act, the Hazardous Materials Transportation Act, the Clean Water Act, the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water
Act, the Atomic Energy Act and the Federal Insecticide, Fungicide and Rodenticide Act, in each case, as amended from time to time. 
  
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder. 
  
 “Eurocurrency Liabilities” has the meaning set forth in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. 
  
 “Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender
specified as its “Eurodollar Lending Office” in Schedule I or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the Administrative Agent. 
  

 7 
  
 Credit Agreement 

 “Eurodollar Rate” means, for any Interest Period for each Eurodollar
Rate Advance, the rate per annum (rounded upward, if necessary, to the nearest whole multiple of 1/16 of 1% per annum) appearing on Telerate Page 3750 as of 11:00 a.m. (London time) on the date (as to any Interest Period, the “Determination
Date”) that is two Business Days before the first day of such Interest Period, as LIBOR for a period equal to such Interest Period. In the event that Telerate Page 3750 shall cease to report such LIBOR or, in the reasonable judgment of the
Majority Lenders, shall cease to accurately reflect such LIBOR, then the “Eurodollar Rate” with respect to such Interest Period for such Eurodollar Rate Advance shall be the rate per annum at which deposits in U.S. dollars are offered by
the principal office of Citibank, N.A., in London, England to leading banks in the London interbank market at 11:00 A.M. (London time) on the Determination Date in an amount comparable to the amount of the related Borrowing and for a period equal to
such Interest Period. 
  
 “Eurodollar
Rate Advance” means, at any time, an Advance which bears interest at rates based upon the Eurodollar Rate. 
  
 “Eurodollar Rate Reserve Percentage” of any Lender for any Interest Period for any Eurodollar Rate Advance means the
reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. 
  
 “Events of Default” has the meaning set forth in Section 6.01. 
  
 “Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time. 
  
 “Excluded Representations” means the representations and warranties set forth in Section 4.01(f), Section 4.01(g), Section 4.01(n) and Section 4.01(o). 
  
 “Existing Credit Agreement” means the Credit Agreement dated as of December 20, 2002, among
the Borrower, certain financial institutions and Citibank, N.A., as Administrative Agent, as amended. 
  
 “Facility Fee” has the meaning set forth in Section 2.03(a). 
  
 “Federal Funds Rate” means, for any day, a
fluctuating interest rate per annum equal for such day to the weighted average of the rates on overnight Federal funds 

  

 8 
  
 Credit Agreement 

 
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it. 
  
 “Funded Indebtedness” of a Person shall mean (i) all liabilities of such Person of the kinds referred to in clauses (i), (ii), (iii), (iv) and (v) of the definition of “Indebtedness” herein,
including without limitation commercial paper, of any maturity, and (ii) other indebtedness (including the current portion thereof) of such Person which would be classified in whole or part as a long-term liability of such Person in accordance with
GAAP, and shall in any event include (i) any Indebtedness having a final maturity more than one year from the date of creation of such Indebtedness and (ii) any Indebtedness, regardless of its term, which is renewable or extendable by such Person
(pursuant to the terms thereof or pursuant to a revolving credit or similar agreement or otherwise) to a date more than one year from the date of creation of such Indebtedness or any date of determination of Funded Indebtedness. 
  
 “GAAP” means generally accepted accounting
principles in the United States of America as in effect from time to time. 
  
 “Governmental Authority” means the federal government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. 
  
 “Hazardous Materials” means petroleum or petroleum products, natural or synthetic gas, asbestos in any form that is or could become friable, and radon gas, any substances defined as or included in the definition of
“hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”,
“contaminants” or “pollutants”, or words of similar meaning and regulatory effect, under any Environmental Law and any other substance exposure to which is regulated under any Environmental Law. 
  
 “Indebtedness” of a Person means, without
duplication, such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (excluding accounts payable arising in the ordinary course of such Person’s business payable
on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by
notes, acceptances, or similar instruments, (v) Capitalized Lease Obligations, (vi) net Rate Hedging Obligations, (vii) Contingent Obligations in respect of Indebtedness, (viii) obligations for which such Person is obligated pursuant to or in
respect of a Letter of Credit and (ix) repurchase obligations or liabilities of such Person with respect to accounts, notes receivable or securities sold by such Person. 
  

 9 
  
 Credit Agreement 

 “Interest Period” means, with respect to any Eurodollar Rate Advance,
the period beginning on the date such Eurodollar Rate Advance is made or Continued, or Converted from a Base Rate Advance, and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each
Interest Period shall be one, two, three or six months or (if available to the Lenders in the opinion of the Lenders) nine or twelve months, as the Borrower may, upon notice received by the Administrative Agent not later than 12:00 noon (New York
City time) on the third Business Day prior to the first day of such Interest Period, select; provided that: 
  
 (i) any Interest Period that would otherwise end after the Commitment Termination Date shall end on the Commitment Termination Date;

  
 (ii) each Interest Period that begins on the
last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; and 

 
 (iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided that, if such extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day. 
  
 “Lenders” means the Banks listed on the signature pages hereof and each Person that shall become a party hereto pursuant
to Sections 8.06(a), (b) and (c). 
  
 “Letter of Credit” of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable.

  
 “LIBOR” means the rate at
which deposits in U.S. dollars are offered to leading banks in the London interbank market. 
  
 “Lien” means any lien, mortgage, security interest or other charge or encumbrance of any kind, or any other type of
preferential arrangement having substantially the same effect as a lien, including, without limitation, the lien or retained security title of a conditional vendor. 
  
 “Majority Lenders” means, at any time, Lenders having Advances representing more than 50%
of the aggregate outstanding principal amount of the Advances or, if no Advances are outstanding, Lenders having Commitments representing more than 50% of the total Commitments at such time. 
  

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 “Margin Stock” means margin stock within the meaning of Regulation U.

  
 “Material Adverse Change” or
“Material Adverse Effect” means a material adverse change in or, as the case may be, effect on (i) the business, condition (financial or otherwise), or operations of the Borrower and its Consolidated Subsidiaries taken as a whole,
(ii) the legality, validity or enforceability of this Agreement or (iii) the ability of the Borrower to pay and perform its obligations hereunder. 
  
 “Material Agreements” has the meaning specified in Section 4.01(o). 
  
 “Material Indebtedness” has the meaning set
forth in Section 6.01(d). 
  
 “Material
Subsidiary” shall mean a Subsidiary which (i) owns, leases or occupies any building, structure or other facility used primarily for the bottling, canning or packaging of soft drinks or soft drink products or warehousing and distributing of
such products, other than any such building, structure or other facility or portion thereof, which is not of material importance to the total business conducted by the Borrower and its Subsidiaries as an entirety, (ii) is a party to any contract
with respect to the bottling, canning, packaging or distribution of soft drinks or soft drink products, other than any such contract which is not of material importance to the total business conducted by the Borrower and its Subsidiaries as an
entirety, and in any event includes each of the Subsidiaries indicated as Material Subsidiaries listed in Schedule IV as of the date hereof, and (iii) any Subsidiary of the Borrower that would qualify as a “significant subsidiary” under
Regulation S-X of the Securities and Exchange Commission (or its successor agency). 
  
 “Moody’s” means Moody’s Investors Service, Inc. and its successors. 
  
 “Moody’s Rating” means, at any time,
the rating of the long-term senior unsecured non-credit-enhanced debt obligations of the Borrower then outstanding most recently announced by Moody’s. 
  
 “Multiemployer Plan” means any employee benefit plan which is a “multiemployer plan” within the meaning of
Section 4001(a)(3) of ERISA and to which the Borrower or any member of a Controlled Group has or had an obligation to contribute. 
  
 “Note” has the meaning set forth in Section 2.17. 
  
 “Notice of Borrowing” has the meaning set forth in Section 2.02(a). 
  
 “OECD” means the Organization for Economic
Cooperation and Development. 
  

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 “Other Taxes” has the meaning set forth in Section 2.14(b). 

 
 “PBGC” means the Pension Benefit
Guaranty Corporation or any successor. 
  
 “Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any
political subdivision or agency thereof. 
  
 “Plan” means an employee pension benefit plan (other than a Multiemployer Plan) to which Section 4021 of ERISA applies and (i) which is maintained for employees of the Borrower or any member of a Controlled Group or (ii) to
which the Borrower or any member of a Controlled Group made, or was required to make, contributions at any time within the preceding five years. 
  
 “Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such
Person, or other assets owned, leased or operated by such Person. 
  
 “Rate Hedging Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party’s assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, and (b) any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing. 
  
 “Rating Level Change” means a change in the
Moody’s Rating or the Standard & Poor’s Rating (other than as a result of a change in the rating system of such rating agency) that results in the change from one Rating Level Period to another, which Rating Level Change shall be
effective on the date on which the relevant change in such rating is first announced by Moody’s or Standard & Poor’s, as the case may be. 
  
 “Rating Level Period” means a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period, a Rating Level 4
Period or a Rating Level 5 Period; provided that: 
  
 (i) “Rating Level 1 Period” means a period during which the Moody’s Rating is at or above A3 or the Standard & Poor’s Rating is at or above A-; 
  

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 (ii) “Rating Level 2 Period” means a period that is not a Rating Level 1
Period during which the Moody’s Rating is Baa1 or the Standards & Poor’s Rating is at or above BBB+; 
  
 (iii) “Rating Level 3 Period” means a period that is not a Rating Level 1 Period or a Rating Level 2 Period during which
Moody’s Rating is at or above Baa2 or the Standard & Poor’s Rating is at or above BBB; 
  
 (iv) “Rating Level 4 Period” means a period that is not a Rating Level 1 Period, a Rating Level 2 Period or a Rating
Level 3 Period during which the Moody’s Rating is at or above Baa3 or the Standard & Poor’s Rating is at or above BBB-; and 
  
 (v) “Rating Level 5 Period” means a period that is not a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3
Period or a Rating Level 4 Period; 
  
 and provided
further that if the Moody’s Rating and the Standard & Poor’s Rating differ by more than one rating level, then the Rating Level Period shall be one Rating Level Period higher than the Rating Level Period resulting from the
application of the lower of such ratings (for which purpose Rating Level Period 1 is the highest Rating Level Period and Rating Level 5 is the lowest Rating Level Period). 
  
 “Register” has the meaning set forth in Section 8.06(d). 
  
 “Regulations T, U and X” means Regulations
T, U and X issued by the Board of Governors of the Federal Reserve System, as from time to time amended. 
  
 “Reportable Event” means (i) a reportable event described in Section 4043 of ERISA and regulations thereunder (other than
reportable events for which notice has been waived pursuant to PBGC regulations), (ii) a withdrawal by a substantial employer from a Plan to which more than one employer contributes, as referred to in Section 4063(b) of ERISA, or (iii) a cessation
of operations at a facility causing more than 20% of Plan participants to be separated from employment, as referred to in Section 4062(e) of ERISA. 
  
 “Responsible Officer” means the President, the Controller, the Treasurer or the Chief Financial Officer of the Borrower.

  
 “Solvent” means, with
respect to any Person at any time, that (a) the fair value of the Property of such Person is greater than the total amount of liabilities (including without limitation contingent liabilities) of such Person, (b) the present fair saleable value of
the Property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, 

  

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(c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature, and (d) such Person is not engaged in a business and is not about to engage in a business for which such Person’s property would constitute an unreasonably small capital. 
  
 “Standard & Poor’s” means Standard
& Poor’s Ratings Service, presently a division of The McGraw-Hill Companies, Inc., and its successors. 
  
 “Standard & Poor’s Rating” means, at any time, the rating of the long-term senior unsecured, non-credit-enhanced
debt obligations of the Borrower then outstanding most recently announced by Standard & Poor’s. 
  
 “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company or other entity
of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation,
partnership, limited liability company or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership, limited liability company or other entity
shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person; provided, that notwithstanding the foregoing, Piedmont Coca-Cola Bottling Partnership, a Delaware general partnership, shall be deemed to be a Subsidiary of the Borrower so long as the Borrower owns a greater than 50% economic
interest therein. 
  
 “Taxes”
has the meaning set forth in Section 2.14(a). 
  
 “Telerate Page 3750” means the display designated as page “3750” on the Bridge Information Service (or such other page as may replace page “3750” on the Dow Jones Markets Service or such other service as
may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollar deposits). 
  
 “Termination Event” means, with respect to
a Plan which is subject to Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or any other member of the Controlled Group from such Plan during a plan year in which the Borrower or any other member of the Controlled Group
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under any other provision of Title IV of ERISA, (c) the termination of such Plan, the filing of a notice of intent to terminate such Plan or the
treatment of an amendment of such Plan as a termination under Section 4041 of ERISA or (d) the institution by the PBGC of proceedings to terminate such Plan, in each case which could reasonably be expected to have a Material Adverse Effect.

  

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 “Type” refers to whether an Advance is a Base Rate Advance or a
Eurodollar Rate Advance. 
  
 “Unfunded
Liabilities” means the amount (if any) by which the present value of all vested and unvested accrued benefits under a single employer plan, as defined in Section 4001(a)(15) of ERISA, exceeds the fair market value of assets allocable to
such benefits, all determined as of the then most recent valuation date for such Plans using the PBGC actuarial assumptions utilized for purposes of determining the current liability for purposes of such valuation.  
  
 “Utilization Fee” has the meaning set forth
in Section 2.03(b). 
  
 SECTION 1.02. Computation of Time
Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” mean “to but
excluding”. 
  
 SECTION 1.03. Accounting Terms. (a)
All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e). 
  
 (b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth herein, and the Borrower so requests, the Administrative Agent, the Lenders and the Borrower will negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of
such change in GAAP; provided that until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP as in effect prior to such change therein. 
  
 ARTICLE 2 
 AMOUNTS AND TERMS OF THE ADVANCES 
  
 SECTION
2.01. The Advances. 
  
 (a) Each Lender severally agrees,
on and subject to the terms and conditions hereinafter set forth, to make advances to the Borrower (each, an “Advance”) from time to time on any Business Day during the period from the Closing Date until the Commitment Termination
Date in an aggregate amount up to but not exceeding at any one time outstanding the amount set forth under the heading “Commitment” opposite such Lender’s name on Schedule I or, if such Lender has entered into an Assignment and
Acceptance, set forth for such Lender in the Register (as such amount may be reduced pursuant to Section 2.04 or increased pursuant to Section 2.19, such Lender’s “Commitment”) and, as to all Lenders, up to but not exceeding at
any one time outstanding $100,000,000 (subject to Section 2.19). 
  

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 (b) Each Borrowing and each Conversion or Continuation thereof (i) shall be in an aggregate amount not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) shall consist of Advances of the same Type (and, if such Advances are Eurodollar Rate Advances, having the same Interest Period) made, Continued or Converted on
the same day by the Lenders ratably according to their respective Commitments, except in each case as otherwise provided in Sections 2.08(e) and (f), as applicable. 
  
 (c) Within the limits of each Lender’s Commitment, the Borrower may from time to time borrow, prepay pursuant to
Section 2.10 and reborrow under this Section 2.01. 
  
 SECTION
2.02. Making the Advances. 
  
 (a) (i)
Each Borrowing shall be made on notice, given not later than 11:00 a.m. (New York City time) on the third Business Day prior to the date of such Borrowing (in the case of a Borrowing consisting of Eurodollar Rate Advances) or given not later than
11:00 a.m. (New York City time) on the Business Day of such Borrowing (in the case of a Borrowing consisting of Base Rate Advances), by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof. 
  
 (ii) Each such notice of a Borrowing (a “Notice of
Borrowing”) shall be in writing in substantially the form of Exhibit A hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) amount of such Borrowing, and (iv) in the
case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance. 
  
 (iii) Each Lender shall, before 1:00 p.m. (New York City time) on the date of such Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender’s ratable portion of such Borrowing. 
  
 (iv) Upon the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article 3, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s aforesaid address. 
  

(b) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing which the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense (excluding loss of profit) reasonably incurred by such Lender as a result of any failure to make such Borrowing
(including, without limitation, as a result of any failure to fulfill, on or before the date specified in such Notice of Borrowing, the applicable conditions set forth in Article 3) and the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing. A certificate as to the amount of such losses, costs and expenses, submitted to the Borrower and the Administrative Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error. 
  

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 (c) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any
Borrowing that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on
the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand (but without duplication) such corresponding amount
together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time
to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as
part of such Borrowing for purposes of this Agreement (and such Advance shall be deemed to have been made by such Lender on the date on which such amount is so repaid to the Administrative Agent). 
  
 (d) The failure of any Lender to make the Advance to be made by it as part of
any Borrowing shall not relieve the other Lenders of their obligations hereunder to make an Advance on the date of such Borrowing, and no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other
Lender on the date of any Borrowing. 
  
 SECTION 2.03. Certain
Fees. 
  
 (a) Facility Fee. The Borrower agrees to pay
to the Administrative Agent for the account of each Lender a facility fee (the “Facility Fee”) on the average daily amount (whether used or unused) of such Lender’s Commitment from the date hereof (in the case of each Bank) and
from the Closing Date specified in the Assignment and Acceptance pursuant to which it became a Lender (in the case of each such Lender) until the Commitment Termination Date at a rate per annum equal to the Applicable Facility Fee Rate. The Facility
Fee shall be payable quarterly in arrears on the last Business Day of each March, June, September and December and on the Commitment Termination Date, commencing on the last Business Day of June, 2005. 
  
 (b) Utilization Fee. For each day on which the aggregate principal
amount of Advances outstanding exceeds an amount equal to 50% of the aggregate Commitments, the Borrower agrees to pay to the Administrative Agent for the account of each Lender a utilization fee (the “Utilization Fee”) on the
aggregate principal amount of the Advances of such Lender outstanding on such day at a rate per annum equal to the Applicable Utilization Fee Rate. The Utilization Fee shall be payable in respect of each Advance on each date on which interest is
payable on such Advance as specified in Section 2.06(a) hereof. 
  

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 (c) Administrative Agent’s Fee. The Borrower agrees to pay to the Administrative Agent, for
the Administrative Agent’s own account, an administrative agency fee at the times and in the amounts heretofore agreed between the Borrower and the Administrative Agent. 
  
 SECTION 2.04. Reduction of the Commitments. 
  
 (a) The Commitment of each Lender shall be automatically reduced to zero on the Commitment Termination Date. 
  
 (b) The Borrower shall have the right, upon at least three Business
Days’ notice to the Administrative Agent, to terminate, in whole or reduce ratably in part, the unused portions of the Commitments of the Lenders; provided that the aggregate amount of the Commitments of the Lenders shall not be reduced
to an amount which is less than the aggregate principal amount of the Advances then outstanding; and provided further that each partial reduction shall be in an aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof. 
  
 (c) Once reduced or terminated, the
Commitments may not be reinstated. 
  
 SECTION 2.05. Repayment
of Advances. The Borrower shall repay the unpaid principal amount of each Advance made by each Lender, and each Advance made by each Lender shall mature, on the Commitment Termination Date. 
  
 SECTION 2.06. Interest. 
  
 (a) Ordinary Interest. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by each Lender, from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: 
  
 (i) Base Rate Advances. While such Advance is a Base Rate Advance, a rate per annum equal to the Base
Rate in effect from time to time plus the Applicable Margin for Base Rate Advances as in effect from time to time, payable quarterly in arrears on the last Business Day of each March, June, September and December and on the date such Base
Rate Advance shall be Converted or paid in full. 
  
 (ii) Eurodollar Rate Advances. While such Advance is a Eurodollar Rate Advance, a rate per annum for each Interest Period for such Advance equal to the sum of the Eurodollar Rate for such Interest Period plus the Applicable
Margin for Eurodollar Rate Advances as in effect from time to time, payable on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day which occurs at three-month intervals after the
first day of such Interest Period, and on each date on which such Eurodollar Rate Advance shall be Continued, Converted or paid. 
  

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 (b) Default Interest. Notwithstanding the foregoing, if any Event of Default shall have occurred
and be continuing, the Borrower shall pay interest on: 
  
 (i) the unpaid principal amount of each Advance owing to each Lender, payable on demand (and in any event in arrears on the dates referred to in Section 2.06(a)(i) or (a)(ii) above), at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid on such Advance pursuant to said Section 2.06(a)(i) or (a)(ii), as applicable; provided that if such Event of Default shall be continuing at the end of any Interest Period for any Eurodollar Rate
Advance, such Advance shall forthwith be Converted to a Base Rate Advance bearing interest as aforesaid in this Section 2.06(b)(i); and 
  
 (ii) the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable on demand (and in any event in arrears on the date such amount shall be paid in full), at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate
Advances pursuant to Section 2.06(a)(i) above. 
  
 SECTION 2.07.
Additional Interest on Eurodollar Rate Advances. The Borrower shall pay to each Lender additional interest on the unpaid principal amount of each Eurodollar Rate Advance of such Lender, from the date of such Advance until such principal
amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for each Interest Period for such Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional interest shall be determined by such Lender and
notified to the Borrower through the Administrative Agent. 
  
 SECTION 2.08. Interest Rate Determinations; Changes in Rating Systems. 
  
 (a) The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rates determined by the Administrative Agent for the purposes of Section 2.06. 
  
 (b) If the relevant rates do not appear on Telerate Page 3750, and the
Eurodollar Rate cannot be determined on the basis set forth in the second sentence of the definition of “Eurodollar Rate”: 
  
 (i) the Administrative Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such
Eurodollar Rate Advances for such Interest Period, 
  

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 (ii) each Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance, and 
  
 (iii) the obligation of the Lenders to make or Continue, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist. 
  
 (c) If,
with respect to any Eurodollar Rate Advances, the Majority Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Majority Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon: 
  
 (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance, and 
  
 (ii) the obligation of the Lenders to make or Continue, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and such Lenders that the circumstances causing such
suspension no longer exist. 
  
 (d) If the Borrower shall fail to
select the duration of any ensuing Interest Period for any outstanding Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Administrative Agent will forthwith so
notify the Borrower and the Lenders and the Borrower will automatically be deemed to have selected an Interest Period of three months therefor. 
  
 (e) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or
prepayment or otherwise, to less than $5,000,000, such Advances shall automatically Convert into Base Rate Advances. 
  
 (f) Upon the occurrence and during the continuance of any Event of Default, (x) each Eurodollar Rate Advance shall automatically, on the last day of the
then existing Interest Period therefor, Convert into a Base Rate Advance and (y) the obligation of the Lenders to make or Continue, or to Convert Advances into, Eurodollar Rate Advances shall automatically be suspended until such Event of Default
shall be cured or waived. 
  
 (g) If the rating system of either
Moody’s or Standard & Poor’s shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Administrative Agent (on behalf of the Lenders) shall negotiate in
good faith to amend the references to specific ratings in this Agreement to reflect such changed rating system or the non-availability of ratings from such rating agency (provided that any such amendment to such specific ratings shall not be
effective without the approval of the Majority Lenders). 
  

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 SECTION 2.09. Voluntary Conversion and Continuation of Advances. 
  
 (a) Optional Conversion. The Borrower may on any Business Day, upon
notice given to the Administrative Agent not later than 11:00 a.m. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all or any portion of the
outstanding Advances of one Type comprising part of the same Borrowing into Advances of the other Type; provided that (i) any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum
amount specified in Section 2.01(b) and (ii) in the case of any such Conversion of a Eurodollar Rate Advance into a Base Rate Advance on a day other than the last day of an Interest Period therefor, the Borrower shall reimburse the Lenders in
respect thereof pursuant to Section 8.04(c). Each such notice of a Conversion shall, within the restrictions specified above, specify (x) the date of such Conversion, (y) the Advances to be Converted, and (z) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower. 
  
 (b) Continuations. The Borrower may, on any Business Day, upon notice given to the Administrative Agent not later than 11:00 a.m. (New York City
time) on the third Business Day prior to the date of the proposed Continuation and subject to the provisions of Sections 2.08 and 2.12, Continue all or any portion of the outstanding Eurodollar Rate Advances comprising part of the same Borrowing for
one or more Interest Periods; provided that (i) Eurodollar Rate Advances so Continued and having the same Interest Period shall be in an amount not less than the minimum amount specified in Section 2.01(b) and (ii) in the case of any such
Continuation on a day other than the last day of an Interest Period therefor, the Borrower shall reimburse the Lenders in respect thereof pursuant to Section 8.04(c). Each such notice of a Continuation shall, within the restrictions specified above,
specify (x) the date of such Continuation, (y) the Eurodollar Rate Advances to be Continued and (y) the duration of the initial Interest Period (or Interest Periods) for the Eurodollar Rate Advances subject to such Continuation. Each notice of
Continuation shall be irrevocable and binding on the Borrower. 
  
 SECTION 2.10. Prepayments of Advances. The Borrower may, on notice given not later than 11:00 a.m. (New York City time) on the second Business Day prior to the date of the proposed prepayment of Advances (in the case of Eurodollar
Rate Advances) or given not later than 11:00 a.m. (New York City time) on the Business Day of the proposed prepayment of Advances (in the case of Base Rate Advances), stating the proposed date and aggregate principal amount of the prepayment, and if
such notice is given the Borrower shall, prepay, without penalty or premium, the outstanding principal amounts of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount not less than $5,000,000 or integral 
  

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multiples of $1,000,000 in excess thereof and (y) in the case of any such prepayment of a Eurodollar Rate Advance on a day other than the last day of an
Interest Period therefor, the Borrower shall reimburse the Lenders in respect thereof pursuant to Section 8.04(c). The Borrower shall have no right to prepay the Advances except as provided in this Section 2.10 (or as required pursuant to the other
provisions of this Agreement). 
  
 SECTION 2.11. Increased
Costs. 
  
 (a) If, due to either (i) the introduction of or
any change (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances, then the Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased
cost. A certificate as to the amount of such increased cost, prepared in good faith and submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. 
  
 (b) If any Lender determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling
such Lender and that the amount of such capital is increased by or based upon the existence of such Lender’s commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall immediately pay to the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the
light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender’s commitment to lend hereunder. A certificate as to such amounts, prepared in good faith
and submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. 
  
 SECTION 2.12. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make or Continue Eurodollar Rate Advances or to fund or otherwise maintain Eurodollar Rate Advances hereunder, (i) the obligation of such Lender to make or Continue, or to Convert Advances into, Eurodollar Rate Advances
shall be suspended until the Administrative Agent shall notify the Borrower and the 
  

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Lenders that the circumstances causing such suspension no longer exist and (ii) each Eurodollar Rate Advance of such Lender shall convert into a Base Rate
Advance at the end of the then current Interest Period for such Eurodollar Rate Advance. 
  
 SECTION 2.13. Payments and Computations. 
  
 (a) The Borrower shall make each payment hereunder without set-off or counterclaim not later than 12:00 noon (New York City time) on the day when due in Dollars to the Administrative Agent at its address referred to
in Section 8.02 in same day funds. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, Facility Fee or Utilization Fee ratably (other than amounts payable pursuant to
Section 2.02(b), 2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.06(d), from and
after the Closing Date specified in such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods prior to such Closing Date directly between themselves. 
  
 (b) All computations of interest based on Citibank’s base rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. All computations of interest based on the Eurodollar Rate or the Federal Funds Rate
and of the Facility Fee and the Utilization Fee shall be made by the Administrative Agent, and all computations of interest pursuant to Section 2.07 shall be made by the relevant Lender, on the basis of a year of 360 days, for the actual number of
days (including the first day but excluding the last day) occurring in the period for which such interest or fee is payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error. 
  
 (c) Whenever any payment
hereunder would be due on a day other than a Business Day, such due date shall be extended to the next succeeding Business Day, and any such extension of such due date shall in such case be included in the computation of payment of interest,
Facility Fee and Utilization Fee, as the case may be; provided however that if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to fall due in the next following calendar month, such payment shall be
made on the next preceding Business Day. 
  
 (d) Unless the
Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the 

  

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Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to
be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate. 
  
 SECTION 2.14. Taxes.

  
 (a) Any and all payments by the Borrower hereunder shall be
made, in accordance with Section 2.13, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of
each Lender and the Administrative Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender’s Applicable Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any
Lender or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law. 
  
 (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter referred to as “Other Taxes”). 
  
 (c) The Borrower will indemnify each Lender and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.14) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Administrative Agent (as the case may be) makes written demand
therefor. A certificate as to the amount of such Taxes and Other Taxes, submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding (as between the Borrower, the Lenders and the Administrative Agent) for
all purposes, absent manifest error. 
  

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 (d) Within 30 days after the date of any payment of Taxes, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing payment thereof or other proof of payment of such Taxes reasonably satisfactory to the relevant Lender(s). If no Taxes are
payable in respect of any payment hereunder, upon the request of the Administrative Agent the Borrower will furnish to the Administrative Agent, at such address, a statement to such effect with respect to each jurisdiction designated by the
Administrative Agent. 
  
 (e) Each Lender organized under the laws
of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement (in the case of each Bank) and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender (in the case of
each other Lender), and from time to time thereafter if requested in writing by the Borrower (but only so long as such Lender remains lawfully able to do so), shall provide the Borrower with Internal Revenue Service form W-8BEN or W-8ECI, as
appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. If the form provided by a Lender at the time such Lender first becomes a party to
this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from “Taxes” as defined in Section 2.14(a). 
  
 (f) For any period with respect to which a Lender has failed to provide the
Borrower with the appropriate form described in Section 2.14(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required
under the first sentence of subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by the United States; provided however that should a Lender become subject to
Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as the Lender may reasonably request to assist the Lender to recover such Taxes. 
  
 (g) Any Lender claiming any additional amounts payable pursuant to this Section 2.14 shall use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office(s) if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. 
  

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 SECTION 2.15. Set-Off; Sharing of Payments, Etc. 
  
 (a) Without limiting any of the obligations of the Borrower or the rights of
the Lenders hereunder, if the Borrower shall fail to pay when due (whether at stated maturity, by acceleration or otherwise) any amount payable by it hereunder or under any Note each Lender may, without prior notice to the Borrower (which notice is
expressly waived by it to the fullest extent permitted by applicable law), set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final, in any currency, matured or unmatured)
and other obligations and liabilities at any time held or owing by such Lender or any branch or agency thereof to or for the credit or account of the Borrower. Each Lender shall promptly provide notice of such set-off to the Borrower,
provided that failure by such Lender to provide such notice shall not affect the validity of such set-off and application. 
  
 (b) If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the
Advances made by it (other than pursuant to Section 2.02(b), 2.11, 2.14 or 8.04(c)) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances made by them or make such other adjustments as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided however that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to
such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights
of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. 
  
 SECTION 2.16. Right to Replace a Lender. If the Borrower is required to make any additional payment pursuant to
Section 2.11 or 2.14 to any Lender or if any Lender’s obligation to make or Continue, or to Convert Advances into, Eurodollar Rate Advances shall be suspended pursuant to Section 2.12 (in each case, such Lender being an “Affected
Person”), the Borrower may elect, if such amounts continue to be charged or such suspension is still effective, to replace such Affected Person as a party to this Agreement; provided that, no Default or Event of Default shall have
occurred and be continuing at the time of such replacement; and provided further that, concurrently with such replacement, (i) another financial institution which is an Eligible Assignee and is reasonably satisfactory to the Borrower
and the Administrative Agent shall agree, as of such date, to purchase for cash the Advances of the Affected Person pursuant to an Assignment and Acceptance and to become a Lender for all purposes under this Agreement and to assume all obligations
(including all outstanding Advances) of the Affected Person to be 
  

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terminated as of such date and to comply with the requirements of Section 8.06 applicable to assignments, and (ii) the Borrower shall pay to such Affected
Person in same day funds on the day of such replacement all accrued interest, accrued fees and other amounts then owing to such Affected Person by the Borrower hereunder to and including the date of termination, including without limitation payments
due such Affected Person under Section 2.11 and 2.14. 
  
 SECTION
2.17. Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time to time hereunder. 
  
 (b) The Administrative Agent shall maintain accounts in which it shall record (i) the date, amount, Type, interest rate and duration of Interest Period
(if applicable) of each Advance made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof. 
  
 (c) The entries made in the accounts maintained pursuant to clause (a) or (b) of this Section 2.17 shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided
that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Advances in accordance with the terms of this Agreement. 

 
 (d) Any Lender may request that its Advances be evidenced by a promissory
note. In such event, the Borrower will promptly prepare, execute and deliver to such Lender a promissory note (a “Note”) payable to the order of such Lender, in a form approved by the Administrative Agent, in a principal amount
equal to the amount of such Lender’s Commitment and otherwise duly completed. 
  
 SECTION 2.18. Extension of Commitments. (a) The Borrower may, not earlier than 90 days and not later than 60 days before the Commitment Termination Date, by notice to the Administrative Agent request that the
Commitment Termination Date then in effect (the “Existing Commitment Termination Date”) be extended to the date 364 days after the Existing Commitment Termination Date. The Administrative Agent shall promptly notify the Lenders of
such request. The Borrower may make this extension request only once. 
  
 (b) Each Lender, in its sole discretion, shall, by notice to the Administrative Agent given not more than 60 nor less than 50 days before the Existing Commitment Termination Date, advise the Administrative Agent whether or not such Lender
agrees to such extension. A Lender that determines not to so extend its Commitment shall so notify the Administrative Agent promptly after making such determination and is herein called a “Non-Extending Lender”. If a Lender does not
give timely notice to the Administrative Agent of whether or not such Lender agrees to such extension, it shall be deemed to be a Non-Extending Lender. 
  

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 (c) The Administrative Agent shall notify the Borrower of each Lender’s determination on or before
the date 45 days before the Existing Commitment Termination Date. 
  
 (d) If and only if (i) the total of the Commitments of Lenders that have agreed to extend their Commitments as herein provided is more than 75% of the aggregate amount of the Commitments in effect immediately prior to the Existing
Commitment Termination Date, and (ii) immediately prior to the Existing Commitment Termination Date no Default has occurred and is continuing and the representations and warranties of the Borrower set forth in Section 4.01 shall be true and correct
in all material respects on and as of the Existing Commitment Termination Date as though made on and as of such date (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct
in all material respects as of such earlier date), then effective on the Existing Commitment Termination Date the Commitment Termination Date shall be extended to the date 364 days after the Existing Commitment Termination Date (or, if such day is
not a Business Day, the immediately preceding Business Day) which date shall thereafter be the Commitment Termination Date, provided that the Commitment of each Non-Extending Lender shall in any event terminate on the Existing Commitment
Termination Date and the Borrower shall pay in full on the Existing Termination Date all amounts payable to each Non-Extending Lender hereunder. 
  
 SECTION 2.19. Increase of Commitments. 
  
 (a) The Borrower shall have the right at any time after the Closing Date to increase the aggregate Commitments hereunder in accordance with the following
provisions and subject to the following conditions: 
  
 (i) The Borrower shall give the Administrative Agent, which shall promptly deliver a copy thereof to each of the Lenders, at least 20 Business Days’ prior written notice (a “Notice of Increase”) of any such requested
increase specifying the aggregate amount by which the Commitments are to be increased (the “Requested Increase Amount”), which shall be at least $10,000,000, and the requested date of increase (the “Requested Increase
Date”). Each Lender shall have the right, but no obligation whatsoever, by written notice to the Borrower through the Administrative Agent not less than 10 Business Days after the date of said Notice of Increase, to offer to increase its
Commitment by an amount specified by such Lender, which shall not be less than $1,000,000 and shall not exceed the Requested Increase Amount. Any Lender that so offers to increase its Commitment is herein called an “Increasing
Lender”. Any Lender that does not so offer within such time shall be deemed to have declined to increase its Commitment. 
  

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 (ii) If the aggregate amount of the increases offered pursuant to sub-clause (i) above
exceeds the Requested Increase Amount, the increase shall be allocated ratably among the Increasing Lenders. 
  
 (iii) If the aggregate amount of the increases offered pursuant to sub-clause (i) above is less than the Requested Increase Amount, the
Borrower may, through the Administrative Agent, offer the balance of the Requested Increase Amount to one or more other financial institutions, each of which must be reasonably satisfactory to the Administrative Agent; provided, that the
Commitment to be acquired hereunder by any such other financial institution shall not be less than $1,000,000. Any such other financial institution that agrees to acquire a Commitment pursuant hereto is herein called an “Additional
Lender”. 
  
 (iv) Effective on the
Requested Increase Date, subject to the terms and conditions hereof, (x) Schedule I shall be deemed amended to reflect the increases contemplated hereby, (y) the Commitment of each Increasing Lender shall be increased by the amount determined
pursuant to sub-clauses (i) and (ii) above, and (z) each Additional Lender shall enter into an agreement in form and substance satisfactory to the Borrower and the Administrative Agent pursuant to which it shall undertake, as of such Requested
Increase Date, a new Commitment in the amount determined pursuant to sub-clause (iii) above, and such Additional Lender shall thereupon be deemed to be a Lender for all purposes of this Agreement. Each Additional Lender may request a Note in
accordance with Section 2.17(d). 
  
 (v) If on
the Requested Increase Date there are Advances outstanding hereunder, appropriate adjustments shall be made (by the making of Advances by the Increasing Lenders and the Additional Lenders and/or the prepayment of outstanding Advances) as necessary
to cause the outstanding Advances to be held ratably by all Lenders. 
  
 (vi) The Borrower may not exercise its rights under this Section 2.19 more than once in each successive annual period commencing on the Closing Date. 
  
 (b) Anything in this Section 2.19 to the contrary notwithstanding, no increase in the aggregate Commitments hereunder
pursuant to this Section shall be effective unless: 
  
 (i) as of the date of the relevant Notice of Increase and on the relevant Requested Increase Date and after giving effect to such increase, (x) no Default or Event of Default shall have occurred and be continuing and (y) the representations
and warranties of the Borrower in Article 4 (subject to updating in the case of Sections 4.01(n) and 4.01(o)) shall be true and correct in all material respects as if made on and as of such date (unless expressly stated to relate to an earlier date,
in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); 
  

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 (ii) on and as of the date of the relevant Notice of Increase and on the relevant
Requested Increase Date and after giving effect to such increase, the Moody’s Rating and the S&P Rating shall be at least equal to Baa3 and BBB- respectively; 
  
 (iii) the Borrower shall not previously have reduced the Commitments under Section 2.04; and 
  
 (iv) after giving effect to any such increase the aggregate
amount of the Commitments shall not exceed $150,000,000. 
  
 ARTICLE 3 
 CONDITIONS OF LENDING 
  
 SECTION 3.01. Conditions Precedent to Initial Borrowing. The obligation of each Lender to make an Advance on the
occasion of the initial Borrowing is subject to the condition precedent that the Closing Date shall occur on or before April 11, 2005, and that the Administrative Agent shall have received the following, each (unless otherwise specified below) dated
the Closing Date, in form and substance satisfactory to the Administrative Agent and (except for the items in clauses (a), (b) and (c)) in sufficient copies for each Lender: 
  
 (a) Certified copies of (x) the certificate of incorporation and by-laws of the Borrower, (y) the
resolutions of the Board of Directors of the Borrower authorizing the making and performance by the Borrower of this Agreement and the transactions contemplated hereby, and (z) documents evidencing all other necessary corporate action and
governmental approvals, if any, with respect to this Agreement. 
  
 (b) A certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be
delivered hereunder. 
  
 (c) A certificate from
the Secretary of State of the State of Delaware dated a date reasonably close to the date hereof as to the good standing of and certificate of incorporation filed by the Borrower. 
  
 (d) A favorable opinion of Kennedy Covington Lobdell & Hickman, L.L.P., special counsel to the Borrower,
substantially in the form of Exhibit C hereto. 
  
 (e) A favorable opinion of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the Administrative Agent, substantially in the form of Exhibit D hereto. 
  

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 (f) A certificate of a Responsible Officer of the Borrower certifying that (i) no Default
or Event of Default as of the date thereof has occurred and is continuing, and (ii) the representations and warranties contained in Section 4.01 are true and correct on and as of the date thereof as if made on and as of such date. 
  
 (g) Evidence of the termination of the commitment of each
lender under the Existing Credit Agreement and of the payment by the Borrower of all amounts whatsoever payable by it under the Existing Credit Agreement. 
  
 (h) Notes, payable to the order of the respective Lenders that have requested the same prior to the Closing Date, duly completed and
executed. 
  
 (i) Such other documents relating
to this Agreement and the transactions contemplated hereby as the Administrative Agent or any Lender through the Administrative Agent may reasonably request. 
  
 SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation of each Lender to make an Advance on the occasion of each Borrowing (including
without limitation the initial Borrowing) shall be subject to the further conditions precedent that on the date of such Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance
by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true): 
  
 (a) the representations and warranties contained in Section 4.01 (excluding, in the case of any Borrowing
after the initial Borrowing, the Excluded Representations) are true and correct in all material respects on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); and 
  
 (b) No Default or Event of Default has occurred and is
continuing, or would result from such Borrowing or from the application of the proceeds thereof. 
  
 ARTICLE 4 
 REPRESENTATIONS AND WARRANTIES 
  
 SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows: 
  
 (a) The Borrower and each of its Material Subsidiaries (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, 

  

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(ii) is duly qualified and in good standing in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires
it to so qualify or be licensed and where, in each case, failure so to qualify and be in good standing could have a Material Adverse Effect and (iii) has all requisite power and authority to own or lease and operate its Property and to carry on its
business as now conducted and as proposed to be conducted. 
  
 (b) The making and performance by the Borrower of this Agreement are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not violate (i) any provision of
the Borrower’s certificate of incorporation or by-laws, (ii) any agreement, indenture or other contractual restriction binding on the Borrower, (iii) any law, rule or regulation (including, without limitation, the Securities Act of 1933 and the
Exchange Act and the regulations thereunder, and Regulations T, U or X), or (iv) any order, writ, judgment, injunction, decree, determination or award binding on the Borrower. The Borrower is not in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in breach of any contractual restriction binding upon it, except for such violation or breach which would not have a Material Adverse Effect. 
  
 (c) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority is required (other than those which have been obtained) for the making and performance by the Borrower of this Agreement or for the legality, validity, binding effect or enforceability thereof.

  
 (d) This Agreement constitutes a legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of this Agreement is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (i) the
possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing. 
  
 (e) (i) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at January 2,
2005, and the related consolidated statements of operations, cash flows and changes in stockholders’ equity for the fiscal year ended on such date, audited by Pricewaterhouse Coopers L.L.P., copies of which have heretofore been furnished to
each Lender, are complete and correct in all material respects and present fairly the consolidated financial condition of the Borrower and its Consolidated Subsidiaries as of such date, and the consolidated results of their operations, cash flows
and changes in stockholders’ equity for the fiscal year then ended. 
  

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 (ii) All such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP for the periods involved. 
  
 (iii) As of the date hereof, neither the Borrower nor any of its Consolidated Subsidiaries has any material Contingent Obligation or liability for taxes, long-term lease or unusual forward or long-term commitment
which is not reflected herein or in the schedules and exhibits hereto or in the foregoing financial statements or in the notes thereto. 
  
 (f) Since January 2, 2005, no Material Adverse Change has occurred. 
  
 (g) Except as disclosed in Schedule III, no litigation, investigation or proceeding of or before any court
or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Material Subsidiaries or against any of its or their respective Property or revenues (i) with respect to this Agreement or
the Notes or any of the transactions contemplated hereby or (ii) which, in the reasonable judgment of the Borrower, would have a Material Adverse Effect. 
  
 (h) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance will be used for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, or for any purpose that violates or would be inconsistent with the provisions of Regulations T, U and X. 

 
 (i) The Borrower is not an “investment
company”, or a Person “controlled by” an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. 
  
 (j) All information that has been made available by the Borrower or any of its representatives to the
Administrative Agent or any Lender in connection with the negotiation of this Agreement was, on or as of the dates on which such information was made available, complete and correct in all material respects and did not contain any untrue statement
of a material fact or omit to state a fact necessary to make the statements contained therein not misleading in light of the time and circumstances under which such statements were made. 
  
 (k) A copy of the most recent Annual Report (5500 Series Form), including all attachments thereto, filed
with the Internal Revenue Service for each Plan, has been provided to the Administrative Agent and fairly presents the funding status of each Plan as of the date of each such Annual Report. There has been no deterioration in any single Plan’s
funding status, or, collectively, all of the Plan’s funding status since the date of such Annual Report that could reasonably be expected to have a Material Adverse Effect. The Borrower has provided the Administrative Agent with a list of all
Plans and 

  

 33 
  
 Credit Agreement 

 
Multiemployer Plans and all available information with respect to direct, indirect, or potential withdrawal liability to any Multiemployer Plan of the
Borrower or any member of a Controlled Group. 
  
 (l) The Borrower and each of its Material Subsidiaries is in compliance with all laws, statutes, rules, regulations and orders binding on or applicable to the Borrower or such Material Subsidiary (including, without limitation, ERISA and
all Environmental Laws) and all of their respective Property, subject to the possible implications of the litigation and proceedings described in Schedule III and except to the extent failure to so comply could not (either individually or in the
aggregate) reasonably be expected to have a Material Adverse Effect. 
  
 (m) Each of the Borrower and its Subsidiaries has filed or caused to be filed all tax returns which to the knowledge of the Borrower are required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its Property and all other taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (other than those the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be, or those the failure to pay which, in the
aggregate, would not have a Material Adverse Effect); and (i) no tax liens have been filed and (ii) to the knowledge of the Borrower, no claims are being asserted with respect to any such taxes, fees or other charges, which, either individually or
in the aggregate, are in excess of $1,000,000, other than as disclosed in Schedule III. 
  
 (n) Schedule IV contains an accurate list of all of the presently existing Subsidiaries and Material Subsidiaries, setting forth their
respective jurisdictions of incorporation and the percentage of their respective outstanding capital stock or other equity interests owned by the Borrower or other Subsidiaries and all of the issued and outstanding shares of capital stock or other
equity interests of the Subsidiaries have been duly authorized and issued and are fully paid and non-assessable. 
  
 (o) The agreements identified on Schedule V (the “Material Agreements”) are all of the material business contracts (other
than purchase and sales agreements and credit agreements) to which the Borrower or any Material Subsidiary is a party; each Material Agreement is in full force and effect; and the Borrower and its Material Subsidiaries are in material compliance
with the terms and provisions applicable to them contained in the Material Agreements. 
  
 (p) The Borrower is, and immediately after the making of each Borrowing will be, Solvent. 
  

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 Credit Agreement 

 ARTICLE 5 
 COVENANTS OF THE BORROWER 
  
 SECTION 5.01. Covenants. So long as any Commitment shall remain in effect and until payment in full of all amounts payable by the Borrower hereunder, unless the Majority Lenders shall otherwise consent in writing: 
  
 (a) Financial Statements. The Borrower will furnish to each Lender:

  
 (i) as soon as available, but in any event
within 90 days after the end of each fiscal year of the Borrower, copies of the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such year and of the related consolidated statements of operations, cash
flows and changes in stockholders’ equity for such year, setting forth in each case in comparative form the figures for the previous year, certified without qualification arising out of the scope of the audit, by independent certified public
accountants of nationally recognized standing; 
  
 (ii) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, copies of the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and of the related unaudited consolidated statements of operations, cash flows and changes in stockholders’ equity of the Borrower and its Consolidated Subsidiaries for such quarterly
period and the portion of the fiscal year through such date, setting forth in each case in comparative form figures for the previous year, certified by a Responsible Officer (subject to normal year-end audit adjustments); 
  
 (iii) concurrently with the delivery of the financial
statements referred to in clauses (i) and (ii) above, a Compliance Certificate;  
  
 (iv) promptly upon the filing thereof, copies of all registration statements and annual, quarterly or other regular reports which the
Borrower files with the Securities and Exchange Commission; and 
  
 (v) such other information relating to the Borrower and its Subsidiaries as the Administrative Agent or any Lender may from time to time reasonably request. 
  
 All such financial statements shall be complete and correct in all material respects and
shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as approved by such accountants or officer, as the case may be, and disclosed therein). 
  
 (b) Use of Proceeds. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances solely for its general corporate purposes; provided that neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any such proceeds. 
  

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 Credit Agreement 

 (c) Certain Notices. 
  
 (1) The Borrower will give notice in writing to the Administrative Agent and the Lenders of (i) the occurrence of any
Default or Event of Default and (ii) any change in the rating of the long-term senior unsecured non-credit-enhanced debt obligations of the Borrower by Moody’s or Standard & Poor’s, each such notice to be given promptly and in any
event within five days after occurrence thereof. 
  
 (2) Promptly
after the Borrower, any member of a Controlled Group or any administrator of a Plan: 
  
 (i) receives the notification referred to in clauses (i), (iv) or (vii) of Section 6.01(h), 
  
 (ii) has knowledge of (A) the occurrence of a Reportable
Event with respect to a Plan; (B) any event which has occurred or any action which has been taken to amend or terminate a Plan as referred to in clauses (ii) and (vi) of Section 6.01(h); (C) any event which has occurred or any action which has been
taken which could result in complete withdrawal, partial withdrawal, or secondary liability for withdrawal liability payments with respect to a Multiemployer Plan as referred to in clause (vii) of Section 6.01(h); or (D) any action which has been
taken in furtherance of, any agreement which has been entered into for, or any petition which has been filed with a United States district court for, the appointment of a trustee for a Plan as referred to in clause (iii) of Section 6.01(h), or

  
 (iii) files a notice of intent to terminate a
Plan with the Internal Revenue Service or the PBGC; or files with the Internal Revenue Service a request pursuant to Section 412(d) of the Code for a variance from the minimum funding standard for a Plan; or files a return with the Internal Revenue
Service with respect to the tax imposed under Section 4971(a) of the Code for failure to meet the minimum funding standards established under Section 412 of the Code for a Plan, 
  
 the Borrower will furnish to the Administrative Agent a copy of any notice received, request or petition filed and agreement entered into;
the most recent Annual Report (Form 5500 Series) and attachments thereto for the Plan; the most recent actuarial report for the Plan; any notice, return or materials required to be filed with the Internal Revenue Service in connection with the
event, action or filing; and a written statement of a Responsible Officer describing the event or the action taken and the reasons therefor. 
  
 (d) Conduct of Business. The Borrower will, and will cause each Material Subsidiary to, do all things necessary (if applicable) to remain duly
incorporated, validly existing 

  

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 Credit Agreement 

 
and in good standing as a domestic corporation in its jurisdiction of incorporation and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted except where such failure to remain in good standing or to maintain such authority may not reasonably be expected to have a Material Adverse Effect. The Borrower will continue to engage in its business
substantially as conducted on the date hereof, and, except where such failure may not reasonably be expected to have a Material Adverse Effect, will cause its Subsidiaries to continue to engage in their business substantially as conducted on the
date hereof. 
  
 (e) Taxes. The Borrower will, and will
cause each Subsidiary to, pay when due all material taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect
to which adequate reserves have been set aside. 
  
 (f)
Insurance. The Borrower will, and will cause each Material Subsidiary to, maintain with financially sound and reputable insurance companies insurance on all or substantially all of its Property, in such amounts and covering such risks as is
consistent with sound business practice for Persons in substantially the same industry as the Borrower or such Subsidiary, and the Borrower will furnish to any Lender upon request full information as to the insurance carried. 
  
 (g) Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject (including ERISA and applicable Environmental Laws), except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. 
  
 (h)
Maintenance of Properties. The Borrower will, and will cause each Material Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and
proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times, except where the failure to so maintain, preserve, protect and repair could not reasonably be expected to have
a Material Adverse Effect. 
  
 (i) Inspection. The Borrower
will, and will cause each Subsidiary to, permit the Administrative Agent and the Lenders (coordinated through the Administrative Agent), at their sole cost and expense (except that if an Event of Default has occurred and is continuing, the Borrower
will indemnify the Administrative Agent and the Lenders against such cost and expense), to inspect any of the Property, corporate books and financial records of the Borrower and such Subsidiary, to examine and make copies of the books of account and
other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and to be advised as to the same by, their respective officers upon reasonable notice and at
such reasonable times during the Borrower’s normal business hours and intervals as the Lenders may designate. 
  

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 Credit Agreement 

 (j) Merger. The Borrower will not, and will not permit any Material Subsidiary to, merge or
consolidate with or into any other Person, except that (a) a Material Subsidiary may merge into the Borrower or another Material Subsidiary and (b) the Borrower or any Material Subsidiary may merge or consolidate with any other Person,
provided that (1) in the case of such a merger or consolidation involving the Borrower, the Borrower shall be the continuing or surviving corporation and (2) in the case of such a merger or consolidation involving a Material Subsidiary, a
Material Subsidiary shall be the continuing or surviving corporation, provided further that nothing herein shall be deemed to prohibit a merger or consolidation by a Subsidiary with or into another Person (other than the Borrower) in connection with
an exchange of bottling territories permitted under Sections 5.01(m)(ix) and 5.01(n)(vii), and provided further that in each case, prior to and after giving effect to any such merger or consolidation, no Default or Event of Default shall exist.

  
 (k) Preservation of Material Agreements. Except in
connection with dispositions of assets or other transactions permitted by this Agreement, the Borrower will, and will cause its Subsidiaries to, use commercially reasonable efforts to maintain in full force and effect all material agreements
necessary for the conduct of the Borrower’s business, except where such failure to so use such commercially reasonable efforts could not reasonably be expected to have a Material Adverse Effect. 
  
 (l) Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, or suffer to exist any Lien in or on the Property of the Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, except: 
  
 (i) the existing Liens listed in Schedule II hereto and other Liens existing on the date hereof securing an
obligation in an amount, in the case of each such obligation, of less than $5,000,000 (and extension, renewal and replacement Liens upon the same Property previously subject to such an existing Lien, provided the amount secured by each Lien
constituting such an extension, renewal or replacement Lien shall not exceed the amount secured by the Lien previously existing); 
  
 (ii) Liens arising from taxes, assessments, or claims described in Section 5.01(o) hereof that are not yet due or that remain payable
without penalty or to the extent permitted to remain unpaid under the proviso to such Section 5.01(o); 
  
 (iii) deposits or pledges to secure worker’s compensation, unemployment insurance, old age benefits or other social security
obligations, or in connection with or to secure the performance of bids, tenders, trade contracts or leases, or to secure statutory obligations, or stay, surety or appeal bonds, or other pledges or deposits of like nature and all in the ordinary
course of business; 
  
 (iv) Liens on Property
securing all or part of the purchase price thereof (including without limitation Liens in respect of leases of personal or real Property) and Liens (whether or not assumed) existing in Property at the time of purchase thereof by the 

  

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 Credit Agreement 

 
Borrower or a Subsidiary, as the case may be (and extension, renewal and replacement Liens upon the same property previously subject to a Lien described in
this clause (iv), provided the amount secured by each Lien constituting such extension, renewal or replacement shall not exceed the amount secured by the Lien previously existing), provided that each such Lien is confined solely to the
Property so purchased, improvements thereto and proceeds thereof; 
  
 (v) Liens resulting from progress payments or partial payments under United States Government contracts or subcontracts thereunder; 
  
 (vi) Liens arising from legal proceedings, so long as such proceedings are being contested in good faith by
appropriate proceedings diligently conducted and execution is stayed on all judgments resulting from any such proceedings; 
  
 (vii) zoning restrictions, easements, minor restrictions on the use of real property, minor irregularities in title thereto and other
minor Liens that do not in the aggregate materially detract from the value of a Property to, or materially impair its use in the business of, the Borrower or such Subsidiary; and 
  
 (viii) other Liens securing Indebtedness in an aggregate amount, as to all Liens under this clause (viii),
not exceeding $50,000,000 at any time outstanding. 
  
 (m)
Investments. The Borrower will not, and will not permit any Subsidiary to, at any time purchase, acquire or own any stock, bonds, notes or other securities of, or any partnership or other interest in, or make any capital contribution to, any
other Person (any of the foregoing being referred to in this clause (m) as an “investment”), except: 
  
 (i) investments, in addition to those otherwise permitted hereunder, listed on Schedule VI; 
  
 (ii) investments in Subsidiaries (subject to Section
5.01(m)(xii)) and investments in any cooperative providing bottling, canning or other productive goods or services to the Borrower or any Subsidiary; 
  
 (iii) investments in obligations backed by the full faith and credit of the United States of America; 
  
 (iv) investments in certificates of deposit issued (i) by
any of the Lenders, or (ii) by any bank or by United States or Canadian commercial banks having shareholders’ equity of at least $500,000,000 and whose long term obligations are rated “AA” or “Aa” by Standard &
Poor’s or Moody’s, respectively; 
  

 39 
  
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 (v) investments in commercial paper or corporate promissory notes maturing, or which may
be redeemed by the holder, not more than six months after the date of acquisition and rated “A-1” by Standard & Poor’s Corporation or “P-1” by Moody’s; 
  
 (vi) investments in repurchase agreements held in safekeeping at substantial repositories and secured by
investments of the kind listed in clauses (iii), (iv) and (v) above; 
  
 (vii) investments in time deposits denominated in Dollars in commercial banks (including branch offices of United States banks) located in Western Europe and having shareholders’ equity of at least $500,000,000;

  
 (viii) investments in assets, franchises and
businesses after the date hereof, the result of which does not cause the Borrower to violate any term of this Section 5.01, and as to which in the case of each such investment, the chief financial officer of the Borrower shall have sent to each Bank
a certificate certifying that the acquisition is permitted hereunder including this clause (m), and in the event that the purchase price of any soft drink bottling assets, franchises and business acquired singly or as a group exceeds $50,000,000
shall have sent to each Lender a copy of audited and/or unaudited financial statements for the most recently completed fiscal year and interim period relating to the assets, franchises and businesses acquired; 
  
 (ix) investments in Persons, assets, franchises and
businesses after the date hereof in connection with an exchange of bottling territories; provided that on a pro forma basis after giving effect to each such investment (including without limitation giving effect to Acquisition Cash Flow for the
relevant period) and the related disposition of bottling territories by the Borrower or its Subsidiaries, the Borrower remains in compliance with the covenants set forth in Sections 5.01(q) and (r); 
  
 (x) investments in wholly-owned Subsidiaries formed for the
purpose of making investments permitted hereunder; 
  
 (xi) other investments not exceeding $5,000,000 in the aggregate at any time for the Borrower and all Subsidiaries; and 
  
 (xii) investments in Consolidated Subsidiaries created or acquired after the date hereof up to but not exceeding $50,000,000 in any fiscal
year of the Borrower; 
  
 provided that anything herein to the
contrary notwithstanding, the Borrower will not, and will not permit its Subsidiaries to, acquire controlling interests in any Person or Persons whose principal business is outside the beverage industry if the aggregate consideration paid in respect
of all such acquisitions after the date hereof would exceed $125,000,000. 
  

 40 
  
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 (n) Asset Dispositions. The Borrower will not, and will not permit any Subsidiary to, sell,
convey, assign, abandon or otherwise transfer or dispose of, voluntarily or involuntarily (any of the foregoing being referred to in this clause (n) as a “transaction” and any series of related transactions constituting but a single
transaction), any of its Property, tangible or intangible, except: 
  
 (i) transactions (including sales of trucks, vending machines and other equipment) in the ordinary course of business; 
  
 (ii) transactions between Consolidated Subsidiaries or between the Borrower and Consolidated Subsidiaries; 
  
 (iii) any sale of real property not used in the current
operations of the Borrower, provided that the aggregate proceeds of sales pursuant to this clause (iii) shall not exceed $25,000,000 in any fiscal year of the Borrower; 
  
 (iv) other sales, conveyances, assignments or other transfers or dispositions in immediate exchange for cash
or tangible assets, subject to prior approval in each case by the Majority Lenders; 
  
 (v) other sales, conveyances, assignments or other transfers or dispositions that do not in the aggregate exceed $10,000,000 in any fiscal
year of the Borrower; 
  
 (vi) the sale for cash
of any and all accounts receivable in a face amount not to exceed $50,000,000; 
  
 (vii) dispositions of Persons, assets, franchises and businesses after the date hereof in connection with an exchange of bottling
territories; provided that on a pro forma basis after giving effect to any such disposition and the related acquisition of bottling territories by the Borrower or its Subsidiaries, the Borrower remains in compliance with the covenants set forth in
Sections 5.01(q) and (r); 
  
 (viii) transfers or
dispositions for cash, other than as provided by clauses (i) through (vii) above, if on the date of the consummation thereof, if such date is prior to the Commitment Termination Date, the Commitments are permanently reduced on such date by the
amount equal to the cash proceeds of such transfers or dispositions less the amount of transaction costs and income taxes incurred by the Borrower or one of its Subsidiaries in connection with such transfer or disposition. 
  
 (o) Taxes. The Borrower will, and will cause each Subsidiary to, pay
or discharge any of the following described taxes, assessments, charges, levies, claims and liabilities which are material to the Borrower and its Subsidiaries when taken as a whole: 
  
 (i) on or prior to the date on which penalties attach thereto, all taxes, assessments and other governmental
charges or levies imposed upon it or any of its Property or income; 
  

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 (ii) on or prior to the date when due, all lawful claims of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons which, if unpaid, might result in the creation of a Lien upon any such Property; and 
  
 (iii) on or prior to the date when due, all other lawful claims which, if unpaid, might result in the creation of a Lien upon any such
Property (other than Liens not forbidden by Section 5.01(l) hereof) or which, if unpaid, might give rise to a claim entitled to priority over general creditors of the Borrower or such Subsidiary in a case under Title 11 (Bankruptcy) of the United
States Code, as amended, or in any insolvency proceeding or dissolution or winding-up involving the Borrower or such Subsidiary; 
  
 provided that unless and until foreclosure, distraint, levy, sale or similar proceedings shall have been commenced, the Borrower or such Subsidiary need not pay or
discharge any such tax, assessment, charge, levy, claim or current liability so long as the validity thereof is contested in good faith and by appropriate proceedings diligently conducted and so long as such reserves or other appropriate provisions
as may be required by GAAP shall have been made therefor and so long as such failure to pay or discharge does not have a Material Adverse Effect. 
  
 (p) Subsidiary Debt. The Borrower will not permit any Subsidiary to incur or permit to exist any Indebtedness except (i) Indebtedness to the
Borrower or another Subsidiary and (ii) other Indebtedness in an aggregate amount not exceeding $5,000,000 at any time outstanding. 
  
 (q) Consolidated Cash Flow/Fixed Charges Ratio. The Borrower will not permit the Consolidated Cash Flow/Fixed Charges Ratio, as determined
quarterly as of the last day of each fiscal quarter of the Borrower (and treating such fiscal quarter as having been completed), to be less than 1.5 to 1. 
  
 (r) Consolidated Funded Indebtedness/Cash Flow Ratio. The Borrower will not permit the Consolidated Funded Indebtedness/Cash Flow Ratio, as
determined quarterly as of the last day of each fiscal quarter of the Borrower (and treating such fiscal quarter as having been completed), to exceed 6.0 to 1. 
  

(s) Contingent Obligations. The Borrower will not, and will not permit its Subsidiaries to, incur Contingent Obligations in respect of
Indebtedness of any Person in excess of $100,000,000 in the aggregate at any time (excluding Contingent Obligations existing on the date hereof and disclosed in Schedule VII). 
  

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 ARTICLE 6 
 EVENTS OF DEFAULT 
  
 SECTION 6.01. Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing: 
  
 (a) The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable; or the Borrower shall fail to pay
any interest on any Advance or any Facility Fee or Utilization Fee or any other amount payable hereunder when due and such failure remains unremedied for three Business Days; or 
  
 (b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers)
in any certificate delivered in connection with this Agreement shall prove to have been incorrect in any material respect when made or deemed made; or 
  
 (c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Sections 5.01(b), (c)(1), (j), (q) or
(r), (ii) the Borrower shall fail to perform or observe the covenant contained in Section 5.01(a) and such failure remains unremedied for five Business Days or (iii) Borrower shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement on its part to be performed or observed, and such failure, in the case of this clause (iii), remains unremedied for 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent; or

  
 (d) The Borrower or any of its Subsidiaries
shall fail to pay any principal of or interest on any other Indebtedness which is outstanding in an aggregate principal amount of at least $25,000,000, or its equivalent in other currencies (in this clause (d) called “Material
Indebtedness”), in the aggregate when the same becomes due and payable (whether at scheduled maturity, by required prepayment, acceleration, demand or otherwise); or any other event shall occur or condition shall exist under any agreement
or instrument relating to any Material Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Material Indebtedness, or to require the same to be prepaid or defeased (other than by a regularly required payment); or 
  
 (e) The Borrower or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an 

  

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order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Property and such
proceeding shall remain undismissed or unstayed for a period of 60 days; or the Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or 
  
 (f) (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition with respect to it or its debts under any such law, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its Property, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 90 days; or (iii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or any substantial part of its Property which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; 
  
 (g) A Change in Control shall
occur; or 
  
 (h) The Majority Lenders shall
determine in good faith (which determination shall be conclusive) that the potential liabilities associated with the events set forth in clauses (i) through (vii) below, individually or in the aggregate, could have a Material Adverse Effect:

  
 (i) The PBGC notifies a Plan pursuant to
Section 4042 of ERISA by service of a complaint, threat of filing a law suit or otherwise of its determination that an event described in Section 4042(a) of ERISA has occurred, a Plan should be terminated or a trustee should be appointed for a Plan;
or 
  
 (ii) Any action is taken to terminate a
Plan pursuant to its provisions or the plan administrator files with the PBGC a notice of intent to terminate a Plan in accordance with Section 4041 of ERISA; or 
  

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 (iii) Any action is taken by a plan administrator to have a trustee appointed for a Plan
pursuant to Section 4042 of ERISA; or 
  
 (iv) A
return is filed with the Internal Revenue Service, or a Plan is notified by the Secretary of the Treasury that a notice of deficiency under Section 6212 of the Code has been mailed, with respect to the tax imposed under Section 4971(a) of the Code
for failure to meet the minimum funding standards established under Section 412 of the Code; or 
  
 (v) A Reportable Event occurs with respect to a Plan; or 
  
 (vi) Any action is taken to amend a Plan to become an employee benefit plan described in Section 4021(b)(1)
of ERISA, causing a Plan termination under Section 4041(e) of ERISA; or 
  
 (vii) The Borrower or any member of a Controlled Group receives a notice of liability or demand for payment on account of complete withdrawal under Section 4203 of ERISA, partial withdrawal under Section 4205 of ERISA
or on account of becoming secondarily liable for withdrawal liability payments under Section 4204 of ERISA (sale of assets); or 
  
 (i) The Borrower or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge any judgment or order for the
payment of money, either singly or in the aggregate, in excess of $25,000,000, which is not stayed on appeal or otherwise being appropriately contested in good faith; 
  
 then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice
to the Borrower, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower,
declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such other amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an Event of Default with respect to the Borrower of the kind referred
to in clause (e) or (f) above (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Advances, all such interest and all such other amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. 
  

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 ARTICLE 7 
 THE ADMINISTRATIVE AGENT 
  
 SECTION 7.01. Authorization and Action. Each Lender hereby appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers under this Agreement as are delegated
to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the
Advances), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal
liability or which is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. 
  
 SECTION 7.02. Administrative Agent’s Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Lenders for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (i) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by
it and shall not be liable to the Lenders for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower or any of its Subsidiaries; (iv) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (v) shall incur no liability to the Lenders under or in respect of this Agreement
by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. 
  
 SECTION 7.03. Citibank and Affiliates. With respect to its Commitment
and the Advances made by it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the
Borrower, 

  

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 Credit Agreement 

 
any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any such Subsidiary, all as if Citibank were not the
Administrative Agent and without any duty to account therefor to the Lenders. 
  
 SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to
in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. 
  
 SECTION 7.05. Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower), ratably according to the respective amounts of their Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the
Administrative Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements found in a
final-non-appealable judgment by a court of competent jurisdiction to have resulted from the Administrative Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Administrative Agent is not reimbursed for such expenses by the Borrower.

  
 SECTION 7.06. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and 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 to appoint a successor Administrative Agent that, unless a Default or Event of Default shall have occurred and then be continuing, is reasonably acceptable to the Borrower. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation or the Majority Lenders’ removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having total assets
of at least $1,000,000,000. Upon the acceptance of any 

  

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 Credit Agreement 

 
appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative
Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article 7 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.

  
 SECTION 7.07. Arrangers. Each Arranger, in its capacity
as such, shall have no obligation or responsibility hereunder and shall not become liable in any manner hereunder to any party hereto. 
  
 ARTICLE 8 
 MISCELLANEOUS

  
 SECTION 8.01. Amendments, Etc. No amendment of any
provision of this Agreement shall be effective unless the same shall be in writing and signed by the Borrower and the Majority Lenders, or by the Borrower and the Administrative Agent on behalf of the Majority Lenders, and no waiver of any provision
of this Agreement shall be effective unless the same shall be in writing and signed by the Administrative Agent with the consent of the Majority Lenders; provided, however, that no amendment, or waiver shall, unless in writing and
signed by all the Lenders or by the Administrative Agent with the consent of all the Lenders, do any of the following: (a) increase or extend the Commitments (other than as contemplated by Sections 2.18 and 2.19), (b) reduce the principal of, or
interest on, the Notes or any fees (other than the Administrative Agent’s fee referred to in Section 2.03(c)) or other amounts payable hereunder, (c) postpone any date fixed for any payment of principal of, or interest on, the Advances or any
fees (other than the Administrative Agent’s fee referred to in Section 2.03(c)) or other amounts payable hereunder, (d) change the second sentence of Section 2.13(a), (e) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Advances which shall be required for the Lenders or any of them to take any action hereunder or (f) amend this Section 8.01; provided further that no amendment or waiver shall, unless in writing and signed by
the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement. This Agreement and the agreement referred to in Section 2.03(c) and the Notes
constitute the entire agreement of the parties with respect to the subject matter hereof and thereof. 
  
 SECTION 8.02. Notices, Etc. 
  
 (a) Subject to clauses (b) through (e) below, all notices and other communications provided for hereunder shall be in writing (including telecopier) and
mailed, telecopied or delivered by hand: 
  
 (i)
if to the Borrower: 
  
 Coca-Cola Bottling Co.
Consolidated 
 4100 Coca-Cola Plaza 
 Charlotte, NC 28211 
 Attention: Vice President & Treasurer 
  
 Telephone No.: (704) 557-4633 
 Telecopier No.: (704) 557-4451 
  

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 Credit Agreement 

 (ii) if to the Administrative Agent: 
  
 Citibank, N.A. 
 Two Penns Way, Suite 200 
 New Castle, Delaware 19720 
  
 Attention: Kimberly Eidam-Melendez 
  
 Telephone No.: (302) 894-6012 
 Telecopier No.: (212) 994-0961 
  
 (iii) if to any Lender, at the Domestic Lending Office of
such Lender; 
  
 or, as to the Borrower or the Administrative Agent, at such other
address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent. All such
notices and communications shall be deemed to have been duly given or made (i) in the case of hand deliveries, when delivered by hand, (ii) in the case of mailed notices, three Business Days after being deposited in the mail, postage prepaid, and
(iii) in the case of telecopier notice, when transmitted and confirmed during normal business hours (or, if delivered after the close of normal business hours, at the beginning of business hours on the next Business Day), except that notices and
communications to the Administrative Agent pursuant to Article 2 or 7 shall not be effective until received by the Administrative Agent.  
  
 (b) The Borrower hereby agrees that it will use its best efforts to provide to the Administrative Agent all information, documents and other materials
that it is obligated to furnish to the Administrative Agent pursuant to this Agreement, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but
excluding any such communication that (i) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (ii) provides notice of any Default or Event of Default under this Agreement or (iii) is
required to be delivered to satisfy any condition precedent to the occurrence of the Closing Date and/or any borrowing (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting
the Communications in an electronic/soft medium in a 

  

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 Credit Agreement 

 
format acceptable to the Administrative Agent to oploanswebadmin@citigroup.com. In addition, the Borrower agrees to continue to provide the Communications to
the Administrative Agent in the manner specified herein but only to the extent requested by the Administrative Agent. 
  
 (c) The Borrower further agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on
Intralinks or a substantially similar electronic transmission system (the “Platform”). THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER OR ANY
OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM
SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 
  
 (d) The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes
hereof. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes hereof. Each
Lender agrees (i) to provide to the Administrative Agent in writing (including by electronic communication), promptly after the date of this Agreement, an e-mail address to which the foregoing notice may be sent by electronic transmission and (ii)
that the foregoing notice may be sent to such e-mail address. 
  
 (e) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant hereto in any other manner specified herein. 
  

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 Credit Agreement 

 SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or the Administrative
Agent to exercise, and no delay in exercising, and no course of dealing with respect to, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 
  
 SECTION 8.04. Costs, Expenses and Indemnification. 
  
 (a) The Borrower agrees to pay and reimburse on demand (i) all reasonable costs and expenses of the Administrative Agent and each Arranger in connection
with the preparation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for
the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement, and (ii) all costs and expenses, if any (including, without limitation, reasonable
counsel fees and expenses of the Administrative Agent and each of the Lenders), incurred by the Administrative Agent or any Lender in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement
and the other documents to be delivered hereunder, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 8.04(a). Such reasonable fees and out-of-pocket expenses shall be
reimbursed by the Borrower upon presentation to the Borrower of a statement of account, regardless of whether this Agreement is executed and delivered by the parties hereto or the transactions contemplated by this Agreement are consummated.

  
 (b) (i) The Borrower hereby agrees to
indemnify the Administrative Agent, each Arranger, each Lender and each of their respective Affiliates and their respective officers, directors, employees, agents, advisors and representatives (each, an “Indemnified Party”) from and
against any and all direct claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense with respect thereto arising out of or in connection with or relating to this Agreement or the
transactions contemplated hereby or thereby or any use made or proposed to be made with the proceeds of the Advances, whether or not such investigation, litigation or proceeding is brought by the Borrower, any of its shareholders or creditors, an
Indemnified Party or any other Person, or an Indemnified Party is otherwise a party thereto, and whether or not any of the conditions precedent set forth in Article 3 are satisfied or the other transactions contemplated by this Agreement are
consummated, except to the extent such direct claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful
misconduct. 
  

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 Credit Agreement 

 (ii) The Borrower hereby further agrees that (i) no Indemnified Party shall have any
liability to the Borrower for or in connection with or relating to this Agreement or the transactions contemplated hereby or thereby or any use made or proposed to be made with the proceeds of the Advances, except to the extent such liability is
found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct and (ii) the Borrower will not assert any claim against the Administrative
Agent or any Lender, any of their respective Affiliates, or any of their respective directors, officers, employees, attorneys or agents, on any theory of liability, for consequential, indirect, special or punitive damages arising out of or relating
to this Agreement or the actual or proposed use of any Advance. 
  
 (c) If any payment of principal of, or Conversion or Continuation of, any Eurodollar Rate Advance of a Lender is made on a day other than the last day of an Interest Period for such Advance as a result of any optional or mandatory
prepayment, acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, the Borrower shall pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses (other than loss of profit) which it may reasonably incur as a result of such payment, Continuation or Conversion and the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Advance. A certificate as to the amount of such losses, costs and expenses, submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. 
  
 SECTION 8.05. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Bank that such Bank has executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent and each Lender and their respective successors and permitted assigns, provided that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of
the Lenders. 
  
 SECTION 8.06. Assignments and
Participations. 
  
 (a) Each Lender may, with notice to and
the consent of the Administrative Agent and, unless an Event of Default shall have occurred and be continuing, the Borrower (such consents not to be unreasonably withheld), assign to one or more banks or other entities all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it); provided that: 
  
 (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations of the assigning Lender under
this Agreement, 
  
 (ii) except in the case of an
assignment by a Lender to one of its Affiliates or to another Lender, the amount of the Commitment of the assigning Lender being assigned 

  

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 Credit Agreement 

 
pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event (unless the
Borrower and the Administrative Agent otherwise agree) be less than the lesser of (x) such Lender’s Commitment hereunder and (y) $5,000,000 or an integral multiple of $1,000,000 in excess thereof, 
  
 (iii) each such assignment shall be to an Eligible Assignee,

  
 (iv) the parties to each such assignment
shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, and 
  
 (v) the parties to each such assignment (other than the Borrower) shall deliver to the Administrative Agent a processing and recordation
fee of $3,500. 
  
 Upon such execution, delivery, acceptance and recording, from
and after the Closing Date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a
party hereto). 
  
 (b) By executing and delivering an Assignment
and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies
of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf 

  

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 Credit Agreement 

 
and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. 
  
 (c) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee, the Administrative Agent shall, if such Assignment and Acceptance has been completed (and the Borrower and the Administrative Agent shall have consented to the relevant assignment)
and is in substantially the form of Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. 
  
 (d) The Administrative Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of each of the Lenders and, with respect to Lenders, the Commitment of, and principal amount of the
Advances owing to, each such Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender hereunder for the purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. 
  
 (e) Each Lender may sell
participations to one or more Persons in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it); provided, however,
that (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the Borrower, the Administrative Agent 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, (iv)
in any proceeding under the Federal Bankruptcy Code in respect of the Borrower, such Lender shall remain and be, to the fullest extent permitted by law, the sole representative with respect to the rights and obligations held in the name of such
Lender (whether such rights or obligations are for such Lender’s own account or for the account of any participant) and (v) no participant under any such participation agreement shall have any right to approve any amendment or waiver of any
provision of this Agreement, or to consent to any departure by the Borrower therefrom, except to the extent that any such amendment, waiver or consent would (x) reduce the principal of, or interest on, the Notes, in each case to the extent the same
are subject to such participation, or (y) postpone any date fixed for the payment of principal of, or interest on, the Advances, in each case to the extent the same are subject to such participation. 
  
 (f) Any Lender may, in connection with any permitted assignment or
participation or proposed assignment or participation pursuant to this Section 8.06 and subject to 

  

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 Credit Agreement 

 
the provisions of Section 8.12, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower or any
of its Subsidiaries or Affiliates furnished to such Lender by or on behalf of the Borrower. 
  
 (g) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time, without the consent of the Administrative Agent or the Borrower, create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. 
  
 (h) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time, without the consent of the Administrative Agent or the Borrower, assign to an Affiliate of such Lender all or any portion of its rights (but not its obligations) under this Agreement. 
  
 SECTION 8.07. Governing Law; Submission to Jurisdiction. This
Agreement shall be governed by, and construed in accordance with, the law of the State of New York. The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New
York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Borrower hereby irrevocably appoints CT Corporation System (the
“Process Agent”), with an office on the date hereof at 111 8th Avenue, 13th Floor, New York, New York 10011, as its agent and true and lawful attorney-in-fact in its name, place and stead to accept on
behalf of the Borrower and its Property service of the copies of the summons and complaint and any other process which may be served in any such legal proceedings brought in any such court, and the Borrower agrees that the failure of the Process
Agent to give any notice of any such service of process to the Borrower shall not impair or affect the validity of such service or, to the extent permitted by applicable law, the enforcement of any judgment based thereon. The Borrower irrevocably
waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. 
  
 SECTION 8.08.
Severability. In case any provision in this Agreement shall be held to be invalid, illegal or unenforceable, such provision shall be severable from the rest of this Agreement, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. 
  
 SECTION 8.09. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement. Any counterpart hereof may be executed and delivered via telecopier, and each such counterpart so executed and delivered shall have the same force and effect as an originally
executed and delivered counterpart hereof. 
  

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 Credit Agreement 

 SECTION 8.10. Survival. The obligations of the Borrower under Sections 2.02(b), 2.07, 2.11, 2.14
and 8.04, and the obligations of the Lenders under Section 7.05, shall survive the repayment of the Advances and the termination of the Commitments. In addition, each representation and warranty made, or deemed to be made by any Notice of Borrowing,
herein or pursuant hereto shall survive the making of such representation and warranty, and no Lender shall be deemed to have waived, by reason of making any Advance, any Default or Event of Default that may arise by reason of such representation or
warranty proving to have been false or misleading. 
  
 SECTION
8.11. Waiver of Jury Trial. EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
  
 SECTION 8.12. Confidentiality. Each Lender agrees to hold any confidential information which it may receive from the Borrower or any of its Subsidiaries or Affiliates pursuant to this Agreement in confidence and for use in connection
with this Agreement, including without limitation for use in connection with its rights and remedies hereunder, except for disclosure (a) to other Lenders and their respective Affiliates, (b) to legal counsel, accountants, and other professional
advisors to such Lender, (c) to regulatory officials, (d) as requested pursuant to or as required by law, regulation, or legal process, (e) in connection with any legal proceeding to which such Lender is a party and (f) to a proposed assignee or
participant permitted under Section 8.06 which shall have agreed in writing to keep such disclosed confidential information confidential in accordance with this Section. 
  
 SECTION 8.13. Nonliability of Lenders. The relationship between the Borrower and the Lenders and the Administrative
Agent shall be solely that of borrower and lender and neither the Administrative Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. 
  

SECTION 8.14. USA PATRIOT Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance with the Act. 
  

 56 
  
 Credit Agreement 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written. 
  

			
	 Borrower

	
	 COCA-COLA BOTTLING CO. CONSOLIDATED

		
	 By
	 	 /s/ Clifford M. Deal, III

	 Name:
	 	 Clifford M. Deal, III

	 Title:
	 	 Vice President and Treasurer

	
	 Administrative Agent

	
	 CITIBANK, N.A.,

	 as Administrative Agent

		
	 By
	 	 /s/ Carolyn A. Kee

	 Name:
	 	 Carolyn A. Kee

	 Title:
	 	 Vice President

  

 57 
  
 Credit Agreement 

			
	 Banks

	
	 CITIBANK, N.A.

		
	 By
	 	 /s/ Carolyn A. Kee

	 Name:
	 	 Carolyn A. Kee

	 Title:
	 	 Vice President

  

 58 
  
 Credit Agreement 

			
	 WACHOVIA BANK,

	   NATIONAL ASSOCIATION

		
	 By
	 	 /s/ Denis Waltrich

	 Name:
	 	 Denis Waltrich

	 Title:
	 	 Associate

  

 59 
  
 Credit Agreement 

			
	 COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEEBANK B.A., “RABOBANK INTERNATIONAL”, NEW YORK BRANCH

		
	 By
	 	 /s/ Floyd Smith

	 Name:
	 	 Floyd Smith

	 Title:
	 	 
		
	 By
	 	 /s/ Rebecca O. Morrow

	 Name:
	 	 Rebecca O. Morrow

	 Title:
	 	 Executive Director

  

 60 
  
 Credit Agreement 

			
	 SUNTRUST BANK

		
	 By
	 	 /s/ Susan M. Hall

	 Name:
	 	 Susan M. Hall

	 Title:
	 	 Managing Director

  

 61 
  
 Credit Agreement 

			
	 BRANCH BANKING AND
   TRUST COMPANY

		
	 By
	 	 /s/ Charles W. Jones

	 Name:
	 	 Charles W. Jones

	 Title:
	 	 Senior Vice President

  

 62 
  
 Credit Agreement 

 SCHEDULE I 
  
 Banks, Commitments and Lending Offices 
  

								
	 Bank

	  	Commitment

	  	 Domestic Lending Office

	  	 Eurodollar Lending Office

	 Citibank, N.A.
	  	$	25,000,000	  	 Citibank, N.A.
 Two Penns Way
 New Castle, DE 19720 Attn:Christina Quezon
	  	 Citibank, N.A.
 Two Penns Way
 New Castle, DE 19720 Attn:Christina Quezon

				
	 Wachovia Bank, National Association
	  	 	25,000,000	  	Wachovia Bank, National Association 1339 Chestnut Street Philadelphia, PA 19107	  	Wachovia Bank, National Association 1339 Chestnut Street Philadelphia, PA 19107
				
	 Cooperatieve Centrale Raiffeisen-Boerenleebank B.A., “Rabobank International”, New York Branch
	  	 	20,000,000	  	 Cooperatieve Centrale Raiffeisen-Boerenleebank B.A., “Rabobank International”, New York Branch
 245 Park Ave.
 New York, NY 10167
	  	 Cooperatieve Centrale Raiffeisen-Boerenleebank B.A., “Rabobank International”, New York Branch
 245 Park Ave.
 New York, NY 10167

				
	 SunTrust Bank
	  	 	20,000,000	  	 SunTrust Bank
 303 Peachtree Street, 3rd
Floor
 Atlanta, GA 30308
	  	 SunTrust Bank
 303 Peachtree Street,
 3rd Floor
 Atlanta, GA 30308

				
	 Branch Banking and Trust Company
	  	 	10,000,000	  	 Branch Banking
 and Trust Company
 200 S. College Street
 2nd Floor
 Charlotte, NC 28202
	  	 Branch Banking
 and Trust Company
 200 S. College Street
 2nd Floor
 Charlotte, NC 28202

	 	  	
	
	  	 	  	 
				
	 Total
	  	$	100,000,000	  	 	  	 

  
  

 Schedule I

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