Document:

exv10w1

 

EXHIBIT 10.1

AGREEMENT

          This Agreement is being entered into as of October 25, 2006 (this “Agreement”), by and among
National Energy Group, Inc. (the “Company”), NEG Oil & Gas LLC (“NEG Oil & Gas”), NEG, Inc.
(“IPOCO”) and American Real Estate Holdings Limited Partnership (“AREH”). All capitalized terms
used but not defined herein shall have the meanings given such terms in the Agreement and Plan of
Merger dated as of December 7, 2005 (the “Merger Agreement”), by and among the Company, NEG Oil &
Gas, IPOCO and AREH.

          WHEREAS, this Agreement has been duly considered and approved by the Special Committee,
following its consideration of all relevant facts, circumstances and alternatives and its
consultation with its financial and legal advisors, and such committee has recommended that the
Company Board adopt and approve this Agreement.

          WHEREAS, the Company Board, based on the recommendation of the Special Committee, has approved
and adopted this Agreement and the transactions contemplated hereby.

          WHEREAS, it is anticipated that, assuming the purchase of the membership interests
contemplated in Section 3 occurs, the Company will distribute to its common stockholders (through a
dividend or tender offer) approximately $37 million.

          NOW, THEREFORE, in consideration of the foregoing premises and the representations,
warranties, covenants and agreements herein contained, and intending to be legally bound hereby,
the Company, NEG Oil & Gas, IPO Co. and AREH hereby agree as follows:

          1. Each of the undersigned acknowledges and agrees that no action by any party in furtherance
of the transactions contemplated by that certain Exclusivity Agreement and Letter of Intent dated
September 7, 2006 (the “Letter”), by and among AREH, AREP and Riata Energy, Inc. (including,
without limitation, the NEG Holding Purchase and the consummation of the Transaction or the
Restructuring (as such capitalized terms are defined in the Letter)), shall in any event be or be
deemed to be a breach of the Merger Agreement or any representations, warranties, covenants or
other provisions thereof (including, without limitation, Section 4.2 thereof).

          2.
Each of the undersigned (including the Company, which, as
contemplated in Section 6.1(a) of the Merger Agreement, is acting
hereunder at the direction of the Special Committee) agrees that the Merger Agreement shall terminate pursuant to
Section 6.1(a) thereof, automatically, without any further action required, upon the transfer of
all of the Company’s membership interest in NEG Holding LLC (“NEG Holding”) as provided in Section
3 below.

          3. In recognition of the fact that, as contemplated in the Letter, NEG Oil & Gas or its
Affiliate intends to purchase or to cause NEG Holding to purchase (such purchaser, the “Interest
Buyer”) all of the Company’s membership interest in NEG Holding pursuant to Section 5.4 of the NEG
Holding Operating Agreement in connection with the closing, if any,
of AREP’s transaction with Riata
Energy, Inc. contemplated in the Letter:

 

 

     (A) the Company hereby represents, warrants, acknowledges and agrees that:

   (i) the Company owns its membership interest in NEG Holding and
all rights under the NEG Holding Operating Agreement, all as set
forth in the NEG Holding Operating Agreement, free and clear of all
liens, claims and encumbrances (other than liens in favor of NEG Oil
& Gas in connection with the NEG Operating LLC credit facility (the
“AREP Liens”));

   (ii) effective upon delivery of notice (the “Exercise Notice”)
by NEG Oil & Gas to the Company (which will be effective upon receipt
of a facsimile copy thereof by the Company) stating that the purchase
rights under Section 5.4 of the NEG Holding Operating Agreement are
being exercised by the Interest Buyer and the payment of the sum
specified in Section 4(B) below: (x) all right, title and interest
of the Company in NEG Holding shall automatically be and be deemed to
be, transferred, assigned conveyed and sold to the Interest Buyer and
the Company shall cease to be a member of NEG Holding or have any
rights, powers or interests therein or under the NEG Holding
Operating Agreement and (y) the Company will cease to have (and
releases and shall be deemed to have released): (I) any right to
receive any payment or distribution from NEG Holding or its
subsidiaries or (II) any other right or claim with respect to NEG
Holding or its subsidiaries, in the case of each of (I) and (II)
associated with, arising out of or relating to its membership
interests in NEG Holding, other than the right to receive the payment
contemplated in Section 4(B) below.

     (B) NEG Oil & Gas agrees that upon delivery of the Exercise Notice: (i) the
Interest Buyer will cause to be delivered to the Company the sum of
$261,124,876* (the “Payment”), which the parties agree is the
amount owing to the Company under Section 5.4 of the NEG Holding Operating
Agreement; and (ii) the AREP Liens will be released and terminated. Upon receipt of
such payment the Company will pay in full the amount of principal and outstanding
interest owing under the Company’s 10.75% senior notes due 2006 (the “Bonds”), the
principal amount of which is approximately $148.6 million. As a result, after
payment of the Bonds the Company will retain approximately $112,487,876 from the
Payment.

 

			
	*	 	The above amount assumes that the closing occurs on
November 1, 2006. If it occurs on a different date then the price will be
adjusted to take into account the appropriate accrual of interest on the Bonds
(as defined above) and the appropriate distribution to NEG Oil & Gas under
Article VI of the NEG Holding Operating Agreement.

 

 

          5. At the time the Payment is delivered, automatically and without any further action
necessary: (i) the management agreements between the Company and each of National Onshore LP,
National Offshore LP and NEG Operating LLC will be terminated; and (ii) any assets or property of
NEG Oil & Gas and its subsidiaries owned by them but in the possession of the Company (including,
without limitation, information technology, software and data relevant to the oil and gas
operations of NEG Oil & Gas or its subsidiaries) will be transferred and delivered to NEG Oil & Gas
or its subsidiaries, as designated by NEG Oil & Gas.

          6. The provisions of this Agreement constitute an agreement separate from the Merger Agreement
and shall survive any termination of the Merger Agreement.

          7. This Agreement may be executed through the use of separate signature pages or in any number
of counterparts and all such counterparts shall be deemed one and the same instrument.

          8. This Agreement shall be deemed to be made in and in all respects shall be interpreted,
construed and governed by and in accordance with the law of the State of Delaware without regard to
the conflict of law principles thereof.

[The balance of this page has been left blank intentionally.]

 

 

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the date first
written above.

	 	 	 	 	 	 	 
	 	 	NATIONAL ENERGY GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Bob G. Alexander	 	 
	 

	 	 	 	 

Name: Bob G. Alexander
	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	NEG OIL & GAS LLC	 	 
	 

	 	By:
	 	AREP O & G Holding LLC, its sole member	 	 
	 

	 	By:
	 	AREP Oil & Gas Holding LLC, its sole member	 	 
	 

	 	By:
	 	American Real Estate Holdings Limited Partnership, its sole member	 	 
	 

	 	By:
	 	American Property Investors, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Meister	 	 
	 

	 	 	 	 

Name: Keith Meister
	 	 
	 

	 	 	 	Title: Principal Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	NEG, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Meister	 	 
	 

	 	 	 	 

Name: Keith Meister
	 	 
	 

	 	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP	 	 
	 

	 	By:
	 	American Property Investors, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Meister	 	 
	 

	 	 	 	 

	 	 
	 	 	Name: Keith Meister	 	 
	 	 	Title: Principal Executive Officer	 	 

[Signature page to Agreement among National Energy Group, Inc., NEG Oil & Gas LLC,

NEG, Inc. and American Real Estate Holdings Limited Partnership]<PAGE>

                                                                    Exhibit 10.1

BANCO MERCANTIL, C.A. BANCO UNIVERSAL, domiciled in the city of the Caracas,
originally registered with the Commercial Registry kept by the former Commercial
Court of the Federal District on December 3, 1925, under No. 123, which current
Articles of Incorporation were amended and merged into one single text are
evidenced by the entry made in the First Commercial Registry of the Judicial
Circuit of the Capital District and State of Miranda on February 2, 2006, under
No. 45, Volume 11-Pro, Sole Registry of Fiscal Information (R.I.F.)
            , hereinafter THE BANK, represented in this by its ATTORNEY-IN-FACT,
LUIS MARCEL UROSA ZAGER, Venezuelan, attorney, single, of legal age, domiciled
in the city of Caracas, bearer of Identity Card No.             , hIs capacity
being evidenced by a power of attorney registered with the Subaltern Office of
the First Public Registry of Baruta Municipality and State of Miranda, on
February 19, 1999, under No. 18, Volume 2, Third, sufficiently authorized to
execute this document, as party of the first part; and as party of the second
part, HARVEST VINCCLER, C.A. limited partnership domiciled in the city of
Caracas, originally registered with the Commercial Registry of the Judicial
Circuit of the Federal District and State of Miranda, on June 28, 1993, under
No. 13, Volume 146-A Second, which transformation from commercial society into
limited partnership and total amendment of the articles of association, are
evidenced by the entry made in the the Second Commercial Registry of the Capital
District and State of Miranda Judicial Circuit, on September 7, 2006, under No.
40, Volume 186 Second, Sole Registry of Fiscal Information (R.I.F.) No.
            , hereinafter THE BORROWER, represented herein by its GENERAL
MANAGER, MAURICIO DI GIROLAMO LIZARRAGA, Venezuelan, of legal age, married,
domiciled in the city of Caracas and bearer of the Identity Card No.
            , sufficiently authorized to execute this document by ARTICLE
ELEVENTH of the Corporate Bylaws of their principal, have agreed to enter into
this agreement of INTEREST BEARING LOAN, which will be governed by the following
clauses: FIRST: GRANT OF INTEREST BEARING LOAN AND ITS USE: THE BANK grants
hereby the BORROWER an INTEREST BEARING LOAN of ONE HUNDRED FIVE BILLION
BOLIVARS (BS. 105.000.000.000,00), which THE BORROWER declares to have received
in cash fully. THE BORROWER will use the amount of money received as an INTEREST
BEARING LOAN exclusively to carry out operations of legitimate commercial
character; SECOND: FORM AND OPPORTUNITY OF PAYMENT OF THE INTEREST BEARING LOAN:
THE BORROWER is obliged to return to THE BANK the amount of money received as an
INTEREST BEARING LOAN within a term of THREE (3) YEARS as of the

<PAGE>

date of authentication of this document, by ONE (1) ANNUAL to AMORTIZE THE DEBT
CAPITAL, for the amount of TWENTY ONE BILLION BOLIVARS (BS. 21.000.000.000,00),
and must be paid at the expiration of the FIRST (1ST) YEAR as of the last date
of authentication of this document and FOUR (4) SEMESTRAL INSTALMENTS likewise
to amortize the debt capital for the amount of TWENTY ONE BILLION BOLIVARS (BS.
21.000.000.000,00) each of them to be collected consecutively until their total
and definitive cancellation as of the date of the FIRST (1) YEAR of this
contract OF INTEREST BEARING LOAN effect. For all the purposes of this contract
of INTEREST BEARING LOAN, ONE (1) YEAR is understood to be a TERM OF THREE
HUNDRED AND SIXTY (360) continuous DAYS; therefore, ONE (1) YEAR is made up of
THREE HUNDRED SIXTY (360) continuous DAYS; ONE (1) SEMESTER is a term made up of
ONE HUNDRED EIGHTY (180) CONTINUOUS DAYS; AND ONE (1) MONTH is a term made up of
THIRTY (30) CONTINUOUS DAYS. In case the date of payment of any of the
INSTALMENTS due to be paid by the BORROWER TO THE BANK under this contract,
would be payable on a banking not working day in Caracas, Bolivarian Republic of
Venezuela, THE BORROWER AND THE BANK do agree that said date of payment will be
postponed to the following bank working day in Caracas, Bolivarian Republic of
Venezuela; THIRD: CONVENTIONAL AND MORA INTERESTS: The amount of money received
as interest bearing loan will produce conventional interests calculated on the
debit balance under the variable rates regime as follows: 3.1- During the FIST
FIRST YEAR (1) of this contract effect, at a FIXED RATE of TEN POINT ZERO TWO
PERCENT (10.02%) PER ANNUM; and 3.2- During the TWO (2) REMAINING years of this
contract effect, at the rate of interest agreed by THE BANK AND THE BORROWER,
with at least FIVE (5) BANK WORKING DAYS in advance as of the starting day of
each term of ONE HUNDRED EIGHTY (180) continuous DAYS, to which effects, THE
BANK will send THE BORROWER information via fax or e-mail to THE BORROWER
address that will be farther specified, ratifying the rate of interest
previously agreed and THE BORROWER will immediately confirm it using any of the
indicated ways by a communication addressed to the address given by THE BANK
which likewise will be indicated farther, ratifying the interest rate agreed for
the term, and THE BORROWER will immediately confirm using any of the mentioned
communication ways by a communication to the following address given by THE
BANK, such communications will be sufficient proof of the interest rate agreed
for the term in concern. If for any reason or circumstance THE BANK AND THE
BORROWER do not reach conveniently any agreement on the matter previously
referred, for the purposes of this document, the resulting interest rate at the
beginning of the corresponding term will be considered the applicable
conventional interest rate: NINETY FIVE PERCENT (95%) of the AVERAGE PONDERED
ACTIVE RATE (T.A.P.P.) in force for that opportunity. The AVERAGE PONDERED
ACTIVE RATE is understood as the annual nominal average pondered active interest
rate of the SIX (6) main

<PAGE>

universal and commercial banks of the country, with greater volume of deposits,
published in the bulletin of weekly indicators issued by Banco Central de
Venezuela (B.C.V.), or in its absence, the one published on the web page
www.bcv.org.ve: Active and Passive Rates: Six (6) Main Banks. IT IS AGREED THAT
DURING THE FORCE TERM OF THIS CONTRACT, THE BORROWER WILL PAY TO THE BANK THE
CONVENTIONAL INTERESTS CALCULATED IN THE WAY FORESEEN IN NUMBERS 3.1. AND 3.2.
OF THIS CLAUSE, FOR DUE PERIODS OF ONE HUNDRED EIGHTY (180) CONTINUOUS DAYS AS
OF THE AUTHENTICATION OF THIS DOCUMENT. In case the date of payment of any of
the INSTALMENTS due to be paid by the BORROWER TO THE BANK under this contract,
would be payable on a banking not working day in Caracas, Bolivarian Republic of
Venezuela, THE BORROWER AND THE BANK do agree that said date of payment will be
postponed to the following bank working day in Caracas, Bolivarian Republic of
Venezuela, THE PAYMENT OF EACH OF THE INTERESTS PORTIONS, MADE BY THE BORROWER
DURING THE FORCE OF THIS CONTRACT, WILL BE UNEQUIVOCAL AND IRREVOCABLE
ACCEPTANCE BY ITS PART OF THE CONVENTIONAL INTEREST RATE USED BY THE BANK FOR
THE CALCULATION AND DETERMINATION OF THE SAME. IN CASE OF DELAY IN THE PAYMENT
OF ANY OBLIGATIONS REFERRED BY THIS CONTRACT, THE APPLICABLE DELAY DURING ALL
THE TIME IT LASTS, I.E. FROM THE DATE SUCH PAYMENT SHOULD HAVE BEEN DONE UNTIL
THE PAYMENT DAY OF THE TOTAL PAYMENT BY THE BORROWER TO THE BANK, WILL BE THE
ONE RESULTING FROM ADDING TEN POINT ZERO TWO PERCENT (10.02%) PER ANNUM TO THE
CONVENTIONAL INTEREST RATE IN FORCE AT THE DATE DELAY, THE CONVENTIONAL INTEREST
RATE MUTUALLY AGREED OR NINETY FIVE PERCENT (95%) AVERAGE PONDERED ACTIVE RATE
(T.A.P.P) in force at the beginning of term of thirty continuous days, a THREE
PERCENT (3%) PER YEAR; FOURTH: PAYMENT IN ADVANCE: Despite the foreseen in
clauses SECOND AND THIRD of this contract, THE BORROWER can pay in advance the
whole or part of the amount of money received as INTEREST BEARING LOAN and the
conventional interests resulting from the application of the interest rate
mentioned in Clause THIRD of this contract and caused until the date of the
payment in advanced, at any moment of this contract effect, and for any other
amount, without any penalty whatsoever, notifying THE BANK in written with at
least TWO (2) BANK WORKING DAYS in advance in Caracas, Bolivarian Republic of
Venezuela. In that case, it is understood that THE BANK will allocate the amount
paid in advance, first to the interest caused and secondly to the remnant owed
capital. Additionally, in this case, THE BORROWER AND THE BANK agree that the
amount of the INSTALMENTS TO AMORTIZE THE OWED CAPITAL and the

<PAGE>

conventional interests under this contract will be modified in mutual agreement
to reflect the effect of said payment in advance. FIFTH: DEBT AUTHORIZATION OR
CHARGE TO ACCOUNT OR DEPOSIT: THE BORROWER EXPRESSLY AND IRREVOCABLY AUTHORIZES
THE BANK TO DEBIT OR CHARGE ANY ACCOUNT OR DEPOSIT IT MAINTAINS JOINTLY OR
INDISTINCTLY WITH NATURAL OR JURIDICAL PERSONS IN THE BANK, ALL MATURED AMOUNTS
OF MONEY TO BE DEBITED IN RELATION TO THE GRANTING OF THE INTEREST BEARING LOAN
REFERRED IN THIS CONTRACT, WITHOUT IT BEING UNDERSTOOD THAT THESE CHARGES GIVE
RISE TO NOVATION OF SAID OBLIGATIONS. SIXTH: CAUSES FOR ANTICIPATED OBLIGATIONS
DUE: It will be considered due obligations and perfectly demanded payment in
full and immediately of the obligations that have been assumed by THE BORROWER
by virtue of this document in ONE (1) of the following events: 6.1.- The failure
to pay when due any ONE (1) of the INSTALMENTS TO AMORTIZE CAPITAL or any one
(1) of the INTEREST instalments in the opportunities when according to this
document such concepts be demandable. 6.2.- If THE BORROWER, breaching what the
SEVENTH clause of this contract stipulates, assigns or delegates the rights or
obligations assumed under this agreement to any individual or legal entity;
6.3.- If precautionary or executive measures prohibiting the sale or
encumbrance, attachment, seizure or other type of measure are declared on the
assets owned by THE BORROWER and such measures are not stayed within a period of
SIXTY (60) continuous DAYS after the date the decision to adopt these measures
was issued; 6.4.- The nullity or inefficacy for any cause of any of the
guarantees constituted to support the payment of the INTEREST BEARING LOAN
referred in this contract, provided that THE BORROWER or a third party do not
establish an equivalent substitutive guarantee to THE BANK'S satisfaction 6.5.-
If there is a judicial declaration of moratorium, bankruptcy or the judicial
liquidation of THE BORROWER'S assets or if the last one incurs in payments
ceasing; 6.6.- If THE BORROWER fails to deliver historical annual Financial
Statements to THE BANK during the term of this contract of INTEREST BEARING LOAN
within NINETY (90) continuous DAYS of the end of the fiscal year, duly certified
by a firm of independent auditors approved by THE BANK, or its monthly Balance
Sheets duly signed by an independent public accountant within THIRTY (30)
continuous DAYS after they have been requested; 6.7.- If THE BORROWER had
provided erroneous or false information that has been used as the base to grant
this INTEREST BEARING LOAN, 5.8.- If it is determined that THE BORRIWER has used
the moneys of THE INTEREST BEARING LOAN for ends or purposes different to the
one stated in this contract. 6.9.- If substantial changes are made to the
current shareholding structure of THE BORROWER without the previous written
consent of THE BANK. To these effects, it will be understood as substantial
changes in the shareholding structure, any change implying a variation higher
than TEN (10%) PERCENT of the same; 6.10.- If THE BORROWER fails to provide THE
BANK within the EIGHT (8) BANK WORKING

<PAGE>

DAYS after its written request, any information that has been at the same time
requested to THE BANK by any authority controller our supervisor of the banks
and financial institutions activities in general and that is directly related to
THE BORROWER; 6.11.- If THE BORROWER fails to immediately notify to THE BANK the
existence of any event that may adversely affect its current economic and
financial situation, unless this event is a consequence or is related to the
conversion of the oil project(s) being currently developed by THE BORROWER of
the operative service agreements to mixed company; 6.12.- If THE BORROWER
performs activities of different nature to its social object at the time of
authentication of this contract, unless such change is consequence or is related
to the conversion of the oil project(s) being currently developed by THE
BORROWER of the operative service agreements to mixed company ; 6.13.- The
revoke or renewal failure, depending on the case, of any government
authorization or of any other kind or nature which hinders THE BORROWER'S
fulfilment of its commercial activities; 6.14.- In case of the anticipated
expiration of any other obligations assumed by THE BORROWER with THE BANK or
with any other of its branches, affiliated, subsidiaries or related companies;
and 6.15.- - Default of any other relevant obligations assumed by THE BORROWER
herein. THE FAILURE IN THE FULFILMENT OF THE BANK'S RIGHTS IN AGREEMENT WITH
THIS CLAUSE SHALL BE IN NO CASE UNDERSTOOD AS WAIVER TO THEM, TO THE ACTIONS
THAT MAY BE DERIVED FROM THEM OR AS AN ACCEPTANCE OR TOLERANCE OF THE
CIRCUMSNTANCES EMPOWERING IT TO EXERCISE THEM; SEVENTH: RIGHTS OR OBLIGATIONS
CONVEYANCE: This contract is considered to be celebrated "intuito personae" in
relation to THE BORROWER; consequently, this last one under any circumstances
will not be able to convey or delegate the corresponding rights and obligations
in agreement herewith; EIGHTH: NOTIFICATIONS, COMMUNICATIONS OR CITATIONS
ADDRESS: All notifications, communications or citations that THE BANK and THE
BORROWER should address regarding this agreement of INTEREST BEARING LOAN, will
be done in written, via telefax or e-mail, exclusively sent to the following
addresses: THE BANK: Final Avenida Andres Bello, cruce con Avenida El Lago,
Edificio Mercantil Nro. 1, San Bernardino, Municipio Libertador, Distrito
Capital, Caracas, Unidad Gerencia Petroleo y Gas I, Atencion: Sra. Liliana
Bonora Buzzoni, Telefonos Nros. 0212-5030439 /0440, Telefax Nro. 0212-5031131,
E-mail: lbonora@bancomercantil.com; and THE BORROWER: Centro Profesional
Eurobuilding, Piso 9, Ofic. 9-D, Calle La Guairita, Chuao. Municipio Baruta.
Estado Miranda, Attention: Mr. Mauricio Di Girolamo, Telephone (s) Nro. (s)

<PAGE>

58212-212-70-00 Telefax Nro. 58-212-993-36-38 and E-mail:
Mauricio.digirolamo@harvestvinccler.com., with copy to 1177 Enclave Parkway,
Suite 300, Houston, Texas 77077, United States of America. Attention to: Mr.
Steve Tholen, Telephone: 1-281-899-57-14, Telefax: 1-281-899-57-03. E-mail:
stholen@harvestnr.com. THE BORROWER EXPRESSLY RELEASES THE BANK FROM ANY
LIABILITY, DIRECTLY OR INDIRECTLY, DERIVED FROM ANY NOTICE OR COMMUNICATION OR
CITATION SENT TO AN ADDRESS THAT IS NOT THE CURRENT ADDRESS, WHEN THIS IS DUE TO
FAILURE TO NOTIFY IN A TIMELY MANNER WHAT IS REFERRED IN THIS CLAUSE; NINTH:
APPLICABLE LEGAL REGIME: In case of matters that have not been foreseen in this
contract, the resolutions of the Commerce Code in relation to Loan which are
foreseen in the XIV Title of said legal instrument; the norms described in the
XVI Title of the Third Book of the Civil Code regarding Mutual or Interest
Bearing Loan, as well as the resolutions of the Decree with Rank of Law of
Reform of the Banks and other institutions General Law, whenever they will be
applicable.; TENTH: EXPENDITURES: ALL EXPENDITURES, TAXES, COMMISSIONS, TARIFFS,
CHARGES, HONORARIES AND OTHER PRESENT OR FUTURE CONCEPTS ORIGINATED OR DERIVED
OR PRODUCED AS A CONSEQUENCE OF THE CELEBRATION AND (OR) EXECUTION OF THIS
CONTRACT, INCLUDING PROFESSIONAL HONORARIES OF ATTORNEYS CAUSED BY THE CLAIMS
AND EXECUTION OF THE OBLIGATIONS HEREIN REFERRED BEFORE THE COMPETENT
JURISDICTIONAL ORGANISMS, WILL BE ON THE BORROWER'S ACCOUNT; ELEVENTH: OTHER
DECLARATIONS: THE BORROWER, ACCORDING TO WHAT IS INSTRUCTED IN ARTICLE 13 OF THE
NORMS RELATED TO THE PROTECTION OF THE FINANCIAL SERVICES USERS DICTATED BY THE
BANKS SUPERINTENDENCY AND OTHER FINANCIAL INSTITUTIONS BY RESOLUTION NO. 147-02
DATED AUGUST 28, 2002, PUBLISHED IN OFFICIAL GAZETTE OF THE BOLIVARIAN REPUBLIC
OF VENEZUELA NO. 37.517 DATED AUGUST 30, 2002, EXPRESSLY DECLARED THAT BEFORE
THE GRANT OF THIS CONTRACT, THE BANK GAVE THEM ONE (1) EXEMPLARY OF THE SAME
DRIFT AND THAT CONSEQUENTLY ENOUGH TIME WAS DISPOSED TO EXAMINE ITS CONTENT,
OBTAIN THE PROFESSIONAL ASSISTANCE OF A RELIABLE ATTORNEY AND IN GENERAL,
UNDERSTAND THE PRECISE SCOPE, IMPORTANCE AND JURIDICAL CONSEQUENCES OF ALL AND
EACH OF ITS CLAUSES, WHICH ARE ACCEPTED WITHOUT ANY OBJECTION SINCE THEY ARE
EXACT, INTEGRAL AND EXACT REFLECTION OF THEIR WILLS; and TWELVTH: SELECTION OF
SPECIAL DOMICILE: For all the effects and consequences derived from this
contract, THE BANK, THE BORROWER, choose as special domicile the city of
Caracas, to the jurisdiction of which Tribunals expressly they declare to be
subject to without detriment of the right that assists THE BANK in its character
of creditor to go to any other competent Tribunal according to the Law.

<PAGE>

                        BOLIVARIAN REPUBLIC OF VENEZUELA
         BETTY C. MARTINEZ BLANCO ACTING NOTARY. FOURTH PUBLIC NOTARY OF
                  LIBERTADOR MUNICIPALITY AND FEDERAL DISTRICT

Caracas on the twenty eighth (28) day of the month of September of the year two
thousand six (2006). 196 years of the Independence and 147 years of the
Federation. The previous document written by the Attorney ROBERTO LARES ALFONZO,
registered in Inpreabogado under No. 31803, was presented for its Authentication
and Return, according form No. 106581, dated 09-27-2006. Being present the
grantors, LUIS MARCEL UROSA ZAGER AND MAURICIO DI GIROLAMO LIZARRAGA, both
Venezuelans, of legal age, both married, bearers of the Identification Cards
Nos.:              AND             , domiciled in Caracas. The original and its
photocopies were read, compared and signed in presence of the Notary Public, and
the grantors expressed: "ITS CONTENT IS TRUE AND OUR SIGNATURES DO APPEAR AT THE
BOTTOM OF THE DOCUMENT". The Notary, therefore, upon request of the interested
party, PUBLICALLY CERTIFIES this document containing the Act or Juridical
Negotiation granted herein, and the copies signed in original which will form
the Principal and Duplicated Volumes, inserted under No. 09, Volume 80, of the
Authentication Books held by this Notary, witnessed by NELSON ROLDAN Y FRANKLIN
ROJAS, Venezuelans, both of legal age, bearers of the identification cards Nos.
             and              and of this domicile. The undersigning Notary does
hereby certify that Ordinal No. 2 of Article 78 of Decree No. 1554 with rank of
Law, of Public Registry and Notaries, has been complied with. Likewise, it is
certified that 1) The Commercial Registry of BANCO MERCANTIL, C.A. (BANCO
UNIVERSAL) registered before the Commercial Registry held by the Commercial
Court of the Federal District on 04/03/1925, under No. 123. 2) Last modification
registered before the First Commercial Registry of the Capital District and
State of Monagas Judicial Circuit on 02/02/2006, under No. 45, Volume 11-APro.
3) Power of Attorney recorded before the Subaltern Office of the First Circuit
of the Baruta Municipality, State of Miranda Registry Office on 02/19/1999,
under No. 18, Volume 02, Third Protocol. 4) HARVEST VINCCLER, S.C.A. Registry
document recorded before the same Commercial Registry on 09/07/2006, under No.
40, Volume 186-A-second, were presented. For this Act the Notary moved and was
set up in Edificio

<PAGE>

Banco Mercantil, 32nd Floor, Av. Andres Bello, Caracas on request of the
interested party, being 2:00 p.m. The present document has five (05) useful
folios.-

THE NOTARY PUBLIC,

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