Document:

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                                                                   Exhibit 10.36

                                  $200,000,000

                          JAFRA COSMETICS INTERNATIONAL

                   10 3/4% SENIOR SUBORDINATED NOTES DUE 2011

                               PURCHASE AGREEMENT

                                                                     May 2, 2003

Credit Suisse First Boston LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
     c/o Credit Suisse First Boston LLC
         Eleven Madison Avenue
         New York, N.Y. 10010-3629

Dear Sirs:

      1. Introductory. Jafra Cosmetics International, Inc. ("JAFRA US"), a
company incorporated under the laws of Delaware, and Distribuidora Comercial
Jafra, S.A. de C.V. ("JAFRA MEXICO"), a company established under the laws of
Mexico (each, an "ISSUER", and together, the "ISSUERS"), propose, subject to the
terms and conditions stated herein, to severally issue and sell to the several
initial purchasers named in Schedule A hereto (the "PURCHASERS")
U.S.$200,000,000 principal amount of their 10 3/4% Senior Subordinated Notes Due
2011 (the "OFFERED SECURITIES") to be issued under an Indenture to be dated as
of May 20, 2003 (together with the first supplement thereto, the "INDENTURE"),
among Jafra US, Jafra Mexico, the initial Guarantors (as hereafter defined) and
U.S. Bank National Association, as Trustee (the "TRUSTEE"). CDRJ Investments
(Lux) S.A., a Luxemburg Company ("CDRJ"), the Issuers and the Parent (as defined
below) are herein collectively referred to as the "COMPANY". On the Closing Date
(as defined below) each Issuer will be a direct or indirect, wholly-owned
subsidiary of Parent.

      In connection with the issuance and sale of the Offered Securities, on the
Closing Date, (i) Jafra Mexico will acquire low-vote preferred stock of Jafra
Cosmetics International, S.A. de C.V. ("JCISA") from JCISA and the shareholders
of JCISA, (ii) Jafra Mexico will acquire the assets and liabilities comprising
the Mexican distribution business of the Company from Distribuidora Venus S.A.
de C.V., a wholly-owned subsidiary of JCISA, and (iii) Jafra Worldwide Holdings
(Lux), S.ar.L. (the "PARENT") will acquire all the assets and liabilities of
CDRJ North Atlantic (Lux) S.ar.L., including, directly or indirectly, all of the
capital stock of each of Jafra US, Jafra Mexico, JCISA and each of the other
Guarantors (other than the Parent). The foregoing transactions described in (i)
through (iii) are hereinafter referred to as the "REORGANIZATION".
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      The Parent will fully and unconditionally guarantee the Offered Securities
on a senior subordinated basis on the terms provided in the Indenture (the
"PARENT GUARANTEE"). Jafra US's obligations with respect to the Offered
Securities will also be guaranteed by Jafra Mexico (the "JAFRA MEXICO CROSS
GUARANTEE") and by each subsequently acquired or organized U.S. subsidiary of
Jafra US, subject to certain exceptions set forth in the Indenture. Jafra
Mexico's obligations with respect to the Offered Securities will also be
guaranteed by Jafra US (the "U.S. ISSUER CROSS GUARANTEE"), and by JCISA and
each existing and subsequently acquired or organized subsidiary of Jafra Mexico
and JCISA (together with the U.S. subsidiary guarantees, the "SUBSIDIARY
GUARANTEES"). The Parent Guarantee, the Jafra Mexico Cross Guarantee, the U.S.
Issuer Cross Guarantee and the Subsidiary Guarantees are herein referred to
collectively as the "GUARANTEES, and the guarantors on such Guarantees, the
"GUARANTORS".

      The Offered Securities will be offered and sold to the Purchasers without
being registered under the Securities Act of 1933 (the "SECURITIES ACT"), in
reliance upon an exemption therefrom. Holders of the Offered Securities
(including the Purchasers and their direct and indirect transferees) will be
entitled to the benefits of a Registration Rights Agreement (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Issuers and the Guarantors will agree
to use reasonable best efforts to file with the Securities and Exchange
Commission (the "COMMISSION") (i) a registration statement under the Securities
Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") registering an issue of senior
subordinated notes of each of Jafra US and Jafra Mexico (the "EXCHANGE
SECURITIES"), which will be identical in all material respects to the Offered
Securities (except that the Exchange Securities will not contain terms with
respect to transfer restrictions or with respect to additional interest) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT").

      Each Issuer and the Parent hereby agrees with the several Purchasers as
follows:

      2. Representations and Warranties of the Company. Each Issuer, CDRJ and
the Parent, jointly and severally, represents and warrants to, and agrees with,
the several Purchasers that:

            (a) A preliminary offering circular and an offering circular
      relating to the Offered Securities to be offered by the Purchasers have
      been prepared by the Company. Such preliminary offering circular (the
      "PRELIMINARY OFFERING CIRCULAR") and offering circular, as supplemented as
      of the date of this Agreement, are hereinafter collectively referred to as
      the "OFFERING CIRCULAR". On the date of this Agreement and on the Closing
      Date, the Offering Circular does not and will not include any untrue
      statement of a material fact or omit to state any material fact required
      to be stated therein or necessary in order to make the statements therein,
      in the light of the circumstances under which they were

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      made, not misleading. The preceding sentence does not apply to statements
      in or omissions from the Offering Circular based upon written information
      furnished to the Issuers by any Purchaser through Credit Suisse First
      Boston LLC ("CSFB") specifically for use therein, it being understood and
      agreed that the only such information is that described as such in Section
      7(b) hereof. The Offering Circular, as of its date and as of the Closing
      Date, contains, or will contain, all of the information that, if requested
      by a prospective purchaser of the Offered Securities, would be required to
      be provided to such prospective purchaser pursuant to Rule 144A(d)(4)
      under the Securities Act.

            (b) The Offered Securities have been duly authorized by each of the
      Issuers. When the Offered Securities are delivered and paid for pursuant
      to this Agreement and the Indenture on the Closing Date, the Offered
      Securities will have been duly executed, authenticated, issued and
      delivered and will conform to the description thereof contained in the
      Offering Circular and will constitute valid and legally binding
      obligations of the Issuers and the Guarantors, entitled to the benefits
      provided in the Indenture and enforceable in accordance with their terms,
      subject to (i) bankruptcy, insolvency, reorganization, fraudulent
      conveyance, moratorium or other similar laws now or hereafter in effect
      relating to creditors' rights generally and (ii) general principles of
      equity (regardless of whether enforcement is considered in a proceeding in
      equity or at law) and the discretion of the court before which any
      proceeding therefor may be brought.

            (c) Jafra US has been duly incorporated and is an existing
      corporation in good standing under the laws of the State of Delaware;
      Jafra Mexico has been duly incorporated and is an existing corporation
      under the laws of Mexico; and each of CDRJ and the Parent has been duly
      incorporated and is an existing corporation under the laws of Luxembourg;
      each with corporate power and authority to own its properties and conduct
      its business as described in the Offering Circular; and each of Jafra US
      and Jafra Mexico is duly qualified to do business as a foreign corporation
      in good standing in all other jurisdictions in which its ownership or
      lease of property or the conduct of its business requires such
      qualification, except in such jurisdictions in which the failure to so
      qualify would not reasonably be expected to have a material adverse effect
      on the business, properties, results of operations or condition (financial
      and other) of CDRJ and, following the Reorganization, Parent and, its
      subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").

            (d) Each subsidiary of CDRJ has been duly incorporated or organized
      and is an existing corporation or other entity under the laws of the
      jurisdiction of its incorporation, with corporate power and authority to
      own its properties and conduct its business as described in the Offering
      Circular (except as would not reasonably be expected, individually or in
      the aggregate, to have a Material Adverse Effect), and each subsidiary of
      CDRJ is duly qualified to do business as a

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      foreign corporation in all other jurisdictions in which its ownership or
      lease of property or the conduct of its business requires such
      qualification; all of the issued and outstanding capital stock of each
      subsidiary of CDRJ has been duly authorized and validly issued and is
      fully paid and nonassessable; and the capital stock of each subsidiary
      owned by CDRJ is, directly or through subsidiaries, owned free from liens,
      encumbrances and defects, except for such liens, encumbrances or defects
      as (i) would not reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect or (ii) may arise pursuant to the
      Senior Secured Credit Facilities (as defined below) in connection with the
      transactions contemplated thereunder.

            (e) The Indenture has been duly authorized by each Issuer; and when
      the Offered Securities are delivered and paid for pursuant to this
      Agreement on the Closing Date, the Indenture will have been duly executed
      and delivered by the Issuers and will conform to the description thereof
      contained in the Offering Circular in all material respects and the
      Indenture will constitute the valid and legally binding obligation of the
      Issuers, enforceable in accordance with its terms, subject to bankruptcy,
      insolvency, fraudulent transfer, reorganization, moratorium and similar
      laws of general applicability relating to or affecting creditors' rights
      and to general equity principles (regardless of whether enforcement is
      considered in a proceeding in equity or at law).

            (f) On the Closing Date, the Guarantee of the Offered Securities by
      each Guarantor will have been duly authorized by such Guarantor and will
      conform to the description thereof contained in the Offering Circular in
      all material respects. When the Offered Securities have been issued,
      executed and authenticated in accordance with the Indenture and delivered
      to and paid for by the Purchasers in accordance with the terms of this
      Agreement, the Guarantee of each Guarantor will constitute a valid and
      legally binding obligation of such Guarantor, enforceable in accordance
      with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability
      relating to or affecting creditors' rights generally and to general equity
      principles (regardless of whether enforcement is considered in a
      proceeding in equity or at law).

            (g) This Agreement has been duly authorized, executed and delivered
      by CDRJ, each Issuer and the Parent.

            (h) On the Closing Date, the Registration Rights Agreement will have
      been duly authorized, executed and delivered by each Issuer and Guarantor,
      and upon such execution and delivery, will constitute valid and legally
      binding obligations of each Issuer and Guarantor, enforceable in
      accordance with its terms, subject to bankruptcy, insolvency, fraudulent
      transfer, reorganization, moratorium and similar laws of general
      applicability relating to or affecting

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      creditors' rights and to general equity principles (regardless of whether
      enforcement is considered in a proceeding in equity or at law). On the
      Closing Date, the Registration Rights Agreement will conform as to legal
      matters to the description thereof in the Offering Circular in all
      material respects.

            (i) Except as described in the Offering Circular, there are no
      contracts, agreements or understandings between CDRJ or any Issuer or
      Guarantor and any person that would give rise to a valid claim against any
      Issuer or any Purchaser for any brokerage commission, finder's fee or
      other like payment in connection with the transactions contemplated in
      this Agreement, and any such payment by any Issuer or Guarantor will not
      have a Material Adverse Effect.

            (j) Except for (i) such consents, approvals, authorizations, orders
      or filings as may be required to be obtained or made under the Securities
      Act, the Exchange Act (as defined below), the Trust Indenture Act of 1939,
      as amended (the "TRUST INDENTURE ACT") and applicable state securities
      laws as provided in the Registration Rights Agreement, (ii) such consents,
      approvals, authorizations, orders or filings as have been made or
      obtained, or (iii) as disclosed in the Offering Circular, no consent,
      approval, authorization, or order of, or filing with, any governmental
      agency or body or any court is required to be made or obtained by any of
      the Issuers or the Guarantors for the consummation of the transactions
      contemplated by this Agreement, the Registration Rights Agreement and the
      Offering Circular in connection with the issuance and sale of the Offered
      Securities by the Issuers.

            (k) The execution, delivery and performance of the Indenture, the
      Guarantees, this Agreement and the Registration Rights Agreement and the
      issuance and sale of the Offered Securities and compliance with the terms
      and provisions thereof will not result in a breach or violation of any of
      the terms and provisions of, or constitute a default under, any statute
      binding upon or any rule, regulation or order of any governmental agency
      or body or any court, domestic or foreign, having jurisdiction over CDRJ,
      the Parent or any Issuer or any subsidiary of any of the foregoing or any
      of their properties, or any agreement or instrument to which any such
      Person is a party or by which any such Person is bound or to which any of
      the properties of any such Person is subject, or the charter, bylaws or
      equivalent constituent documents of any such Person, except for such
      breaches, violations and defaults (other than with respect to the charter
      of any Issuer or its subsidiaries) as would not, individually or in the
      aggregate, reasonably be expected to have a Material Adverse Effect, and
      on the Closing Date each Issuer and Guarantor will have full corporate
      power and authority to authorize and to issue and sell (in the case of the
      Issuers) or to guarantee (in the case of the Guarantors) the Offered
      Securities as contemplated by this Agreement.

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            (l) Except as disclosed in the Offering Circular, on the Closing
      Date after giving effect to the transactions contemplated by the Offering
      Circular, including the Reorganization, Parent and its subsidiaries,
      including the Issuers, will have good and marketable title to all real
      properties and good and valid title to all other properties and assets
      owned by them or necessary to conduct the businesses operated by them as
      described in the Offering Circular, in each case free from liens,
      encumbrances and defects not permitted by the Indenture, except for such
      failures to have such title and such liens, encumbrances and defects as
      (i) would not reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect or (ii) may arise pursuant to the
      Senior Secured Credit Facilities; and except as disclosed in the Offering
      Circular, Parent and its subsidiaries, including the Issuers, will hold
      any leased real or personal property under valid and enforceable leases,
      except for such failures to be so valid or enforceable as would not
      reasonably be expected to have, individually or in the aggregate, a
      Material Adverse Effect.

            (m) On the Closing Date after giving effect to the transactions
      contemplated by the Offering Circular, including the Reorganization,
      Parent and its subsidiaries, including the Issuers, will possess adequate
      certificates, authorizations or permits issued by appropriate governmental
      agencies or bodies necessary to conduct the business now operated by them
      or to which they have succeeded, pursuant to the Reorganization except as
      would not reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect, and have not received any notice of
      proceedings relating to the revocation or modification of any such
      certificate, authority or permit that would be reasonably expected to
      have, individually or in the aggregate, a Material Adverse Effect.

            (n) No labor dispute with the employees of the Parent, the Issuers
      or any of their respective subsidiaries exists or, to the knowledge of
      Parent or the Issuers, is imminent, that would reasonably be expected to
      have, individually or in the aggregate, a Material Adverse Effect.

            (o) Except as disclosed in the Offering Circular, CDRJ and its
      subsidiaries (and on the Closing Date following the consummation of the
      Reorganization, Parent and its subsidiaries), including Jafra US and Jafra
      Mexico, (i) own, possess or can acquire on reasonable terms, adequate
      trademarks, trade names, know-how, patents, copyrights, technology and
      processes (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to
      conduct the business now operated by them or presently employed by them or
      to which they have succeeded pursuant to the Reorganization, except as
      would not reasonably be expected to have a Material Adverse Effect and
      (ii) have not received any notice of infringement of or conflict with the
      asserted rights of others with respect to any intellectual property, that
      would individually or in the aggregate reasonably be expected to have a
      Material Adverse Effect.

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            (p) Neither CDRJ nor any of its subsidiaries (nor, on the Closing
      Date following consummation of the Reorganization, Parent or any of its
      subsidiaries), including Jafra US and Jafra Mexico, (i) is in violation of
      any statute, or any rule, regulation, decision or order of any
      governmental agency or body or any court, domestic or foreign, relating to
      the use, disposal or release of hazardous or toxic substances or relating
      to the protection or restoration of the environment or human exposure to
      hazardous or toxic substances (collectively, "ENVIRONMENTAL LAWS"), (ii)
      owns or operates any real property contaminated with any substance that is
      subject to any environmental laws, (iii) is liable for any off-site
      disposal or contamination pursuant to any environmental laws, or (iv) is
      subject to any claim relating to any environmental laws, which violation
      (as referred to in (i)), contamination (as referred to in (ii)), liability
      (as referred to in (iii)) or claim (as referred to in (iv)) would
      individually or in the aggregate reasonably be expected to have a Material
      Adverse Effect.

            (q) There are no pending actions, suits or proceedings against or
      affecting CDRJ or any of its subsidiaries, including Jafra US and Jafra
      Mexico, or Parent or any of their respective properties that would
      individually or in the aggregate reasonably be expected to have a Material
      Adverse Effect, or would reasonably be expected to materially and
      adversely affect the ability of any Issuer or Guarantor to perform its
      obligations under the Indenture, the Registration Rights Agreement or
      under this Agreement.

            (r) The historical consolidated financial statements, together with
      the related notes, included in the Offering Circular present fairly in all
      material respects the financial position of each of CDRJ and its
      consolidated subsidiaries, JCISA and its consolidated subsidiaries and
      Jafra US and its consolidated subsidiaries, as of the dates shown and
      their results of operations and cash flows for the periods shown, and such
      financial statements have been prepared in conformity with generally
      accepted accounting principles in the United States applied on a
      consistent basis throughout the periods covered thereby, and the
      assumptions used in preparing the pro forma financial data included in the
      Offering Circular provide a reasonable basis for presenting the estimated
      effects of the transactions or events described therein; and the related
      pro forma adjustments give appropriate effect to those assumptions, and
      the pro forma columns therein reflect the proper application of those
      adjustments to the corresponding historical financial statement amounts.

            (s) Except as disclosed in the Offering Circular, since the date of
      the latest audited financial statements included in the Offering Circular
      there has been no material adverse change in, nor any development or event
      that would reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect, and, except as disclosed in or
      contemplated by the Offering Circular, there has

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      been no dividend or distribution of any kind declared, paid or made by the
      Company on any class of its capital stock.

            (t) None of the Issuers or any Guarantor is an open-end investment
      company, unit investment trust or face-amount certificate company that is
      required to be registered under Section 8 of the United States Investment
      Company Act of 1940 (the "INVESTMENT COMPANY ACT"); and none of CDRJ, the
      Parent, the Issuers or any Guarantor is and, after giving effect to the
      offering and sale of the Offered Securities and the application of the
      proceeds thereof as described in the Offering Circular, will be an
      "investment company" as defined in the Investment Company Act.

            (u) No securities of the Issuers of the same class (within the
      meaning of Rule 144A(d)(3) under the Securities Act) as the Offered
      Securities are listed on any national securities exchange registered under
      Section 6 of the Exchange Act or quoted in a U.S. automated interdealer
      quotation system.

            (v) Assuming the accuracy of the representations, warranties and
      agreements of the initial Purchasers contained in Section 4 hereof, the
      offer and sale of the Offered Securities by the Issuers and the offer of
      the Guarantees by the Guarantors to the several Purchasers in the manner
      contemplated by this Agreement will be exempt from the registration
      requirements of the Securities Act by reason of Section 4(2) thereof and
      Regulation S thereunder ("REGULATION S") and it is not necessary to
      qualify the Indenture in respect of the Offered Securities under the
      United States Trust Indenture Act.

            (w) Neither the Company, nor any of its affiliates, nor any person
      acting on its or their behalf (other than the Purchasers, as to whom the
      Company makes no representation) (i) has, within the six-month period
      prior to the date hereof, offered or sold in the United States or to any
      U.S. person (as such terms are defined in Regulation S) the Offered
      Securities or any security of the same class or series as the Offered
      Securities or (ii) has offered or will offer or sell the Offered
      Securities (A) in the United States by means of any form of general
      solicitation or general advertising within the meaning of Rule 502(c)
      under the Securities Act or (B) with respect to any such securities sold
      in reliance on Rule 903 of Regulation S, by means of any directed selling
      efforts within the meaning of Rule 902(c) of Regulation S. The Issuers,
      their affiliates and any person acting on their behalf (other than the
      Purchasers, as to whom the Company makes no representation) have complied
      and will comply with the offering restrictions requirement of Regulation
      S. CDRJ, the Parent and the Issuers have not entered and will not enter
      into any contractual arrangement with respect to the distribution of the
      Offered Securities except for this Agreement prior to its termination.

            (x) After giving effect to the transactions contemplated by the
      Offering Circular, including the Reorganization, Jafra Mexico will have
      acquired, or

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      obtained the right to use, substantially all the fixed assets of
      Distribuidora Venus S.A. de C.V. used to conduct the Mexican distribution
      business, and from and after such time Jafra Mexico shall conduct such
      Mexican distribution business substantially as such business was conducted
      prior to such time.

            (y) The statistical and market-related data included in the Offering
      Circular are based on or derived from sources that the Company reasonably
      believes to be reliable and accurate; and the Guarantors do not believe
      such sources to be unreliable or inaccurate.

            (z) There is no "substantial U.S. market interest" as defined in
      Rule 902(j) of Regulation S in the Company's debt securities.

            (aa) The Company (i) makes and keeps materially accurate books and
      records and (ii) maintains internal accounting controls that provide
      reasonable assurance that (A) transactions are executed in accordance with
      management's authorization, (B) transactions are recorded as necessary to
      permit preparation of its financial statements and to maintain
      accountability for its assets, (C) access to its assets is permitted only
      in accordance with management's authorization and (D) the reported
      accountability for its assets is compared with existing assets at
      reasonable intervals.

            (bb) The Indenture will on the Closing Date conform in all material
      respects to the requirements of the Trust Indenture Act and the rules and
      regulations of the Commission applicable to an indenture which is
      qualified thereunder.

            (cc) No Issuer, or any Guarantor is in violation of its respective
      charter, by-laws or other organizational documents or in default in any
      material respect in the performance of any obligation, agreement, covenant
      or condition contained in any indenture, loan agreement, mortgage, lease
      or other agreement or instrument, to which any Issuer is a party or by
      which any Issuer or their respective property is bound, except, in each
      case, as would not reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect.

            (dd) Neither CDRJ nor Parent nor any of their respective
      subsidiaries nor any agent thereof acting on their behalf has taken, and
      none of them will take, any action that would cause this Agreement or the
      issuance or sale of the Offered Securities to violate Regulation T,
      Regulation U or Regulation X of the Board of Governors of the Federal
      Reserve System.

            (ee) No "nationally recognized statistical rating organization" as
      such term is defined for purposes of Rule 436(g)(2) under the Securities
      Act (i) has imposed (or has informed CDRJ, JCISA or any Issuer that it is
      considering imposing) any condition (financial or otherwise) on CDRJ,
      JCISA or an Issuer retaining any

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      rating assigned to any debt securities of such Person or (ii) has
      indicated to CDRJ, JCISA or any Issuer that it is considering (a) the
      downgrading, suspension, or withdrawal of, or any review for a possible
      change that does not indicate the direction of the possible change in, any
      rating so assigned or (b) any change in the outlook for any rating on the
      debt securities of such Person.

            (ff) Each of the Issuers and the Guarantors has filed all necessary
      federal, state and foreign income and franchise tax returns, except where
      the failure to so file such returns would not reasonably be expected to
      have, individually or in the aggregate, a Material Adverse Effect, and has
      paid all taxes shown as due thereon, and other than tax deficiencies which
      the Issuers and the Guarantors are contesting in good faith and for which
      adequate reserves have been provided in accordance with generally accepted
      accounting principles, there is no tax deficiency that has been asserted
      against the Issuers, the Guarantors or any of their subsidiaries that
      would reasonably be expected to have, individually or in the aggregate, a
      Material Adverse Effect.

            (gg) On the Closing Date, after giving effect to the offering and
      sale of the Offered Securities and the application of the proceeds thereof
      as described in the Offering Circular, (i) the fair value and present fair
      saleable value of the assets of the Parent and its subsidiaries on a going
      concern basis will exceed the sum of its stated liabilities and identified
      contingent liabilities; and (ii) each of the Parent and its subsidiaries
      will not be (a) left with unreasonably small capital with which to carry
      on its business as it is proposed to be conducted, (b) unable to pay its
      debts (contingent or otherwise) as they mature or (c) otherwise insolvent.
      In computing the amount of such contingent liabilities at any time, it is
      intended that such liabilities will be computed at the amount that, in the
      light of all the facts and circumstances existing at such time, represent
      the amount that can reasonably be expected to become an actual or matured
      liability.

            (hh) The Reorganization shall be consummated on the Closing Date as
      described in the Offering Circular in all material respects.

      3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Issuers agree to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Issuers, at a purchase price of 97.0% of the aggregate principal amount
thereof plus accrued interest from May 20, 2003 to the Closing Date the
respective principal amounts set forth opposite the names of the several
Purchasers in Schedule A hereto.

      The Purchasers acknowledge that Jafra US will be severally obligated with
respect to the payment of $80.0 million of principal of the Offered Securities,
together with interest thereon (the "JAFRA US PORTION"), and that Jafra Mexico
will be severally obligated with respect to the payment of $120.0 million of
principal of the Offered

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Securities, together with interest thereon (the "JAFRA MEXICO PORTION"). The
Purchasers agree to purchase the Offered Securities from the Issuers on a
several basis as between the Issuers, in the relative proportions of the Jafra
US Portion and the Jafra Mexico Portion, respectively, and agree that the net
proceeds of the sale of the Offered Securities and the net purchase price will
be paid to each of the Issuers in that ratio.

      The Issuers will deliver against payment of the purchase price the Offered
Securities to be offered and sold by the Purchasers in reliance on Regulation S
(the "REGULATION S SECURITIES" ) in the form of one or more permanent global
securities in registered form without interest coupons (the "REGULATION S GLOBAL
SECURITIES") which will be deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") for the respective accounts of the DTC
participants for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System ("EUROCLEAR"), and Clearstream Banking, societe
anonyme ("CLEARSTREAM, LUXEMBOURG") and registered in the name of Cede & Co., as
nominee for DTC. The Issuers will deliver against payment of the purchase price
the Offered Securities to be purchased by each Purchaser hereunder and to be
offered and sold by each Purchaser in reliance on Rule 144A under the Securities
Act (the "144A SECURITIES") in the form of one or more permanent global
securities in definitive form without interest coupons (the "RESTRICTED GLOBAL
SECURITIES") deposited with the Trustee as custodian for DTC and registered in
the name of Cede & Co., as nominee for DTC. The Regulation S Global Securities
and the Restricted Global Securities shall be assigned separate CUSIP numbers.
The Restricted Global Securities shall include the legend regarding restrictions
on transfer set forth under "Transfer Restrictions" in the Offering Circular.
Until the termination of the distribution compliance period (as defined in
Regulation S) with respect to the offering of the Offered Securities, interests
in the Regulation S Global Securities may only be held by the DTC participants
for Euroclear and Clearstream, Luxembourg. Interests in any permanent global
Securities will be held only in book-entry form through Euroclear, Clearstream,
Luxembourg or DTC, as the case may be, except in the limited circumstances
described in the Offering Circular.

      Payment for the Regulation S Securities and the 144A Securities shall be
made by the Purchasers in Federal (same day) funds by wire transfer to an
account at a bank acceptable to CSFB drawn to the order of the Issuers at the
office of Debevoise & Plimpton at 10:00 A.M. (New York time), on May 20, 2003,
or at such other time not later than seven full business days thereafter as CSFB
and the Issuers determine, such time being herein referred to as the "CLOSING
DATE", against delivery to the Trustee as custodian for DTC of (i) the
Regulation S Global Securities representing all of the Regulation S Securities
for the respective accounts of the DTC participants for Euroclear and
Clearstream, Luxembourg and (ii) the Restricted Global Securities representing
all of the 144A Securities. The Regulation S Global Securities and the
Restricted Global Securities will be made available for checking at the above
office of Debevoise & Plimpton at least 24 hours prior to the Closing Date.

                                       11
<PAGE>
      4. Representations by Purchasers; Resale by Purchasers.

            (a) Each Purchaser severally represents and warrants to the Issuers
      that it is an "accredited investor" within the meaning of Regulation D
      under the Securities Act.

            (b) Each Purchaser severally acknowledges that the Offered
      Securities have not been registered under the Securities Act and may not
      be offered or sold within the United States or to, or for the account or
      benefit of, U.S. persons except in accordance with Regulation S or
      pursuant to an exemption from the registration requirements of the
      Securities Act. Each Purchaser severally represents and agrees that it has
      offered and sold the Offered Securities, and will offer and sell the
      Offered Securities, (i) as part of its distribution at any time and (ii)
      otherwise until 40 days after the later of the commencement of the
      offering and the Closing Date, only in accordance with Rule 903 or Rule
      144A under the Securities Act ("RULE 144A"). Accordingly, neither such
      Purchaser nor its affiliates, nor any persons acting on its or their
      behalf, has engaged or will engage in any directed selling efforts with
      respect to the Offered Securities, and such Purchaser, its affiliates and
      all persons acting on its or their behalf have complied and will comply
      with the offering restrictions requirement of Regulation S. Each Purchaser
      severally agrees that, at or prior to confirmation of sale of the Offered
      Securities, other than a sale pursuant to Rule 144A, such Purchaser will
      have sent to each distributor, dealer or person receiving a selling
      concession, fee or other remuneration that purchases the Offered
      Securities from it during the restricted period a confirmation or notice
      to substantially the following effect:

            "The Securities covered hereby have not been registered under the
            U.S. Securities Act of 1933 (the "SECURITIES ACT") and may not be
            offered or sold within the United States or to, or for the account
            or benefit of, U.S. persons (i) as part of their distribution at any
            time or (ii) otherwise until 40 days after the later of the date of
            the commencement of the offering and the closing date, except in
            either case in accordance with Regulation S (or Rule 144A if
            available) under the Securities Act. Terms used above have the
            meanings given to them by Regulation S."

      Terms used in this subsection (b) have the meanings given to them by
      Regulation S.

            (c) Each Purchaser severally agrees that it and each of its
      affiliates have not entered and will not enter into any contractual
      arrangement with respect to the distribution of the Offered Securities
      except for any such arrangements with the other Purchasers or affiliates
      of the other Purchasers or with the prior written consent of the Issuers.

                                       12
<PAGE>
            (d) Each Purchaser severally agrees that it and each of its
      affiliates will not offer or sell the Offered Securities in the United
      States by means of any form of general solicitation or general advertising
      within the meaning of Rule 502(c) under the Securities Act, including but
      not limited to (i) any advertisement, article, notice or other
      communication published in any newspaper, magazine or similar media or
      broadcast over television or radio, or (ii) any seminar or meeting whose
      attendees have been invited by any general solicitation or general
      advertising. Each Purchaser severally agrees, with respect to resales made
      in reliance on Rule 144A of any of the Offered Securities, to deliver
      either with the confirmation of such resale or otherwise prior to
      settlement of such resale a notice to the effect that the resale of such
      Offered Securities has been made in reliance upon the exemption from the
      registration requirements of the Securities Act provided by Rule 144A.

            (e) Prior to or simultaneously with any confirmation of sale to any
      purchaser in the initial resale, each Purchaser will deliver to each such
      purchaser of the Offered Securities in connection with its original
      distribution of the Offered Securities, a copy of the Offering Circular as
      amended and supplemented at the date of such delivery.

            (f) Each of the Purchasers severally represents and agrees that (i)
      it has not offered or sold and prior to the date six months after the date
      of issue of the Offered Securities will not offer or sell any Offered
      Securities to persons in the United Kingdom except to persons whose
      ordinary activities involve them in acquiring, holding, managing or
      disposing of investments (as principal or agent) for the purposes of their
      businesses or otherwise in circumstances which have not resulted and will
      not result in an offer to the public in the United Kingdom within the
      meaning of the Public Offers of Securities Regulations 1995 (as amended);
      (ii) it has only communicated or caused to be communicated and will only
      communicate or cause to be communicated any invitation or inducement to
      engage in investment activity (within the meaning of Section 21 of the
      Financial Services and Markets Act 2000 (the "FSMA")) received by it in
      connection with the issue or sale of any Offered Securities in
      circumstances in which Section 21(1) of the FSMA does not apply; and (iii)
      it has complied and will comply with all applicable provisions of the FSMA
      with respect to anything done by it in relation to the Offered Securities
      in, from or otherwise involving the United Kingdom.

            (g) Each of the Purchasers severally represents and agrees that it
      has not publicly offered or sold and will not publicly offer or sell the
      Offered Securities in Mexico.

                                       13

<PAGE>
      5. Certain Agreements of the Issuers and the Guarantors. Each Issuer and
Guarantor, jointly and severally, agrees with the several Purchasers that:

            (a) The Issuers will advise CSFB promptly of any proposal to amend
      or supplement the Offering Circular and will not effect such amendment or
      supplementation without CSFB's consent (which consent will not be
      unreasonably withheld). If, at any time prior to the completion of the
      resale of the Offered Securities by the Purchasers, any event occurs as a
      result of which the Offering Circular as then amended or supplemented
      would include an untrue statement of a material fact or omit to state any
      material fact necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading, or
      if it is necessary at any such time to amend or supplement the Offering
      Circular to comply with any applicable law, the Issuers promptly will
      notify CSFB of such event and promptly will prepare, at their own expense,
      an amendment or supplement which will correct such statement or omission
      or effect such compliance. Neither CSFB's consent to, nor the Purchasers'
      delivery to offerees or investors of, any such amendment or supplement
      shall constitute a waiver of any of the conditions set forth in Section 6.

            (b) The Issuers will furnish to CSFB copies of the Preliminary
      Offering Circular, Offering Circular and all amendments and supplements to
      such documents, in each case as soon as available and in such quantities
      as CSFB reasonably requests. At any time when the Offered Securities are
      outstanding and are "restricted securities" within the meaning of Rule
      144(a)(3) under the Securities Act and the Issuers or any Guarantor is not
      subject to Section 13 or 15(d) of the Exchange Act and is not exempt from
      reporting pursuant to Rule 12g3-2(b) under the Exchange Act, the Issuers
      or the Guarantors, as applicable, will promptly furnish or cause to be
      furnished to CSFB (and, upon request, to each of the other Purchasers)
      and, upon request of holders and prospective purchasers of the Offered
      Securities, to such holders and purchasers, copies of the information
      required to be delivered to holders and prospective purchasers of the
      Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act
      (or any successor provision thereto) in order to permit compliance with
      Rule 144A in connection with resales by such holders of the Offered
      Securities. The Issuers will pay the expenses of printing and distributing
      to the Purchasers all such documents.

            (c) The Issuers will arrange for the qualification of the Offered
      Securities for sale and the determination of their eligibility for
      investment under the laws of such jurisdictions in the United States and
      Canada as CSFB reasonably designates and will continue such qualifications
      in effect so long as reasonably required for the initial resale of the
      Offered Securities by the Purchasers; provided that the Issuers and the
      Guarantors will not be required to qualify as a foreign corporation

                                       14
<PAGE>
      or to file a general consent to service of process in any such state or
      other jurisdiction or to subject themselves to taxation in respect of
      doing business in any state or other jurisdiction in which they are not
      otherwise so subject.

            (d) During the period prior to the effectiveness of the Exchange
      Offer Registration Statement or a Shelf Registration Statement, as the
      case may be, the Parent will provide or cause to be provided to CSFB and,
      upon request, to each of the other Purchasers, information substantially
      equivalent to the information that would be contained in the reports that
      would be filed by Parent with the Commission as provided in the Indenture
      if Parent were then subject to the reporting requirements of Section 13(a)
      or 15(d) of the Exchange Act, in each case within 15 days after the
      respective date on which such report would have been required to be so
      filed.

            (e) During the period of two years after the Closing Date, the
      Issuers and the Guarantors will, upon request, make available to CSFB and
      each of the other Purchasers and any holder of Offered Securities a copy
      of the restrictions on transfer applicable to the Offered Securities.

            (f) During the period of two years after the Closing Date, the
      Issuers will not, and will not permit any of their affiliates (as defined
      in Rule 144 under the Securities Act) to, resell any of the Offered
      Securities that have been reacquired by any of them, except for Offered
      Securities purchased by the Issuers or any of their affiliates and resold
      in a transaction registered under the Securities Act.

            (g) During the period of two years after the Closing Date, neither
      the Issuers nor any Guarantor will be or become, an open-end investment
      company, unit investment trust or face-amount certificate company that is
      or is required to be registered under Section 8 of the Investment Company
      Act.

            (h) The Issuers will pay all reasonable expenses (together with VAT
      where applicable) incidental to the performance of their and the
      Guarantors' obligations under this Agreement, the Registration Rights
      Agreement and the Indenture, including (i) the fees and expenses of the
      Trustee and its professional advisers; (ii) all expenses in connection
      with the execution, issue, authentication, packaging and initial delivery
      of the Offered Securities and, as applicable, the Exchange Securities (as
      defined in the Registration Rights Agreement), the preparation and
      printing of this Agreement, the Registration Rights Agreement, the Offered
      Securities, the Exchange Securities, the Indenture, the Preliminary
      Offering Circular and the Offering Circular and all amendments and
      supplements thereto, and any other document relating to the issuance,
      offer, sale and delivery of the Offered Securities or the Exchange
      Securities; (iii) the cost of qualifying the Offered Securities for
      trading in The Portal Market (PORTAL) and any expenses incidental thereto;
      (iv) the cost of any advertising approved by Issuers in connection with
      the issue of the Offered Securities; (v) any expenses (including

                                       15
<PAGE>
      reasonable fees and disbursements of counsel) incurred in connection with
      qualification of the Offered Securities or the Exchange Securities, for
      sale under the laws of such jurisdictions in the United States and Canada
      as CSFB reasonably designates and the printing of memoranda relating
      thereto; (vi) any fees charged by investment rating agencies for the
      rating of the Offered Securities or the Exchange Securities, and (vii)
      expenses incurred in distributing preliminary offering circulars and the
      Offering Circular (including any amendments and supplements thereto) to
      the Purchasers; provided, however, that except as provided in the next
      sentence of this Section 5(h) and Section 9, the Purchasers shall pay
      their own costs and expenses, including the costs and expenses of their
      counsel, any taxes on the Offered Securities which they may sell and the
      expenses of advertising and offering of the Offered Securities made by the
      Purchasers. The Issuers will also pay or reimburse the Purchasers (to the
      extent incurred by them prior to the Closing Date) for all reasonable
      travel expenses of the Purchasers and the Issuers' officers and employees
      and any other reasonable expenses of the Purchasers and the Issuers in
      connection with attending or hosting meetings with prospective purchasers
      of the Offered Securities from the Purchasers.

            (i) In connection with the initial offering, until the earlier of
      (i) such time as CSFB shall have notified the Issuers and the other
      Purchasers of the completion by the Purchasers of the initial resale of
      the Offered Securities and (ii) 180 days after the Closing Date, none of
      the Issuers, the Guarantors and their affiliates has or will, either alone
      or with one or more other persons, bid for or purchase, for any account in
      which it or any of its affiliates has a beneficial interest, any Offered
      Securities or attempt to induce any person to purchase any Offered
      Securities; and none of the Issuers, the Guarantors and their affiliates
      will make bids or purchases, in any such case for the purpose of creating
      actual, or apparent, active trading in, or of raising the price of, the
      Offered Securities. CSFB agrees to give such notice promptly upon such
      completion of the initial resale.

            (j) For a period of 180 days after the Closing Date (if the sale of
      the Offered Securities by the Issuers to the Purchasers shall have
      occurred), none of the Issuers or any Guarantor will offer, sell, contract
      to sell, pledge or otherwise dispose of, directly or indirectly, or file
      with the SEC a registration statement under this Securities Act relating
      to, any United States dollar-denominated debt securities issued or
      guaranteed by the Issuers or the Guarantors and having a maturity of more
      than one year from the date of issue, or publicly disclose the intention
      to make such an offer, sale, pledge disposition or filing, except (i)
      promissory notes or other debt securities issued or guaranteed in
      immaterial amounts in the ordinary course of business or (ii) issuances of
      Exchange Securities pursuant to the Registration Rights Agreement. The
      Issuers and the Guarantors will not offer, sell, contract to sell, pledge
      or otherwise dispose of, directly or indirectly, any securities under
      circumstances where such offer, sale, pledge, contract or disposition
      would cause the exemption afforded by Section

                                       16
<PAGE>
      4(2) of the Securities Act or the safe harbor of Regulation S thereunder
      to cease to be applicable to the offer and sale of the Offered Securities.

            (k) The Issuers, CDRJ (until such time as the Reorganization is
      consummated as described in the Offering Circular) and Parent will
      indemnify and hold harmless the Purchasers against any non-U.S.
      documentary, stamp or similar issuance tax, including any interest and
      penalties, on the creation, issuance and sale of the Offered Securities by
      the Issuers to the Purchasers and on the execution and delivery of this
      Agreement. All payments to be made by the Issuers and the Guarantors
      hereunder shall be made without withholding or deduction for or on account
      of any present or future non-U.S. taxes, duties or governmental charges
      whatsoever unless either Issuer or a Guarantor, as appropriate, is
      compelled by law to deduct or withhold such taxes, duties or charges. In
      that event, the Issuers and Parent shall pay such additional amounts as
      may be necessary in order that the net amounts received after such
      withholding or deduction shall equal the amounts that would have been
      received if no withholding or deduction had been made, except to the
      extent such taxes arise because of some connection between any Purchaser
      and the foreign jurisdiction imposing such tax, other than the purchase of
      the Offered Securities.

            (l) The Issuers and the Guarantors will use their reasonable best
      efforts to have the Offered Securities admitted to trading in the Private
      Offering, Resale and Trading through Automated Linkages (PORTAL) Market of
      the Nasdaq Stock Market, Inc.

            (m) The Company will use the net proceeds from the sale of the
      Offered Securities as set forth under "Use of Proceeds" in the Offering
      Circular in all material respects.

      6. Conditions of the Obligations of the Purchasers. The obligations of the
several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of officers of each Issuer and
Guarantor made pursuant to the provisions hereof, to the performance by each
Issuer and Guarantor of its obligations hereunder, and to the following
additional conditions precedent:

            (a) (i) The Purchasers shall have received a letter, dated the date
      of this Agreement, of Ernst & Young confirming that they are independent
      public accountants within the meaning of the Securities Act and the
      applicable published rules and regulations thereunder ("RULES AND
      REGULATIONS") and substantially in the form of Exhibit D hereto, or
      otherwise in form and substance reasonably satisfactory to the Purchasers.

            (ii) (A) The Purchasers shall have received from Deloitte & Touche a
      letter dated the date of this Agreement confirming that they are
      independent

                                       17
<PAGE>
      public accountants within the meaning of the Securities Act and the Rules
      and Regulations and substantially in the form of Exhibit E hereto, or
      otherwise in form and substance reasonably satisfactory to the Purchasers
      and (B) either (x) the Purchasers shall have received from Deloitte &
      Touche a letter dated on or prior to the date of first delivery by the
      Purchasers of the final Offering Circular, confirming that they are
      independent public accountants and providing comfort on all data, to the
      extent comparable to the data covered in the letter delivered pursuant to
      clause (ii)(A) of this paragraph, included in such final Offering Circular
      to at least the same extent that comfort on such data was provided in the
      letter delivered pursuant to clause (ii)(A) of this paragraph or (y)(1)
      the Purchasers shall have received a certificate of the Chief Financial
      Officer of the Company dated on or prior to such date of first delivery,
      certifying that he has no reason to believe that any such data are
      inaccurate as set forth in the final Offering Circular and (2) no data
      within the scope of the letter delivered pursuant to clause (ii)(A) of
      this paragraph is in fact modified in the final Offering Circular. The
      Purchasers may in their sole discretion waive the condition set forth in
      clause (ii)(B)(y) with respect to any particular modification of such
      data, but no such waiver shall constitute a waiver of such condition with
      respect to any other modification.

            (iii) The Purchasers shall have received a certificate of the chief
      financial officer of the Issuers certifying to the accuracy of certain
      financial information contained in the Offering Circular in the form of
      Exhibit F hereto, or otherwise in form and substance reasonably
      satisfactory to the Purchasers.

            (b) Subsequent to the execution and delivery of this Agreement,
      there shall not have occurred (i) any change, or any development or event
      that would reasonably be expected to result in a change, in the condition
      (financial or other), business, properties or results of operations of any
      Issuer or Guarantor which, in the reasonable judgment of a majority in
      interest of the Purchasers, including CSFB, is material and adverse and
      makes it impractical to proceed with the completion of the offering
      contemplated herein or the sale of and payment for the Offered Securities;
      (ii) any downgrading in the rating of any debt securities of the Issuers
      or JCISA by any "nationally recognized statistical rating organization"
      (as defined for purposes of Rule 436(g) under the Securities Act), or any
      public announcement that any such organization has under surveillance or
      review its rating of such debt securities (other than an announcement with
      positive implications of a possible upgrading, and no implication of a
      possible downgrading of such rating) or any announcement that the Company
      has been placed on negative outlook; (iii) any material adverse change in
      U.S. or international financial, political or economic conditions or
      currency exchange rates or exchange rates or exchange controls as would,
      in the reasonable judgment of a majority in interest of the Purchasers,
      including CSFB, be likely to prejudice materially the success of the
      proposed issue, sale or distribution of the Offered

                                       18
<PAGE>
      Securities, whether in the primary market or in respect of dealings in the
      secondary market; (iv) any material suspension or material limitation of
      trading in securities generally on the New York Stock Exchange, or any
      setting of minimum prices for trading on such exchange or in the
      over-the-counter market, or any suspension of trading of any securities of
      any Issuer or any Guarantor on any exchange or in the over-the-counter
      market; (v) any banking moratorium declared by U.S. Federal, New York or
      Mexican authorities; (vi) any major disruption of settlements of
      securities or clearance services in the United States or (vii) any
      material attack on, outbreak or escalation of hostilities or act of
      terrorism involving the United States or Mexico, any declaration of war by
      Congress or any other national or international calamity or emergency if,
      in the reasonable judgment of a majority in interest of the Purchasers,
      including CSFB, the effect of any such attack, outbreak, escalation, act,
      declaration, calamity or emergency makes it impractical to proceed with
      completion of the offering or sale of and payment for the Offered
      Securities.

            (c) The Purchasers shall have received an opinion, dated the Closing
      Date, of Debevoise & Plimpton, the special New York counsel for the
      Issuers and Parent, substantially in the form of Exhibit A hereto, or
      otherwise in form and substance reasonably satisfactory to the Purchasers.
      In rendering such opinion, Debevoise & Plimpton may, as to matters
      governed by Mexican law and the laws of Luxembourg, rely upon or assume
      the accuracy of the opinions of Ritch, Heather y Mueller, S.C. and Bonn &
      Schmitt, respectively.

            (d) The Purchasers shall have received an opinion, dated the Closing
      Date, of Ritch, Heather y Mueller, S.C., special counsel for JCISA and its
      subsidiaries, substantially in the form of Exhibit B hereto, or otherwise
      in form and substance reasonably satisfactory to the Purchasers.

            (e) The Purchasers shall have received an opinion, dated the Closing
      Date, of Bonn & Schmitt, special Luxembourg counsel for CDRJ and Parent,
      substantially in the form of Exhibit C hereto, or otherwise in form and
      substance reasonably satisfactory to the Purchasers.

            (f) The Purchasers shall have received from Cravath, Swaine & Moore,
      counsel for the Purchasers, such opinion or opinions, dated the Closing
      Date, with respect to the incorporation of Jafra US, the validity of the
      Offered Securities and the Offering Circular, the exemption from
      registration for the offer and sale of the Offered Securities by the
      Issuers to the several Purchasers and the resales by the several
      Purchasers as contemplated hereby and other related matters as CSFB may
      reasonably require, and each Issuer, CDRJ and the Parent shall have
      furnished to such counsel such documents as they may reasonably request
      for the purpose of enabling them to pass upon such matters. In rendering
      such opinion, Cravath, Swaine & Moore may rely as to all matters governed
      by Mexican law

                                       19
<PAGE>
      and the laws of Luxembourg upon the opinions of Ritch, Heather y Mueller,
      S.C. and Bonn & Schmitt, respectively.

            (g) The Purchasers shall have received from the Issuers and Parent
      certificates dated the Closing Date of the President or any Vice President
      and a principal financial or accounting officer of each Issuer in which
      such officers shall state that, to the best of their knowledge after
      reasonable investigation, as of the Closing Date, the representations and
      warranties of the such Issuer, CDRJ or the Parent, as appropriate, in this
      Agreement are true and correct (in the case of any such representation or
      warranty to the extent subject to a materiality qualification) or true and
      correct in all material respects (in the case of any such representation
      or warranty to the extent not subject to a materiality qualification),
      that such Issuer or Parent, as appropriate, has in all material respects
      complied with all agreements and satisfied all conditions on its part to
      be performed or satisfied hereunder at or prior to the Closing Date, and
      that, subsequent to the date of the most recent financial statements
      contained in the Offering Circular, there has been no material adverse
      change, nor any development or event that, in his reasonable judgment,
      would reasonably be expected to result in material adverse change, in the
      condition (financial or other), business, properties or results of
      operations of the Company taken as a whole, except as set forth in or
      contemplated by the Offering Circular or as described in such certificate.

            (h) The Purchasers shall have received (i) from Ernst & Young a
      letter dated the Closing Date bringing down to three days before the
      Closing Date the information set forth in its letter referred to in
      Section 6(a)(i) and (ii) either (A) in the event a letter is delivered in
      accordance with Section 6(a)(ii)(B)(x), a letter from Deloitte & Touche
      dated the Closing Date bringing down to three days before the Closing Date
      the information set forth in its letter referred to in Section
      6(a)(ii)(B)(x) or (B) in the event no such letter is delivered, a letter
      from Deloitte & Touche dated the Closing Date bringing down to three days
      before the Closing Date the information set forth in its letter referred
      to in Section 6(a)(ii)(A).

            (i) The Reorganization and related financings and transactions
      (including the closing of the senior secured credit facilities (the
      "SENIOR SECURED CREDIT FACILITIES") on or prior to the Closing Date) shall
      have been consummated substantially as described in the Offering Circular.

            (j) The Offered Securities shall have been designated for trading on
      PORTAL.

            (k) Each of the Issuers, the Guarantors and the Trustee shall have
      executed and delivered the Indenture in form and substance reasonably
      satisfactory to the Purchasers and the Indenture shall be in full force
      and effect.

                                       20
<PAGE>
            (l) Each of the Issuers and the Guarantors shall have executed and
      delivered the Registration Rights Agreement in form and substance
      reasonably satisfactory to the Purchasers and the Registration Rights
      Agreement shall be in full force and effect.

            (m) Each Issuer and Parent will furnish the several Purchasers with
      such conformed copies of such opinions, certificates, letters and
      documents as the Purchasers reasonably request. CSFB may in its reasonable
      discretion waive on behalf of the several Purchasers compliance with any
      conditions to the obligations of the Purchasers hereunder, whether in
      respect of the Closing Date or otherwise.

      7. Indemnification and Contribution.

            (a) Each Issuer and Guarantor, jointly and severally, will indemnify
      and hold harmless each Purchaser, its partners, directors and officers and
      each person, if any, who controls such Purchaser within the meaning of
      Section 15 of the Securities Act, against any losses, claims, damages or
      liabilities, joint or several, to which such Purchaser may become subject,
      under the Securities Act or the Exchange Act or otherwise, insofar as such
      losses, claims, damages or liabilities (or actions in respect thereof)
      arise out of any untrue statement or alleged untrue statement of any
      material fact contained in the Offering Circular, or any amendment or
      supplement thereto, or any related preliminary offering circular, or arise
      out of or are based upon the omission or alleged omission to state therein
      a material fact required to be stated therein or necessary in order to
      make the statements therein, in the light of the circumstances under which
      they were made, not misleading, including any losses, claims damages or
      liabilities arising out of or based upon the Issuers' failure to perform
      their obligations under Section 5(a) of this Agreement, and will reimburse
      each Purchaser for any legal or other expenses reasonably incurred by such
      Purchaser in connection with investigating or defending any such loss,
      claim, damage, liability or action; provided, however, that none of the
      Issuers or any Guarantor will be liable in any such case to the extent
      that any such loss, claim, damage or liability arises out of or is based
      upon an untrue statement or alleged untrue statement in or omission or
      alleged omission from any of such documents in reliance upon and in
      conformity with written information furnished to the Issuers or Parent by
      any Purchaser through CSFB specifically for use therein, it being
      understood and agreed that the only such information consists of the
      information described as such in subsection (b) below; and provided
      further, that the foregoing indemnity with respect to the preliminary
      offering circular shall not inure to the benefit of any Purchaser from
      whom the person asserting any such losses, claims, damages or liabilities
      purchased Offered Securities, to the extent that any such losses, claims,
      damages or liabilities of such Purchaser result solely from the fact that
      such Purchaser sold Offered Securities to a person in an initial resale to
      whom there was not sent or given at or prior to the written confirmation
      of the sale of such Offered Securities, a copy of the final

                                       21
<PAGE>
      offering circular (as amended and supplemented), if the Issuers had
      previously furnished such amendments or supplements to such Purchaser
      prior to confirmation of the sale of such Offered Securities to such
      person by such Purchaser and the losses, claims, damages or liabilities of
      such Purchaser result from an untrue statement or omission of a material
      fact contained in the preliminary offering circular, which was corrected
      in the final offering circular.

            (b) Each Purchaser will severally and not jointly indemnify and hold
      harmless the Issuers and the Guarantors, as appropriate, and their
      partners, directors and officers and each person, if any, who controls
      such Person within the meaning of Section 15 of the Securities Act,
      against any losses, claims, damages or liabilities to which any of the
      Issuers and the Guarantors may become subject, under the Securities Act or
      the Exchange Act or otherwise, insofar as such losses, claims, damages or
      liabilities (or actions in respect thereof) arise out of or are based upon
      any untrue statement or alleged untrue statement of any material fact
      contained in the Offering Circular, or any amendment or supplement
      thereto, or any related preliminary offering circular, or arise out of or
      are based upon the omission or the alleged omission to state therein a
      material fact necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading, in
      each case to the extent, but only to the extent, that such untrue
      statement or alleged untrue statement or omission or alleged omission was
      made in reliance upon and in conformity with written information furnished
      to the Issuers or the Guarantors by such Purchaser or through CSFB
      specifically for use therein, and will reimburse any legal or other
      expenses reasonably incurred by the Issuers or the Guarantors in
      connection with investigating or defending any such loss, claim, damage,
      liability or action as such expenses are incurred, it being understood and
      agreed that the only such information furnished by any Purchaser consists
      of the following information in the Offering Circular furnished on behalf
      of each Purchaser: paragraph six, the third and fourth sentences of
      paragraph nine and paragraphs eleven and twelve under the caption "Plan of
      Distribution"; provided, however, that the Purchasers shall not be liable
      for any losses, claims, damages or liabilities arising out of or based
      upon any Issuer's failure to perform its obligations under Section 5(a) of
      this Agreement.

            (c) Promptly after receipt by an indemnified party under this
      Section of notice of the commencement of any action, such indemnified
      party will, if a claim in respect thereof is to be made against the
      indemnifying party under subsection (a) or (b) above, notify the
      indemnifying party of the commencement thereof; but the omission so to
      notify the indemnifying party will not relieve it from any liability (i)
      under subsection (a) or (b) above except to the extent that it has been
      materially prejudiced (through the forfeiture of substantive rights or
      defenses) by such failure or (ii) which it may have to any indemnified
      party otherwise than under subsection (a) or (b) above. In case any such
      action is

                                       22
<PAGE>
      brought against any indemnified party and it notifies the indemnifying
      party of the commencement thereof, the indemnifying party will be entitled
      to participate therein and, to the extent that it may wish, jointly with
      any other indemnifying party similarly notified, to assume the defense
      thereof, with counsel reasonably satisfactory to such indemnified party
      (if such counsel is counsel to the indemnifying party and the
      representation of the indemnified party would present such counsel with a
      conflict of interest, the indemnified party will have the right to employ
      separate counsel, and the indemnifying party will bear the reasonable
      fees, costs and expenses of only one such separate counsel for all
      indemnified parties), and after notice from the indemnifying party to such
      indemnified party of its election so to assume the defense thereof, the
      indemnifying party will not be liable to such indemnified party under this
      Section for any legal or other expenses subsequently incurred by such
      indemnified party in connection with the defense thereof other than
      reasonable costs of investigation. No indemnifying party shall, without
      the prior written consent of the indemnified party, effect any settlement
      of any pending or threatened action in respect of which any indemnified
      party is or could have been a party and indemnity could have been sought
      hereunder by such indemnified party unless such settlement includes (i) an
      unconditional release of such indemnified party from all liability on any
      claims that are the subject matter of such action and (ii) does not
      include a statement as to or an admission of fault or failure to act by or
      on behalf of any indemnified party.

            (d) If the indemnification provided for in this Section is
      unavailable or insufficient to hold harmless an indemnified party under
      subsection (a) or (b) above, then each indemnifying party shall contribute
      to the amount paid or payable by such indemnified party as a result of the
      losses, claims, damages or liabilities referred to in subsection (a) or
      (b) above (i) in such proportion as is appropriate to reflect the relative
      benefits received by the Issuers and the Guarantors on the one hand and
      the Purchasers on the other from the offering of the Offered Securities or
      (ii) if the allocation provided by clause (i) above is not permitted by
      applicable law, in such proportion as is appropriate to reflect not only
      the relative benefits referred to in clause (i) above but also the
      relative fault of the Issuers and the Guarantors on the one hand and the
      Purchasers on the other in connection with the statements or omissions
      which resulted in such losses, claims, damages or liabilities as well as
      any other relevant equitable considerations. The relative benefits
      received by the Issuers and the Guarantors on the one hand and the
      Purchasers on the other shall be deemed to be in the same proportion as
      the total net proceeds from the offering (before deducting expenses)
      received by the Issuers and the Guarantors bear to the total discounts and
      commissions received by the Purchasers from the Issuers and the Guarantors
      in the offering. The relative fault shall be determined by reference to,
      among other things, whether the untrue or alleged untrue statement of a
      material fact or the omission or alleged omission to state a material fact
      relates to information supplied by the Issuers or the Guarantors or the
      Purchasers and the parties'

                                       23
<PAGE>
      relative intent, knowledge, access to information and opportunity to
      correct or prevent such untrue statement or omission. The amount paid by
      an indemnified party as a result of the losses, claims, damages or
      liabilities referred to in the first sentence of this subsection (d) shall
      be deemed to include any legal or other expenses reasonably incurred by
      such indemnified party in connection with investigating or defending any
      action or claim which is the subject of this subsection (d).
      Notwithstanding the provisions of this subsection (d), no Purchaser shall
      be required to contribute any amount in excess of the amount by which the
      total price at which the Offered Securities purchased by it were resold
      exceeds the amount of any damages which such Purchaser has otherwise been
      required to pay by reason of such untrue or alleged untrue statement or
      omission or alleged omission. The Purchasers' obligations in this
      subsection (d) to contribute are several in proportion to their respective
      purchase obligations and not joint.

            (e) The obligations of each Issuer and Guarantor, as appropriate,
      under this Section shall be in addition to any liability which each Issuer
      or Guarantor may otherwise have and shall extend, upon the same terms and
      conditions, to each person, if any, who controls such Issuer or Guarantor,
      as appropriate, within the meaning of the Securities Act or the Exchange
      Act; and the obligations of the Purchasers under this Section shall be in
      addition to any liability which the respective Purchasers may otherwise
      have and shall extend, upon the same terms and conditions, to each person,
      if any, who controls any Purchaser within the meaning of the Securities
      Act or the Exchange Act.

            (f) No person guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any person who was not guilty of such fraudulent
      misrepresentation.

      8. Default of Purchasers. If any Purchaser or Purchasers default in their
obligations to purchase Offered Securities hereunder and the aggregate principal
amount of Offered Securities that such defaulting Purchaser or Purchasers agreed
but failed to purchase does not exceed 10% of the total principal amount of
Offered Securities, CSFB may make arrangements satisfactory to the Issuers for
the purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by such Closing Date, the
non-defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the aggregate principal amount of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
principal amount of Offered Securities and arrangements satisfactory to CSFB and
the Issuers for the purchase of such Offered Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Purchaser or the Issuers, except as
provided in Section 9. As used in

                                       24
<PAGE>
this Agreement, the term "Purchaser" includes any person substituted for a
Purchaser under this Section. Nothing herein will relieve a defaulting Purchaser
from liability for its default.

      9. Survival of Certain Representations and Obligations. Subject to the
last sentence of this Section, the respective indemnities, agreements,
representations, warranties and other statements of CDRJ, each Issuer, each
Guarantor or their officers and of the several Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Purchaser, CDRJ, Issuer, Guarantor or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Offered Securities by the Purchasers is not consummated, the Issuers and
Guarantors shall remain responsible for the expenses to be paid or reimbursed by
them pursuant to Section 5 and the respective obligations of the Issuers and
Guarantors and the Purchasers pursuant to Section 7 shall remain in effect. If
the purchase of the Offered Securities by the Purchasers is not consummated for
any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in Section 6(b)
or the failure of the Senior Secured Credit Facilities to close on or prior to
the Closing Date (unless such failure of the Senior Secured Credit Facilities to
close results from the fault of the Company), the Issuers and Guarantors will
reimburse the Purchasers for all reasonable out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by them in connection
with the offering of the Offered Securities. The Purchasers agree that from and
after the Closing Date and the consummation of the Reorganization, CDRJ and its
officers, directors and shareholders shall not have any liability to the
Purchasers pursuant to this Agreement or otherwise resulting from or in
connection with the transactions contemplated hereby; provided that, with
respect to the officers, directors and shareholders of CDRJ, the foregoing
limitation shall apply solely in their capacity as officers, directors or
shareholders of CDRJ.

      10. Notices. All communications hereunder will be in writing and, if sent
to the Purchasers will be mailed, delivered or telegraphed and confirmed to the
Purchasers, c/o Credit Suisse First Boston LLC, Eleven Madison Avenue, New York,
N.Y. 10010-3629, Attention: Investment Banking Department Transactions Advisory
Group, or, if sent to the Issuers or the Parent, will be mailed, delivered or
telegraphed and confirmed to it at Jafra Cosmetics International, 2451 Townsgate
Road, Westlake Village, CA 91361, Attention: Corporate Secretary; provided,
however, that any notice to a Purchaser pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Purchaser.

      11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
persons referred to in Section 7(e), and no other person will have any right or
obligation hereunder, except

                                       25
<PAGE>
that holders of Offered Securities shall be entitled to enforce the agreements
for their benefit contained in the second sentence of Section 5(b) hereof
against the Issuers and Parent as if such holders were parties thereto.

      12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

      13. Applicable law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.

      Each party hereto hereby submits to the jurisdiction of the Federal and
state courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. Each of Parent and Jafra Mexico irrevocably appoints Jafra
US as its authorized agent upon which process may be served in any such suit or
proceeding, and agrees that service of process upon such agent, and written
notice of said service to Jafra Mexico or Parent, as the case may be, by the
person serving the same to the address provided in Section 10, shall be deemed
in every respect effective service of process upon Jafra Mexico or Parent, as
the case may be, in any such suit or proceeding. Each of Parent and Jafra Mexico
further agrees to take any and all action as may be necessary to maintain such
designation and appointment of such agent in full force and effect for a period
of three years from the date of this Agreement.

      The obligation of Parent and Jafra Mexico in respect of any sum due to any
Purchaser shall, notwithstanding any judgment in a currency other than United
States dollars, not be discharged until the first business day, following
receipt by such Purchaser of any sum adjudged to be so due in such other
currency, on which (and only to the extent that) such Purchaser may in
accordance with normal banking procedures purchase United States dollars with
such other currency; if the United States dollars so purchased are less than the
sum originally due to such Purchaser hereunder, Jafra Mexico or Parent, as the
case may be, agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such Purchaser against such loss. If the United States
dollars so purchased are greater than the sum originally due to such Purchaser
hereunder, such Purchaser agrees to pay to Jafra Mexico or Parent, as the case
may be, an amount equal to the excess of the dollars so purchased over the sum
originally due to such Purchaser hereunder.

                                       26
<PAGE>
                                                                  EXECUTION COPY

      If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among CDRJ, Parent, each Issuer and
the several Purchasers in accordance with its terms.

                                     Very truly yours,

                                     Jafra Comestics International, Inc.

                                       By: /s/ Gonzalo R. Rubio
                                           -------------------------------------
                                            Name:  Gonzalo R. Rubio
                                            Title: President and C.O.O.

                                     Distribuidora Comercial Jafra, S.A. de C.V.

                                       By: /s/ Gonzalo R. Rubio
                                           -------------------------------------
                                            Name:  Gonzalo R. Rubio
                                            Title: President and C.O.O.

                                     Jafra Worldwide Holdings (Lux) S.ar.L.

                                       By: /s/ Gonzalo R. Rubio
                                           -------------------------------------
                                            Name:  Gonzalo R. Rubio
                                            Title: Manager

                                     CDRJ Investments (Lux) S.A.

                                       By: /s/ Gonzalo R. Rubio
                                           -------------------------------------
                                            Name:  Gonzalo R. Rubio
                                            Title: President and C.O.O.
<PAGE>
                                     The foregoing Purchase
                                     Agreement is hereby
                                     confirmed and accepted as
                                     of the date first above
                                     written.

                                     Credit Suisse First Boston LLC
                                     Merrill Lynch, Pierce, Fenner & Smith
                                         Incorporated

                                     By: Credit Suisse First Boston LLC

                                       By: /s/ CAROLYNN ROCKAFELLOW
                                           -------------------------------------
                                            Name:  CAROLYNN ROCKAFELLOW
                                            Title: MANAGING DIRECTOR

                                     By:  Merrill Lynch, Pierce, Fenner &
                                           Smith Incorporated

                                           By: /s/ DAVID TURLIN
                                           -------------------------------------
                                               Name:  DAVID TURLIN
                                               Title: DIRECTOR
<PAGE>
                                   SCHEDULE A
<TABLE>
<CAPTION>

                                                            PRINCIPAL AMOUNT OF
                 PURCHASER                                   OFFERED SECURITIES
                 ---------                                   ------------------

<S>                                                        <C>
Credit Suisse First Boston LLC .........................      $130,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated .....      $ 70,000,000
                                                              ------------
      Total                                                   $200,000,000

</TABLE><PAGE>

                                                                  EXECUTION COPY

                                U.S. $249,150,000

                          LETTER OF CREDIT ISSUANCE AND
                             REIMBURSEMENT AGREEMENT

                           Dated as of October 2, 2002

                                      Among

                               PECOM ENERGIA S.A.,

                              JPMORGAN CHASE BANK,

                    as Letter of Credit Administrative Agent,

                        DEUTSCHE BANK AG NEW YORK BRANCH,

                                 CITIBANK N.A.,

                                  BNP PARIBAS,

                                   WESTLB AG,

                            CREDIT AGRICOLE INDOSUEZ,

                           MIZUHO CORPORATE BANK, LTD.

                                       and

                       BAYERISCHE HYPO-UND VEREINSBANK AG,

                                as Issuing Banks

                                       and

                            THE LENDERS NAMED HEREIN

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   Page
<S>                                                                                                                <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.......................................................................    1

           SECTION 1.01. Certain Defined Terms...................................................................    1

           SECTION 1.02. Computation of Time Periods.............................................................    1

           SECTION 1.03. Accounting Terms........................................................................    1

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT...........................................    2

           SECTION 2.01. The Letters of Credit...................................................................    2

           SECTION 2.02. Drawings and Reimbursement Under Letters of Credit......................................    4

           SECTION 2.03. Fees ...................................................................................    7

           SECTION 2.04. Prepayments of Letter of Credit Advances, Reduction of Available
                         Amounts of Letters of Credit and Other Actions..........................................    8

           SECTION 2.05. Repayment...............................................................................   20

           SECTION 2.06. Interest................................................................................   24

           SECTION 2.07. Interest Rate Determination.............................................................   25

           SECTION 2.08. Conversion of Advances..................................................................   27

           SECTION 2.09. Increased Costs.........................................................................   28

           SECTION 2.10. Illegality..............................................................................   30

           SECTION 2.11. Payments and Computations...............................................................   30

           SECTION 2.12. Taxes ..................................................................................   32

           SECTION 2.13. Notes ..................................................................................   32

           SECTION 2.14. Event of Sovereign Risk.................................................................   33

ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING..............................................................   33

           SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01...................................   33

           SECTION 3.02. Determinations Under Section 3.01.......................................................   36
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                                <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................   36

           SECTION 4.01. Representations and Warranties of the Company...........................................   36

ARTICLE V COVENANTS OF THE COMPANY...............................................................................   36

           SECTION 5.01. Covenants...............................................................................   36

ARTICLE VI EVENTS OF DEFAULT.....................................................................................   37

           SECTION 6.01. Events of Default.......................................................................   37

           SECTION 6.02. Actions in Respect of the Letters of Credit upon Default................................   37

ARTICLE VII THE LETTER OF CREDIT ADMINISTRATIVE AGENT............................................................   38

           SECTION 7.01. Authorization and Action................................................................   38

           SECTION 7.02. Letter of Credit Administrative Agent's Reliance, Etc...................................   38

           SECTION 7.03. JPMorgan Chase Bank and Affiliates......................................................   39

           SECTION 7.04. Lender Credit Decision..................................................................   39

           SECTION 7.05. Indemnification.........................................................................   39

           SECTION 7.06. Successor Letter of Credit Administrative Agent.........................................   40

ARTICLE VIII MISCELLANEOUS.......................................................................................   41

           SECTION 8.01. Amendments, Etc.........................................................................   41

           SECTION 8.02. Notices, Etc............................................................................   41

           SECTION 8.03. No Waiver; Remedies.....................................................................   42

           SECTION 8.04. Costs and Expenses......................................................................   42

           SECTION 8.05. Binding Effect..........................................................................   43

           SECTION 8.06. Assignments and Participations..........................................................   43

           SECTION 8.07. GOVERNING LAW...........................................................................   46

           SECTION 8.08. Execution in Counterparts...............................................................   46

           SECTION 8.09. Jurisdiction; Waiver of Immunities......................................................   47

           SECTION 8.10. Judgment Currency.......................................................................   48
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                                <C>
           SECTION 8.11. Waiver of Jury Trial....................................................................   48

           SECTION 8.12. Representations and Acknowledgments of Lenders..........................................   48

           SECTION 8.13. No Liability of Lenders.................................................................   50

           SECTION 8.14. Right of Set-Off........................................................................   51
</TABLE>

                                       iii

<PAGE>

Schedules

Schedule I - List of Issuing Banks, Aggregate Face Amounts of Letters of Credit
Required to be Issued and Lending Offices

Schedule II - List of L/C Funding Lenders, Lending Offices and Aggregate
Principal Amount of Letter of Credit Advances Required to be Purchased from Each
Issuing Bank

Schedule III - Up-Front Fees

Schedule 5.01 - Underlying Transactions Secured by Letters of Credit Issued
Under Short Term L/C Series C Facility, Long Term L/C Series C Facility and Long
Term L/C Series D Facility

Schedule 8.12(b) - Surviving Provisions Under OCP Letter of Credit Agreement and
Related Participation Agreements

Schedule 8.12(c) - Surviving Provisions Under CAI Letter dated July 24, 2002

Schedule 8.12(d) - Surviving Provisions Under West LB Letter of Credit Agreement

Schedule 8.12(e) - Surviving Provisions Under Mizuho Letter of Credit Agreement

Schedule 8.12(f) - Surviving Provisions Under HVB Letter of Credit Agreement

Exhibits

Exhibit A - Form of Short Term Series A Letter of Credit Issued By Deutsche Bank

Exhibit B - Form of Short Term Series B Letter of Credit Issued By Deutsche Bank

Exhibit C-1 - Form of Short Term Series C Letter of Credit Issued By CAI

Exhibit C-2 - Form of Short Term Series C Letter of Credit Issued By Mizuho

Exhibit C-3 - Form of Short Term Series C Letter of Credit Issued By West LB

Exhibit D-1 - Form of Long Term Series A Letter of Credit Issued By Deutsche
Bank

Exhibit D-2 - Form of Long Term Series A Letter of Credit Issued By Citibank

Exhibit D-3 - Form of Long Term Series A Letter of Credit Issued By BNP PARIBAS

Exhibit E-1 - Form of Long Term Series B Letter of Credit Issued by Deutsche
Bank

Exhibit E-2 - Form of Long Term Series B Letter of Credit Issued by BNP PARIBAS

Exhibit F-1 - Form of Long Term Series C Letter of Credit Issued by CAI

                                       iv

<PAGE>

Exhibit F-2 - Form of Long Term Series C Letter of Credit Issued by West LB

Exhibit G - Form of Long Term Series D Letter of Credit Issued by HVB

Exhibit H-1 - Form of MT Note Supplemental Indenture for Converted Short Term
Letter of Credit Advances

Exhibit H-2 - Form of MT Note Supplemental Indenture for Converted Long Term
Letter of Credit Advances

Exhibit I - Form of Note Purchase Agreement for MT Notes

Exhibit J - Form of Settlement Agreement Executed Upon a Conversion of Letter of
Credit Advances to MT Notes

Exhibit K - Form of Letter of Credit Advance Note

Exhibit L - Form of Assignment and Acceptance

Annexes

Annex A -  Index of Defined Terms

Annex B -  Representations and Warranties

Annex C -  Covenants

Annex D -  Events of Default

                                        v

<PAGE>

                          LETTER OF CREDIT ISSUANCE AND
                             REIMBURSEMENT AGREEMENT

                           Dated as of October 2, 2002

                  PECOM ENERGIA S.A., a sociedad anonima organized under the
laws of Argentina (the "Company"), and JPMORGAN CHASE BANK, as administrative
agent (the "Letter of Credit Administrative Agent") for the Lenders (as
hereinafter defined), DEUTSCHE BANK AG NEW YORK BRANCH ("Deutsche Bank"), as
Short Term L/C Series A Issuing Bank (the "Short Term L/C Series A Issuing
Bank"), DEUTSCHE BANK, as Short Term L/C Series B Issuing Bank (the "Short Term
L/C Series B Issuing Bank"), CREDIT AGRICOLE INDOSUEZ ("CAI"), MIZUHO CORPORATE
BANK, LTD. ("Mizuho"), and WESTLB AG ("West LB"), as Short Term L/C Series C
Issuing Banks (the "Short Term L/C Series C Issuing Banks"), DEUTSCHE BANK, BNP
PARIBAS and CITIBANK N.A. ("Citibank"), as Long Term L/C Series A Issuing Banks
(the "Long Term L/C Series A Issuing Banks"), DEUTSCHE BANK and BNP PARIBAS, as
Long Term L/C Series B Issuing Banks (the "Long Term L/C Series B Issuing
Banks"), CAI and WEST LB, as Long Term L/C Series C Issuing Banks (the "Long
Term L/C Series C Issuing Banks"), BAYERISCHE HYPO-UND VEREINSBANK AG ("HVB"),
as Long Term L/C Series D Issuing Bank (the "Long Term L/C Series D Issuing
Bank" and, together with the Short Term L/C Series A Issuing Bank, the Short
Term L/C Series B Issuing Bank, the Short Term L/C Series C Issuing Banks, the
Long Term L/C Series A Issuing Banks, the Long Term L/C Series B Issuing Banks
and the Long Term L/C Series C Issuing Banks, the "Issuing Banks") and the L/C
Funding Lenders, agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.01. Certain Defined Terms. Capitalized terms used in
this Agreement shall have the meanings set forth in Annex A hereto (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined).

                  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"
each mean "to but excluding".

                  SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with Argentine
GAAP.

                                        1

<PAGE>

                                   ARTICLE II

           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

                  SECTION 2.01. The Letters of Credit. (a) (i) The Short Term
L/C Series A Issuing Bank agrees, on the terms and conditions hereinafter set
forth, to issue on the Effective Date a standby letter of credit, substantially
in the form attached hereto as Exhibit A or otherwise in form and substance
satisfactory to such Issuing Bank, for the account of the Company in the
aggregate face amount of $4,500,000 (such standby letter of credit, the "Short
Term Series A Letter of Credit").

                  (ii)     The Short Term L/C Series B Issuing Bank agrees, on
the terms and conditions hereinafter set forth, to issue on the Effective Date a
standby letter of credit, substantially in the form attached hereto as Exhibit B
or otherwise in form and substance satisfactory to such Issuing Bank, for the
account of the Company in the aggregate face amount of $1,500,000 (such standby
letter of credit, the "Short Term Series B Letter of Credit").

                  (iii)    Each Short Term L/C Series C Issuing Bank agrees, on
the terms and conditions hereinafter set forth, to issue on the Effective Date
(i) in the case of CAI, a standby letter of credit, substantially in the form
attached hereto as Exhibit C-1 or otherwise in form and substance satisfactory
to such Issuing Bank, for the account of the Company in the aggregate face
amount of $6,000,000, (ii) in the case of Mizuho, a standby letter of credit,
substantially in the form attached hereto as Exhibit C-2 or otherwise in form
and substance satisfactory to such Issuing Bank, for the account of the Company
in the aggregate face amount of $10,000,000, and (iii) in the case of West LB, a
standby letter of credit, substantially in the form attached hereto as Exhibit
C-3 or otherwise in form and substance satisfactory to such Issuing Bank, for
the account of the Company in the aggregate face amount of $6,000,000 (all such
standby letters of credit, the "Short Term Series C Letters of Credit"). Each
Short Term Series C Letter of Credit shall be issued for the purpose of serving
as collateral pursuant to the Master Commodity Swap Agreement dated as of
September 26, 1991 between the Company and J. Aron & Company, as in effect from
time to time.

                  (iv)     Each Long Term L/C Series A Issuing Bank agrees, on
the terms and conditions hereinafter set forth, to issue on the Effective Date
(i) in the case of Deutsche Bank, a standby letter of credit, substantially in
the form attached hereto as Exhibit D-1 or otherwise in form and substance
satisfactory to such Issuing Bank, for the account of the Company in the
aggregate face amount of $54,450,000, (ii) in the case of Citibank, a standby
letter of credit, substantially in the form attached hereto as Exhibit D-2 or
otherwise in form and substance satisfactory to such Issuing Bank, for the
account of the Company in the aggregate face amount of $80,000,000 and (iii) in
the case of BNP PARIBAS, a standby letter of credit, substantially in the form
attached hereto as Exhibit D-3 or otherwise in form and substance satisfactory
to such Issuing Bank, for the account of the Company in the aggregate face
amount of $19,000,000 (all such standby letters of credit, the "Long Term Series
A Letters of Credit").

                  (v)      Each Long Term L/C Series B Issuing Bank agrees, on
the terms and conditions hereinafter set forth, to issue on the Effective Date
(i) in the case of Deutsche Bank, a standby letter of credit, substantially in
the form attached hereto as Exhibit E-1 or otherwise in

                                        2

<PAGE>

form and substance satisfactory to such Issuing Bank, for the account of the
Company in the aggregate face amount of $28,700,000 and (ii) in the case of BNP
PARIBAS, a standby letter of credit, substantially in the form attached hereto
as Exhibit E-2 or otherwise in form and substance satisfactory to such Issuing
Bank, for the account of the Company in the aggregate face amount of $11,000,000
(all such standby letters of credit, the "Long Term Series B Letters of
Credit").

                  (vi)     Each Long Term L/C Series C Issuing Bank agrees, on
the terms and conditions hereinafter set forth, to issue on the Effective Date
(i) in the case of CAI, a standby letter of credit, substantially in the form
attached hereto as Exhibit F-1 or otherwise in form and substance satisfactory
to such Issuing Bank, for the account of the Company in the aggregate face
amount of $4,000,000 and (ii) in the case of West LB, a standby letter of
credit, substantially in the form attached hereto as Exhibit F-2 or otherwise in
form and substance satisfactory to such Issuing Bank, for the account of the
Company in the aggregate face amount of $14,000,000 (all such standby letters of
credit, the "Long Term Series C Letters of Credit"). Each Long Term Series C
Letter of Credit shall be issued for the purpose of serving as collateral
pursuant to the Master Commodity Swap Agreement dated as of September 26, 1991
between the Company and J. Aron & Company, as in effect from time to time.

                  (vii)    The Long Term L/C Series D Issuing Bank agrees, on
the terms and conditions hereinafter set forth, to issue on the Effective Date a
standby letter of credit, substantially in the form of Exhibit G or otherwise in
form and substance satisfactory to such Issuing Bank, for the account of the
Company in the aggregate face amount of $10,000,000 (the "Long Term Series D
Letter of Credit"). The Long Term Series D Letter of Credit shall be issued for
the purpose of serving as collateral pursuant to the Master Commodity Swap
Agreement dated as of September 26, 1991 between the Company and J. Aron &
Company, as in effect from time to time.

                  (b)      No Letter of Credit may be issued hereunder after the
date that is the fourth anniversary of the Effective Date. The maximum tenor for
any Letter of Credit issued hereunder shall be one (1) year from the date of
original issuance, but the expiration date of each Long Term Letter of Credit
shall be automatically extended (i) in the case of each Long Term Series A
Letter of Credit and each Long Term Series B Letter of Credit, for up to four
additional one-year terms after the original expiration date and (ii) in the
case of each of the Long Term Series C Letter of Credit and the Long Term Series
D Letter of Credit, for up to two additional one-year terms after the original
expiration date, and for a final term from the last day of the last such
extended term to December 31, 2005; provided that each Issuing Bank may elect,
in its sole discretion, not to extend the expiration date of any Letter of
Credit in accordance with the terms specified in such Letter of Credit. Each
Issuing Bank shall notify the Letter of Credit Administrative Agent promptly
upon its issuance of any Letter of Credit and upon any change or amendment to
any outstanding Letter of Credit issued by such Issuing Bank. Notwithstanding
the foregoing, each Letter of Credit shall terminate no later than (i) in the
case of any Short Term Letter of Credit (other than the Short Term Series C
Letter of Credit), October 4, 2003, (ii) in the case of any Long Term Letter of
Credit (other than the Long Term Series C Letter of Credit and the Long Term
Series D Letter of Credit), October 4, 2007 and (iii) in the case of each of the
Short Term Series C Letters of Credit, the Long Term Series C Letters of Credit
and the Long Term Series D Letter of Credit, December 31, 2005, and no Issuing
Bank shall have any

                                        3

<PAGE>

obligation to honor a draw under any Letter of Credit after such date except as
otherwise provided in such Letter of Credit.

                  SECTION 2.02. Drawings and Reimbursement Under Letters of
Credit. (a) Drawing and Reimbursement. (i) The payment by the Short Term L/C
Series A Issuing Bank of a draw under the Short Term Series A Letter of Credit
shall constitute for all purposes of this Agreement the making by such Issuing
Bank of a Short Term Series A Letter of Credit Advance, which shall initially be
a Base Rate Advance, in the amount of such payment. Upon written demand by such
Issuing Bank to the Letter of Credit Administrative Agent, which shall
immediately present such demand to all Short Term L/C Series A Funding Lenders,
each Short Term L/C Series A Funding Lender shall purchase from such Issuing
Bank, and such Issuing Bank shall sell and assign to each such Short Term L/C
Series A Funding Lender, such Short Term L/C Series A Funding Lender's Pro Rata
Share of such outstanding Short Term Series A Letter of Credit Advance (after
deducting the amount of principal thereof to be prepaid pursuant to Section
2.04(c)) as of the date of such purchase, by making available for the account of
its Lending Office to the Letter of Credit Administrative Agent for the account
of such Issuing Bank in accordance with Section 2.02(a)(viii), by deposit to the
Agent's Account, in same day funds, an amount equal to such Pro Rata Share of
the outstanding principal amount of such Short Term Series A Letter of Credit
Advance to be purchased by such Short Term L/C Series A Funding Lender, together
with all accrued interest on the principal amount so purchased. Upon receipt
thereof, the Letter of Credit Administrative Agent shall transfer such funds to
such Issuing Bank.

                  (ii)     The payment by the Short Term L/C Series B Issuing
Bank of a draw under the Short Term Series B Letter of Credit shall constitute
for all purposes of this Agreement the making by such Issuing Bank of a Short
Term Series B Letter of Credit Advance, which shall initially be a Base Rate
Advance, in the amount of such payment. Upon written demand by such Issuing Bank
to the Letter of Credit Administrative Agent, which shall immediately present
such demand to all Short Term L/C Series B Funding Lenders, each Short Term L/C
Series B Funding Lender shall purchase from such Issuing Bank, and such Issuing
Bank shall sell and assign to each such Short Term L/C Series B Funding Lender,
such Short Term L/C Series B Funding Lender's Pro Rata Share of such outstanding
Short Term Series B Letter of Credit Advance (after deducting the amount of
principal thereof to be prepaid pursuant to Section 2.04(c)) as of the date of
such purchase, by making available for the account of its Lending Office to the
Letter of Credit Administrative Agent for the account of such Issuing Bank in
accordance with Section 2.02(a)(viii), by deposit to the Agent's Account, in
same day funds, an amount equal to such Pro Rata Share of the outstanding
principal amount of such Short Term Series B Letter of Credit Advance to be
purchased by such Short Term L/C Series B Funding Lender, together with all
accrued interest on the principal amount so purchased. Upon receipt thereof, the
Letter of Credit Administrative Agent shall transfer such funds to such Issuing
Bank.

                  (iii)    The payment by each Short Term L/C Series C Issuing
Bank of a draw under the Short Term Series C Letter of Credit issued by it shall
constitute for all purposes of this Agreement the making by such Issuing Bank of
a Short Term Series C Letter of Credit Advance, which shall initially be a Base
Rate Advance, in the amount of such payment. Upon written demand by such Issuing
Bank to the Letter of Credit Administrative Agent, which shall immediately
present such demand to all Short Term L/C Series C Funding Lenders, each Short
Term L/C Series C Funding Lender shall purchase from such Issuing Bank, and such
Issuing

                                        4

<PAGE>

Bank shall sell and assign to each such Short Term L/C Series C Funding Lender,
such Short Term L/C Series C Funding Lender's Pro Rata Share of such outstanding
Short Term Series C Letter of Credit Advance (after deducting the amount of
principal thereof to be prepaid pursuant to Section 2.04(c)) as of the date of
such purchase, by making available for the account of its Lending Office to the
Letter of Credit Administrative Agent for the account of such Issuing Bank in
accordance with Section 2.02(a)(viii), by deposit to the Agent's Account, in
same day funds, an amount equal to such Pro Rata Share of the outstanding
principal amount of such Short Term Series C Letter of Credit Advance to be
purchased by such Short Term L/C Series C Funding Lender, together with all
accrued interest on the principal amount so purchased. Upon receipt thereof, the
Letter of Credit Administrative Agent shall transfer such funds to such Issuing
Bank.

                  (iv)     The payment by each Long Term L/C Series A Issuing
Bank of a draw under the Long Term Series A Letter of Credit issued by it shall
constitute for all purposes of this Agreement the making by such Issuing Bank of
a Long Term Series A Letter of Credit Advance, which shall initially be a Base
Rate Advance, in the amount of such payment. In the case of any Long Term Series
A Letter of Credit Advance made by Deutsche Bank, upon written demand by such
Issuing Bank to the Letter of Credit Administrative Agent, which shall
immediately present such demand to all Long Term L/C Series A Funding Lenders,
each Long Term L/C Series A Funding Lender shall purchase from such Issuing
Bank, and such Issuing Bank shall sell and assign to each such Long Term L/C
Series A Funding Lender, such Long Term L/C Series A Funding Lender's Pro Rata
Share of such outstanding Long Term Series A Letter of Credit Advance (after
deducting the amount of principal thereof to be prepaid pursuant to Section
2.04(c)) as of the date of such purchase, by making available for the account of
its Lending Office to the Letter of Credit Administrative Agent for the account
of such Issuing Bank in accordance with Section 2.02(a)(viii), by deposit to the
Agent's Account, in same day funds, an amount equal to such Pro Rata Share of
the outstanding principal amount of such Long Term Series A Letter of Credit
Advance to be purchased by such Long Term L/C Series A Funding Lender, together
with all accrued interest on the principal amount so purchased. Upon receipt
thereof, the Letter of Credit Administrative Agent shall transfer such funds to
such Issuing Bank.

                  (v)      The payment by each Long Term L/C Series B Issuing
Bank of a draw under the Long Term Series B Letter of Credit issued by it shall
constitute for all purposes of this Agreement the making by such Issuing Bank of
a Long Term Series B Letter of Credit Advance, which shall initially be a Base
Rate Advance, in the amount of such payment. In the case of any Long Term Series
B Letter of Credit Advance made by Deutsche Bank, upon written demand by such
Issuing Bank, addressed to all Short Term L/C Series B Funding Lenders to the
Letter of Credit Administrative Agent, which shall immediately present such
demand to all Long Term L/C Series B Funding Lenders, each Long Term L/C Series
B Funding Lender shall purchase from such Issuing Bank, and such Issuing Bank
shall sell and assign to each such Long Term L/C Series B Funding Lender, such
Long Term L/C Series B Funding Lender's Pro Rata Share of such outstanding Long
Term Series B Letter of Credit Advance (after deducting the amount of principal
thereof to be prepaid pursuant to Section 2.04(c)) as of the date of such
purchase, by making available for the account of its Lending Office to the
Letter of Credit Administrative Agent for the account of such Issuing Bank
within in accordance with Section 2.02(a)(viii), by deposit to the Agent's
Account, in same day funds, an amount equal to such Pro Rata Share of the
outstanding principal amount of such Long Term Series B Letter of Credit Advance
to be purchased by such Long Term L/C Series B Funding Lender, together with all
accrued interest

                                        5

<PAGE>

on the principal amount so purchased. Upon receipt thereof, the Letter of Credit
Administrative Agent shall transfer such funds to such Issuing Bank.

                  (vi)     The payment by each Long Term L/C Series C Issuing
Bank of a draw under the Long Term Series C Letter of Credit issued by it shall
constitute for all purposes of this Agreement the making by such Issuing Bank of
a Long Term Series C Letter of Credit Advance, which shall initially be a Base
Rate Advance, in the amount of such payment. Upon written demand by such Issuing
Bank to the Letter of Credit Administrative Agent, which shall immediately
present such demand to all Long Term L/C Funding Lenders, each Long Term L/C
Series C Funding Lender shall purchase from such Issuing Bank, and such Issuing
Bank shall sell and assign to each such Long Term L/C Series C Funding Lender,
such Long Term L/C Series C Funding Lender's Pro Rata Share of such outstanding
Long Term Series C Letter of Credit Advance (after deducting the amount of
principal thereof to be prepaid pursuant to Section 2.04(c)) as of the date of
such purchase, by making available for the account of its Lending Office to the
Letter of Credit Administrative Agent for the account of such Issuing Bank in
accordance with Section 2.02(a)(viii), by deposit to the Agent's Account, in
same day funds, an amount equal to such Pro Rata Share of the outstanding
principal amount of such Long Term Series C Letter of Credit Advance to be
purchased by such Long Term L/C Series C Funding Lender, together with all
accrued interest on the principal amount so purchased. Upon receipt thereof, the
Letter of Credit Administrative Agent shall transfer such funds to such Issuing
Bank.

                  (vii)    The payment by the Long Term L/C Series D Issuing
Bank of a draw under the Long Term Series D Letter of Credit shall constitute
for all purposes of this Agreement the making by such Issuing Bank of a Long
Term Series D Letter of Credit Advance, which shall initially be a Base Rate
Advance, in the amount of such payment.

                  (viii)   The Company hereby agrees to each sale and assignment
made pursuant to this Section 2.02(a). Each L/C Funding Lender agrees to
purchase its Pro Rata Share of an outstanding Letter of Credit Advance hereunder
on (i) the Business Day on which demand therefor is made by the Issuing Bank
which made such Letter of Credit Advance, provided that notice of such demand
shall have been given in accordance with the terms hereof and shall have been
received not later than 11:00 A.M. (local time in the place where such L/C
Funding Lender's Lending Office is located) on such Business Day, or (ii) the
first Business Day next succeeding the date of such demand if notice of such
demand is given after such time. Upon each assignment by an Issuing Bank to any
L/C Funding Lender of a portion of a Letter of Credit Advance, such Issuing Bank
shall be deemed to represent and warrant to such other Lender that such Issuing
Bank is the legal and beneficial owner of such interest being assigned by it,
free and clear of any liens, but shall not be deemed to make any other
representation or warranty and shall not assume any responsibility with respect
to such Letter of Credit Advance, the Loan Documents or the Company. In the
event that, as of the fourth Business Day after the date of any Letter of Credit
Advance made by any Issuing Bank, the prepayment required to be made pursuant to
Section 2.04(c) has failed to occur for any reason, each L/C Funding Lender
required to purchase a Pro Rata Share of such Letter of Credit Advance shall,
upon notice of such failure given by the Issuing Bank and the Letter of Credit
Administrative Agent as provided for in Sections 2.02(a)(i) through (vi),
immediately purchase its Pro Rata Share of the amount of such Letter of Credit
Advance previously disregarded pursuant to this Section 2.02(a) in respect of
the prepayment amount anticipated to be paid pursuant to Section 2.04(c).

                                        6

<PAGE>

                  (b)      Failure to Make Letter of Credit Advances. (i) If and
to the extent that any L/C Funding Lender shall not have made a required amount
of a Letter of Credit Advance available to the Letter of Credit Administrative
Agent pursuant to the terms of Section 2.02(a), such L/C Funding Lender agrees
to pay to the Letter of Credit Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Issuing Bank from whom such L/C Funding Lender was required to purchase all
or a portion of such Letter of Credit Advance until the date such amount is paid
to the Letter of Credit Administrative Agent (A) during the first three (3)
Business Days after such payment was due, at the Federal Funds Rate and (B)
thereafter, at the Federal Funds Rate plus 2% per annum, for its account or the
account of such Issuing Bank, as applicable. For so long as amounts are due from
an L/C Funding Lender pursuant to this Section 2.02(b), the Issuing Bank to whom
such amounts are owed shall have the right without notice to such L/C Funding
Lender, to the extent permitted by applicable law, to set-off and appropriate
and apply against such amount any and all deposits, in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, at any time held or owing by such
Issuing Bank or any branch or agency thereof to or for the credit or the account
of such Issuing Bank. If such Lender shall pay to the Letter of Credit
Administrative Agent such amount for the account of such Issuing Bank such
Lender's Pro Rata Share of the outstanding principal amount of the Letter of
Credit Advance so purchased shall constitute a Letter of Credit Advance made by
such Lender on the date such payment is made or, if such day is not a Business
Day, on the next succeeding Business Day for purposes of this Agreement, and the
outstanding principal amount of the Letter of Credit Advance made by such
Issuing Bank shall be reduced by such amount on such Business Day.

                  (ii)     The failure of any Lender to make a Letter of Credit
Advance to be made by it on the date specified in Section 2.02(a) shall not
relieve any other Lender of its obligation hereunder to make any Letter of
Credit Advance on such date or any other date, but no L/C Funding Lender shall
be responsible for any amount greater than its Pro Rata Share with respect to
any Letter of Credit Advance solely as a result of the failure of any other
Lender required to purchase its Pro Rata Share of such Letter of Credit Advance
to make such purchase pursuant to Section 2.02(a).

                  SECTION 2.03. Fees. (a) Letter of Credit Fees. (i) The Company
shall pay to the Letter of Credit Administrative Agent, for the ratable account
of the Lenders with respect to each Letter of Credit (based on the proportional
obligation, as of the date of such payment, of each L/C Funding Lender to
purchase, and of the Issuing Bank to retain for its own account, any Letter of
Credit Advances made upon a draw under such Letter of Credit) a fee, payable
quarterly in arrears on the last day of each March, June, September and December
and on the Expiration Date with respect to such Letter of Credit (each, a
"Facility Fee Payment Date"), commencing on December 31, 2002, in an amount
equal to (A) the L/C Accrual Rate with respect to such Letter of Credit on the
difference between (I) the average daily Available Amount outstanding from time
to time with respect to such Letter of Credit during the period beginning on the
most recent Facility Fee Payment Date (or, if no Facility Fee Payment Date has
occurred, the Effective Date) to, but not including, such Facility Fee Payment
Date and (II) the average daily amount of that portion of the L/C Collateral
Account with respect to such Letter of Credit Facility allocable to such Letter
of Credit (based, on any day, on the Available Amount of such Letter of Credit
compared to the aggregate Available Amounts of all Letters of Credit under

                                        7

<PAGE>

such Letter of Credit Facility) from time to time during such period plus (B)
0.375% per annum on the amount in (A)(II). No fees under this Section 2.03(a)(i)
shall accrue in respect of any Letter of Credit under any circumstances after
the Expiration Date with respect to such Letter of Credit.

                  (ii)     Upon the occurrence and during the continuance of a
Default or Event of Default, the amount of any fee payable pursuant to any
clause of this Section 2.03(a)(ii) shall be determined by reference to a rate
per annum that is 2% per annum above the rate per annum referred to in such
clause.

                  (b)      Fronting Fees. The Company shall pay such fronting
fees to each Issuing Bank as may from time to time be agreed between the Company
and such Issuing Bank.

                  (c)      Up-Front Fees. On the Effective Date, the Company
shall pay to each Lender an up-front fee in the amount set forth opposite such
Lender's name on Schedule III hereto.

                  (d)      Other Fees. The Company shall pay to each Issuing
Bank, for its own account, the reasonable costs and expenses of such Issuing
Bank in connection with the issuance and administration of each Letter of Credit
issued by such Issuing Bank, in an aggregate amount per annum per Letter of
Credit not to exceed $1,200.

                  (e)      Administrative Agent's Fees. The Company shall pay to
the Letter of Credit Administrative Agent for its own account such fees as may
from time to time be agreed between the Company and the Letter of Credit
Administrative Agent.

                  SECTION 2.04. Prepayments of Letter of Credit Advances,
Reduction of Available Amounts of Letters of Credit and Other Actions. (a)
Reduction of Available Amounts of Letters of Credit. (i)The Company shall reduce
the Available Amount of any Letter of Credit issued under the Short Term L/C
Series A Facility, the Short Term L/C Series B Facility, the Long Term L/C
Series A Facility or the Long Term L/C Series B Facility, without premium or
penalty, at any time when such reduction is permitted to be made under any
agreement or instrument relating to such Letter of Credit. Any such reductions
shall be effected ratably (by Available Amounts under each outstanding Letter of
Credit under (A) the Short Term L/C Series A Facility and the Long Term L/C
Series A Facility or (B) the Short Term L/C Series B Facility and the Long Term
L/C Series B Facility, as the case may be) by means of a Reduction Certificate,
as delivered from time to time by the beneficiary under such Letter of Credit to
its Issuing Bank, such reductions to be effected on the date such Reduction
Certificate is delivered to such Issuing Bank or otherwise as provided for in
such Letter of Credit.

                  (ii)     The Company shall reduce the full then-outstanding
Available Amount of all Letters of Credit issued under the Short Term L/C Series
C Facility, the Long Term L/C Series C Facility and the Long Term L/C Series D
Facility, without premium or penalty, at any time when such full
then-outstanding Available Amounts are no longer needed under any agreement or
instrument relating to such Letters of Credit. Upon the reduction of such
Available Amount of each Letter of Credit, the Company shall deliver to the
Letter of Credit Administrative Agent a consent, in form and substance
satisfactory to the Letter of Credit

                                        8

<PAGE>

Administrative Agent and the Issuing Bank that issued such Letter of Credit, in
which the beneficiary of such Letter of Credit consents to the termination of
such Available Amount of such Letter of Credit.

                  (b)      Optional Prepayment of Letter of Credit Advances. The
Company may, upon at least three Eurodollar Business Days' irrevocable notice to
the Letter of Credit Administrative Agent stating the proposed date and
aggregate principal amount of the prepayment, and if such notice is given the
Company shall, prepay the outstanding principal amount of all outstanding Letter
of Credit Advances in whole or ratably in part together with, in accordance with
Section 2.04(k), all interest and any other amounts accrued or otherwise due in
respect of such Letter of Credit Advances through the date of such prepayment
(including, without limitation, all LIBOR Funding Costs incurred by the Lenders
in connection with such prepayment and payable by the Company pursuant to
Section 8.04(c)).

                  (c)      Mandatory Prepayment of Letter of Credit Advances.
The Company shall, no later than the fourth Business Day after any date on which
Letter of Credit Advances are made by any Issuing Banks under any Letter of
Credit Facility pursuant to Section 2.02(a), ratably prepay such Letter of
Credit Advances, from cash credited to the L/C Collateral Account with respect
to such Letter of Credit Facility, in an amount equal to the lesser of (i) the
amount then allocated to such L/C Collateral Account and (ii) the aggregate
principal amount of all such Letter of Credit Advances. Notwithstanding the
provisions of Section 8.04(c), the Company shall not be required to pay any
LIBOR Funding Costs incurred by any Lender in connection with any timely
prepayment made pursuant to this Section 2.04(c). All accrued interest on any
principal amount prepaid pursuant to this Section 2.04(c) shall be paid in
accordance with Section 2.04(k) but no amounts in any L/C Collateral Account
shall be used to pay any such accrued interest. The Company irrevocably
authorizes and instructs the Letter of Credit Administrative Agent to apply all
amounts credited to such L/C Collateral Account to the prepayment required under
this Section 2.04(c).

                  (d)      Actions Required On Repayment of Long Term Notes. On
the date of any scheduled repayment of principal of Long Term Trade Series Notes
or Long Term Working Capital Series Notes, the Company shall, with respect to
each Long Term L/C Facility:

                  (i)      first, prepay the outstanding principal amounts of
         any Letter of Credit Advances in respect of such Long Term L/C Facility
         and outstanding principal amounts of any MT Notes issued upon the
         conversion of any Letter of Credit Advances made under such Long Term
         L/C Facility (ratably, in accordance with the respective principal
         amounts thereof then outstanding), and

                  (ii)     second, to the extent necessary, cause a reduction in
         the Available Amount of all Letters of Credit outstanding under such
         Long Term L/C Facility, ratably in accordance with the respective
         Available Amounts thereof, and/or deposit cash into the L/C Collateral
         Account with respect to such Long Term L/C Facility,

so that, after giving effect to the above transactions, the fraction, expressed
as a percentage,

                  (A)      the numerator of which is equal to:

                                        9

<PAGE>

                           (I)      the aggregate principal amount of such
                  Letter of Credit Advances and MT Notes so prepaid on such
                  date, plus

                           (II)     the aggregate scheduled repayment of the
                  principal amount of such Letter of Credit Advances and MT
                  Notes made on such date, plus

                           (III)    the aggregate reductions of such Available
                  Amounts on such date, plus

                           (IV)     the amount of cash so deposited into such
                  L/C Collateral Account on such date, and

                  (B)      the denominator of which is equal to:

                           (I)      the aggregate principal amount of such
                  Letter of Credit Advances and MT Notes outstanding immediately
                  prior to any prepayment pursuant to this subsection, plus

                           (II)     the aggregate Available Amount of any such
                  Letters of Credit immediately prior to any reduction pursuant
                  to this subsection, minus

                           (III)    the aggregate amount of cash and investments
                  thereof credited to such L/C Collateral Account immediately
                  prior to any deposit pursuant to this subsection,

is equal to the percentage of the aggregate outstanding principal amount of the
Long Term Trade Series Notes and Long Term Working Capital Series Notes required
to be repaid on such date.

                  (e)      Actions Required on Receipt of Excess Cash. On the
first Payment Date that occurs at least 120 days after the end of each fiscal
year of the Company, the Company shall, with respect to each Letter of Credit
Facility:

                  (i)      first, prepay the outstanding principal amounts of
         any Letter of Credit Advances in respect of such Letter of Credit
         Facility and outstanding principal amounts of any MT Notes issued upon
         the conversion of any Letter of Credit Advances made under such Letter
         of Credit Facility (ratably, in accordance with the respective
         principal amounts thereof then outstanding), and

                  (ii)     second, to the extent necessary, cause a reduction in
         the Available Amounts of all Letters of Credit outstanding under such
         Letter of Credit Facility, ratably in accordance with the respective
         Available Amounts thereof, and/or deposit cash into the L/C Collateral
         Account with respect to such Letter of Credit Facility,

so that, after giving effect to the above transactions, the amount equal to:

                  (A)      the aggregate principal amount of such Letter of
         Credit Advances and MT Notes so prepaid on such date, plus

                                       10

<PAGE>

                  (B)      the aggregate amount of such reduction in such
         Available Amounts on such date, plus

                  (C)      the aggregate amount of cash so deposited in such L/C
         Collateral Account on such date,

is equal to:

                           (I)      50% of the Excess Cash of the Company for
                  such fiscal year, multiplied by

                           (II)     a fraction:

                                    (1)      the numerator of which is equal to:

                                             (x)      the aggregate principal
                                    amount of such Letter of Credit Advances and
                                    MT Notes outstanding immediately prior to
                                    any prepayment pursuant to this subsection,
                                    plus

                                             (y)      the aggregate Available
                                    Amount of any such Letters of Credit
                                    immediately prior to any reduction pursuant
                                    to this subsection, minus

                                             (z)      the aggregate amount of
                                    cash and investments thereof credited to
                                    such L/C Collateral Account immediately
                                    prior to any deposit pursuant to this
                                    subsection, and

                                    (2)      the denominator of which is equal
                           to:

                                             (x)      the aggregate principal
                                    amount of all Letter of Credit Advances
                                    outstanding under all Letter of Credit
                                    Facilities, all MT Notes issued upon the
                                    conversion of any Letter of Credit Advances,
                                    all Trade Series Notes and all Working
                                    Capital Series Notes, in each case
                                    outstanding immediately prior to any
                                    prepayment thereof from such Excess Cash,
                                    plus

                                             (y)      the aggregate Available
                                    Amount of all Letters of Credit outstanding
                                    under all Letter of Credit Facilities
                                    immediately prior to any reduction in
                                    respect of such Excess Cash, minus

                                             (z)      the aggregate amount of
                                    cash and investments thereof credited to the
                                    L/C Collateral Accounts in respect of all
                                    Letter of Credit Facilities immediately
                                    prior to any deposit in respect of such
                                    Excess Cash.

                  (f)      Actions Required in Respect of Net Cash Proceeds from
Asset Sales. On the first Payment Date that occurs at least 180 days after the
date of any Asset Sale by the

                                       11

<PAGE>

Company or any of its Subsidiaries (excluding Asset Sales in the ordinary course
of business), the Company shall, with respect to each Letter of Credit Facility:

                  (i)      first, prepay the outstanding principal amounts of
         any Letter of Credit Advances in respect of such Letter of Credit
         Facility and outstanding principal amounts of any outstanding MT Notes
         issued upon the conversion of any Letter of Credit Advances made under
         such Letter of Credit Facility (ratably, in accordance with the
         respective principal amounts thereof then outstanding), and

                  (ii)     second, to the extent necessary, reduce the Available
         Amounts of any Letters of Credit outstanding under such Letter of
         Credit Facility and/or deposit cash into the L/C Collateral Account
         with respect to such Letter of Credit Facility,

so that, after giving effect to the above transactions, the amount equal to:

                  (A)      the aggregate principal amount of such Letter of
         Credit Advances and MT Notes so prepaid on such date, plus

                  (B)      the aggregate amount of such reduction in such
         Available Amounts on such date, plus

                  (C)      the aggregate amount of cash so deposited in such L/C
         Collateral Account on such date,

is equal to:

                           (I)      100% of the Net Cash Proceeds from such
                  Asset Sale less the sum of the proceeds of such Asset Sale
                  that shall have been used for Capital Expenditures prior to
                  such Payment Date as permitted by subsection (e) of the
                  Negative Covenants in Annex C and, if such Asset Sale consists
                  of a Sale of Ecuadorian Assets, the amount of Net Cash
                  Proceeds of such Asset Sale required to be applied in
                  accordance with Section 2.04(j), multiplied by

                           (II)     a fraction:

                                    (1)      the numerator of which is equal to:

                                    (x)      the aggregate principal amount of
                           such Letter of Credit Advances and MT Notes
                           outstanding immediately prior to any prepayment
                           pursuant to this subsection, plus

                                    (y)      the aggregate Available Amount of
                           any such Letters of Credit immediately prior to any
                           reduction pursuant to this subsection, minus

                                    (z)      the aggregate amount of cash and
                           investments thereof credited to such L/C Collateral
                           Account immediately prior to any deposit pursuant to
                           this subsection, and

                                       12

<PAGE>

                                    (2)     the denominator of which is equal
                           to:

                                    (x)      the aggregate principal amount of
                           all Letter of Credit Advances outstanding under all
                           Letter of Credit Facilities, all MT Notes issued upon
                           the conversion of any Letter of Credit Advances, all
                           Trade Series Notes and all Working Capital Series
                           Notes, in each case outstanding immediately prior to
                           any prepayment thereof from such Net Cash Proceeds,
                           plus

                                    (y)      the aggregate Available Amount of
                           all Letters of Credit outstanding under all Letter of
                           Credit Facilities immediately prior to any reduction
                           in respect of such Net Cash Proceeds, minus

                                    (z)      the aggregate amount of cash and
                           investments thereof credited to the L/C Collateral
                           Accounts in respect of all Letter of Credit
                           Facilities immediately prior to any deposit in
                           respect of such Net Cash Proceeds.

                  (g)      Actions Required Regarding Changes in Debt. On the
first Business Day that occurs at least 50 days after the end of each fiscal
quarter of the Company, the Company shall, with respect to each Letter of Credit
Facility:

                  (i)      first, prepay the outstanding principal amounts of
         any Letter of Credit Advances in respect of such Letter of Credit
         Facility and outstanding principal amounts of any MT Notes issued upon
         the conversion of any Letter of Credit Advances made under such Letter
         of Credit Facility (ratably, in accordance with the respective
         principal amounts thereof then outstanding), and

                  (ii)     second, to the extent necessary, cause a reduction in
         the Available Amounts of all Letters of Credit outstanding under such
         Letter of Credit Facility, ratably in accordance with the respective
         Available Amounts thereof, and/or deposit cash into the L/C Collateral
         Account with respect to such Letter of Credit Facility,

so that, after giving effect to the above transactions, the amount equal to:

                  (A)      the aggregate principal amount of such Letter of
         Credit Advances and MT Notes so prepaid on such date, plus

                  (B)      the aggregate amount of such reduction in such
         Available Amounts on such date, plus

                  (C)      the aggregate amount of cash so deposited in such L/C
         Collateral Account on such date,

is equal to:

                                       13

<PAGE>

                           (I)      50% of the New Debt Amount with respect to
                  such fiscal quarter multiplied by

                           (II)     a fraction:

                  (A)      the numerator of which is equal to:

                                    (1)      the aggregate principal amount of
                           such Letter of Credit Advances and MT Notes
                           outstanding immediately prior to any prepayment
                           pursuant to this subsection, plus

                                    (2)     the aggregate Available Amount of
                           any such Letters of Credit immediately prior to any
                           reduction pursuant to this subsection, minus

                                    (3)      the aggregate amount of cash and
                           investments thereof credited to such L/C Collateral
                           Account immediately prior to any deposit pursuant to
                           this subsection, and

                           (B)      the denominator of which is equal to:

                                    (1)      the aggregate principal amount of
                           all Letter of Credit Advances outstanding under all
                           Letter of Credit Facilities, all MT Notes issued upon
                           the conversion of any Letter of Credit Advances, all
                           Trade Series Notes and all Working Capital Series
                           Notes, in each case outstanding immediately prior to
                           any prepayment thereof in respect of such New Debt
                           Amount, plus

                                    (2)      the aggregate Available Amount of
                           all Letters of Credit outstanding under all Letter of
                           Credit Facilities immediately prior to any reduction
                           in respect of such New Debt Amount, minus

                                    (3)      the aggregate amount of cash and
                           investments thereof credited to the L/C Collateral
                           Accounts in respect of all Letter of Credit
                           Facilities immediately prior to any deposit in
                           respect of such New Debt Amount.

                  (h)      Actions Required upon the Optional Prepayment of
Trade Series Notes, Working Capital Series Notes, MT Notes, Letter of Credit
Advances or Long Term Debt or the Occurrence of Certain Other Events. (x) With
respect to each Letter of Credit Facility, on any date on which the Company
shall at its option (i) prepay, redeem, repurchase or in any manner defease or
discharge any principal amount outstanding under Long Term Working Capital
Series Notes, Long Term Trade Series Notes, Long Term Letter of Credit Advances
made under any other Letter of Credit Facility, MT Notes issued upon the
conversion of Long Term Letter of Credit Advances made under any other Letter of
Credit Facility or Long Term Debt or (ii) (A) make any deposit to an L/C
Collateral Account pledged in favor of the Lenders under any other

                                       14

<PAGE>

Letter of Credit Facility or (B) reduce the Available Amount of any Letter of
Credit issued under any other Letter of Credit Facility by either (I) causing a
new letter of credit for which the Company or one or more of its Subsidiaries is
the account party to be issued other than under this Agreement or (II) having
the Company or one or more of its Subsidiaries create, assume, incur or suffer
to exist a Lien on cash or financial assets for the benefit of, or contribute
cash or financial assets to, the beneficiary thereof, at a time when no such
deposit or reduction would otherwise be required pursuant to this Agreement, the
Company shall:

                  (i)      first, prepay the outstanding principal amounts of
         any Letter of Credit Advances in respect of such Letter of Credit
         Facility and outstanding principal amounts of any MT Notes issued upon
         the conversion of any Letter of Credit Advances made under such Letter
         of Credit Facility (ratably, in accordance with the respective
         principal amounts thereof then outstanding), and

                  (ii)     second, to the extent necessary, cause a reduction in
         the Available Amount of all Letters of Credit outstanding under such
         Letter of Credit Facility, ratably in accordance with the respective
         Available Amounts thereof, and/or deposit cash into the L/C Collateral
         Account with respect to such Letter of Credit Facility,

so that, after giving effect to the above transactions, the fraction, expressed
as a percentage,

                  (A)      the numerator of which is equal to:

                           (I)      the aggregate principal amount of Letter of
                  Credit Advances and MT Notes in respect of such Letter of
                  Credit Facility so prepaid on such date, plus

                           (II)     the aggregate reductions of such Available
                  Amounts so caused in respect of Letters of Credit issued under
                  such Letter of Credit Facility on such date, plus

                           (III)    the amount of cash so deposited into the L/C
                  Collateral Account in respect of such Letter of Credit
                  Facility on such date, and

                  (B)      the denominator of which is equal to:

                           (I)      the aggregate principal amount of such
                  Letter of Credit Advances and MT Notes outstanding immediately
                  prior to any prepayment pursuant to this subsection, plus

                           (II)     the aggregate Available Amount of any such
                  Letters of Credit immediately prior to any reduction pursuant
                  to this subsection date, minus

                           (III)    the aggregate amount of cash and investments
                  thereof credited to such L/C Collateral Account immediately
                  prior to any deposit pursuant to this subsection,

is equal to:

                                       15

<PAGE>

                  (x)      if action by the Company is required under this
         subsection as a result of any prepayment of Long Term Working Capital
         Series Notes, Long Term Trade Series Notes, MT Notes issued upon the
         conversion of Long Term Letter of Credit Advances made under such other
         Letter of Credit Facility or Long Term Debt, the percentage of the
         aggregate then-outstanding principal amount of such Debt so prepaid;

                  (y)      if action by the Company is required under this
         subsection as a result of any prepayment of Long Term Letter of Credit
         Advances or any optional contribution or reduction by the Company
         described in the first paragraph of this subsection (h), the percentage
         that the amount so prepaid or contributed, or the amount of such
         reduction, as the case may be, represents in respect of:

                           (a)      the aggregate outstanding principal amount
                  of all Long Term Letter of Credit Advances under the
                  applicable Letter of Credit Facility, plus

                           (b)      the aggregate principal amount then
                  outstanding of all MT Notes issued upon the conversion of Long
                  Term Letter of Credit Advances made under the applicable
                  Letter of Credit Facility, plus

                           (c)      the aggregate Available Amounts of all
                  outstanding Letters of Credit issued under the applicable
                  Letter of Credit Facility, minus

                           (d)      the aggregate amount of cash and investments
                  thereof credited to the L/C Collateral Account established
                  with respect to the applicable Letter of Credit Facility;

                  in each case, as calculated immediately prior to such
                  prepayment, deposit or reduction.

In the event that the Company shall, at any time, with respect to any Long Term
Letter of Credit Advances, Long Term MT Notes, Long Term New Notes or Long Term
Debt, enter into any amendment to, or in any other manner cause any change or
rescheduling of, the scheduled payments of principal with respect to such Debt
that would result in a shortening of the remaining average life of any such
Debt, any payment of principal of such Debt on any date shall be treated as an
optional prepayment of such Debt for purposes of this Section 2.04(h)(x). Any
actions required by the Company under this Section 2.04(h)(x) shall be without
duplication of any actions required to be taken by the Company under Section
2.04(d).

                  (y)      The Company shall not on any date prior to the
Maturity Date thereof prepay, repurchase or in any manner defease or discharge
any principal amount of any Short Term Letter of Credit Advance, Short Term MT
Note or Short Term New Note (the "Prepaid Debt") unless otherwise required under
this Section 2.04 or under Section 2.4.2 of any Supplemental Indenture pursuant
to which Short Term New Notes are issued or unless on the same date it shall
have:

                                       16

<PAGE>

                  (i)      in the case of Short Term New Notes (other than Short
         Term MT Notes), other than any of the same constituting Prepaid Debt
         ("Other Short Term New Notes"), prepaid a principal amount thereof, and

                  (ii)     in the case of Short Term L/C Facilities, other than
         any thereof in respect of the Prepaid Debt ( "Other Short Term L/C
         Facilities"), at its option:

                           (A)      prepaid the principal amount of Short Term
                  Letter of Credit Advances and Short Term MT Notes in respect
                  of such Letter of Credit Facilities,

                           (B)      reduced the Available Amount of Letters of
                  Credit issued under such Short Term L/C Facilities and/or

                           (C)      deposited cash into L/C Collateral Accounts
                  in respect of such Short Term L/C Facilities,

so that the aggregate amount of such prepayments and, if applicable, reductions
and deposits, as a percentage of:

                  (I)      in the case of each other series of Other Short Term
         New Notes, the aggregate principal amount of such series of Other Short
         Term New Notes then outstanding, and

                  (II)     in the case of each Other Short Term L/C Facilities,
         the total Available Amount of Letters of Credit issued and principal
         amount of Letter of Credit Advances and Short Term MT Notes outstanding
         in respect of such Other Short Term L/C Facility, minus the value of
         cash and investments on deposit in the L/C Collateral Account in
         respect of such Other Short Term L/C Facility,

is the same as the percentage of the prepaid principal amount of Prepaid Debt is
of

                  (1)      if such Prepaid Debt is Short Term New Notes, the
         principal amount of such series of Short Term New Notes then
         outstanding,

                  (2)      if such Prepaid Debt is in respect of a Short Term
         L/C Facility, the total Available Amount of all Letters of Credit
         issued and the aggregate principal amount of Letter of Credit Advances
         and MT Notes in respect of such Short Term L/C Facility, minus the
         value of cash and investments on deposit in the L/C Collateral Account
         in respect of the Short Term L/C Facility.

In the event that the Company shall, at any time, with respect to any Short Term
Letter of Credit Advances, Short Term MT Notes or Short Term New Notes, enter
into any amendment to, or in any other manner cause any change or rescheduling
of, the scheduled payments of principal with respect to such Debt that would
result in a shortening of the remaining average life of any such Debt, any
payment of principal of such Debt on any date shall be treated as an optional
prepayment of such Debt for purposes of this Section 2.04(h)(y). Any actions
required by the

                                       17

<PAGE>

Company under this Section 2.04(h)(y) shall be without duplication of any
actions required to be taken by the Company under Section 2.04(d).

                  (i)      Actions Required on Prepayments of MT Notes. On the
date on which the Company shall at its option prepay any MT Notes issued upon
the conversion of Letter of Advances made under any Letter of Credit Facility,
the Company shall, with respect to such Letter of Credit Facility:

                  (i)      first, prepay the outstanding principal amounts of
         any Letter of Credit Advances in respect of such Letter of Credit
         Facility, and

                  (ii)     second, to the extent necessary, cause a reduction in
         the Available Amount of all Letters of Credit outstanding under such
         Letter of Credit Facility, ratably in accordance with the respective
         Available Amounts thereof, and/or deposit cash into the L/C Collateral
         Account with respect to such Letter of Credit Facility,

so that, after giving effect to the above transactions, the fraction, expressed
as a percentage,

                  (A)      the numerator of which is equal to:

                           (I)      the aggregate principal amount of Letter of
                  Credit Advances so prepaid on such date, plus

                           (II)     the aggregate reductions of such Available
                  Amounts in respect of Letters of Credit issued under such
                  Letter of Credit Facility on such date, plus

                           (III)    the amount of cash so deposited into the L/C
                  Collateral Account in respect of such Letter of Credit
                  Facility on such date, and

                  (B)      the denominator of which is equal to:

                           (I)      the aggregate principal amount of such
                  Letter of Credit Advances outstanding immediately prior to any
                  prepayment pursuant to this subsection, plus

                           (II)     the aggregate Available Amount of any such
                  Letters of Credit immediately prior to any reduction pursuant
                  to this subsection date, minus

                           (III)    the aggregate amount of cash and investments
                  thereof credited to such L/C Collateral Account immediately
                  prior to any deposit pursuant to this subsection,

is equal to the percentage of the aggregate outstanding principal amount of such
MT Notes so prepaid.

                  (j)      Actions Required on Sale of Ecuadorian Assets. No
later than ten (10) days following the date on which the Company shall complete
any Sale of Ecuadorian Assets, the Company shall, with respect to each of the
Short Term L/C Series A Facility, the Long Term

                                       18

<PAGE>

L/C Series A Facility, the Short Term L/C Series B Facility and the Long Term
L/C Series B Facility only:

                  (i)      first, prepay outstanding principal amounts of any
         Letter of Credit Advances under such Letter of Credit Facility and
         outstanding principal amounts of any MT Notes issued upon the
         conversion of any Letter of Credit Advances made under such Letter of
         Credit Facility (ratably, in accordance with the respective principal
         amounts thereof then outstanding), and

                  (ii)     second, to the extent necessary, reduce the Available
         Amount of any Letters of Credit outstanding under such Letter of Credit
         Facility and/or deposit cash into the L/C Collateral Account with
         respect to such Letter of Credit Facility,

so that, after giving effect to the above transactions, the fraction, expressed
as a percentage,

                  (A)      the numerator of which is equal to:

                           (I)      the aggregate principal amount of Letter of
                  Credit Advances and MT Notes so prepaid on such date, plus

                           (II)     the aggregate reductions of such Available
                  Amounts in respect of Letters of Credit issued under such
                  Letter of Credit Facility on such date, plus

                           (III)    the amount of cash so deposited into the L/C
                  Collateral Account in respect of such Letter of Credit
                  Facility on such date, and

                  (B)      the denominator of which is equal to:

                           (I)      the aggregate principal amount of such
                  Letter of Credit Advances and MT Notes outstanding immediately
                  prior to any prepayment pursuant to this subsection, plus

                           (II)     the aggregate Available Amount of any such
                  Letters of Credit immediately prior to any reduction pursuant
                  to this subsection, minus

                           (III)    the aggregate amount of cash and investments
                  thereof credited to such L/C Collateral Account immediately
                  prior to any deposit pursuant to this subsection,

is equal to the greater of:

                  (x)      the percentage of the Company's ownership of its OCP
         Shares that was subject to the Sale of Ecuadorian Assets, and

                  (y)      the percentage of the Company's participation in
         Block 31 that was subject to the Sale of Ecuadorian Assets.

                                       19

<PAGE>

                  (k)      Mechanics of Prepayments. All prepayments of Letter
of Credit Advances shall be made together with accrued interest to the date of
such prepayment on the principal amount so prepaid and all amounts that may be
owing under Section 8.04(c). Each prepayment of a Letter of Credit Advance shall
be applied ratably to the remaining scheduled principal payments in respect of
such Letter of Credit Advance. If any prepayment of Eurodollar Rate Advances
under a Letter of Credit Facility otherwise would be required to be made under
this Section 2.04(k) on a day other than the last day of the applicable Interest
Period therefor, the Company may transfer an amount to the Letter of Credit
Administrative Agent, for deposit into a separate collateral account established
(at the Company's sole expense) for such purpose and administered by the Letter
of Credit Administrative Agent, equal to the principal amount required to be so
prepaid, together with all interest that would accrue on such principal amount
(assuming such principal amount were prepaid on the last day of the applicable
Interest Period) and on the last day of such Interest Period, the Letter of
Credit Administrative Agent shall release all such amounts deposited from such
L/C Collateral Account and shall apply all such amounts to the prepayment of
such Eurodollar Rate Advances.

                  SECTION 2.05. Repayment. (a) The Company shall repay, on the
date that is one year from the Effective Date, to the Letter of Credit
Administrative Agent, for the account of the Short Term L/C Series A Issuing
Bank and each Short Term L/C Series A Funding Lender that has made a Short Term
Series A Letter of Credit Advance, the aggregate outstanding principal amount of
each Short Term Series A Letter of Credit Advance made by each of them prior to
or on such date.

                  (b)      The Company shall repay, on the date that is one year
from the Effective Date, to the Letter of Credit Administrative Agent, for the
account of the Short Term L/C Series B Issuing Bank and each Short Term L/C
Series B Funding Lender that has made a Short Term Series B Letter of Credit
Advance, the aggregate outstanding principal amount of each Short Term Series B
Letter of Credit Advance made by each of them prior to or on such date.

                  (c)      The Company shall repay, on the date that is one year
from the Effective Date, to the Letter of Credit Administrative Agent, for the
account of each Short Term L/C Series C Issuing Bank and each Short Term L/C
Series C Funding Lender that has made a Short Term Series C Letter of Credit
Advance, the aggregate outstanding principal amount of each Short Term Series C
Letter of Credit Advance made by each of them prior to or on such date.

                  (d)      (i) The Company shall repay to the Letter of Credit
Administrative Agent, for the account of each Long Term L/C Series A Issuing
Bank and each Long Term L/C Series A Funding Lender that has made a Long Term
Series A Letter of Credit Advance prior to the Payment Date on which the first
scheduled principal installment is due in respect of the Long Term Trade Series
Notes and Long Term Working Capital Series Notes, on such Payment Date, 2.5% of
the outstanding principal amount of each such Long Term Series A Letter of
Credit Advance on the date such Letter of Credit Advance was made and
thereafter, shall repay the remaining outstanding principal amount of each such
Long Term Series A Letter of Credit Advance in equal quarterly installments
beginning on the next following Payment Date and ending on the Maturity Date
with respect to the Long Term Series A Letter of Credit Advances (as such
initial repayment amount and such subsequent installments shall be reduced as a
result of the application of prepayments in accordance with Section 2.04 or as a
result of any optional

                                       20

<PAGE>

conversions of any Long Term Series A Letter of Credit Advances into MT Notes
pursuant to Section 2.08); provided that the final such installment shall in any
event be in an amount sufficient to pay the aggregate principal amount of such
Long Term Series A Letter of Credit Advance in full and shall occur no later
than the Maturity Date with respect to the Long Term Series A Letter of Credit
Advances.

                  (ii)     The Company shall repay to the Letter of Credit
Administrative Agent, for the account of each Long Term L/C Series A Issuing
Bank and each Long Term L/C Series A Funding Lender that has made a Long Term
Series A Letter of Credit Advance after the Payment Date on which the first
scheduled principal installment is due in respect of the Long Term Trade Series
Notes and Long Term Working Capital Series Notes, the outstanding principal
amount of each such Long Term Series A Letter of Credit Advance in equal
quarterly installments (as such installments shall be reduced as a result of the
application of prepayments in accordance with Section 2.04 or as a result of any
optional conversions of any Long Term Series A Letter of Credit Advances into MT
Notes pursuant to Section 2.08) beginning on the Payment Date that is the first
scheduled principal payment date of the Long Term Working Capital Series Notes
immediately following the date such Long Term Series A Letter of Credit Advance
is made and ending on the Maturity Date with respect to the Long Term Series A
Letter of Credit Advances; provided that the final such installment shall in any
event be in an amount sufficient to pay the aggregate principal amount of such
Long Term Series A Letter of Credit Advance in full and shall occur no later
than the Maturity Date with respect to the Long Term Series A Letter of Credit
Advances.

         (e)      (i) The Company shall repay to the Letter of Credit
Administrative Agent, for the account of each Long Term L/C Series B Issuing
Bank and each Long Term L/C Series B Funding Lender that has made a Long Term
Series B Letter of Credit Advance prior to the Payment Date on which the first
scheduled principal installment is due in respect of the Long Term Trade Series
Notes and Long Term Working Capital Series Notes, on such Payment Date, 2.5% of
the outstanding principal amount of each such Long Term Series B Letter of
Credit Advance on the date such Letter of Credit Advance was made and
thereafter, shall repay the remaining outstanding principal amount of each such
Long Term Series B Letter of Credit Advance in equal quarterly installments
beginning on the next following Payment Date and ending on the Maturity Date
with respect to the Long Term Series B Letter of Credit Advances (as such
initial repayment amount and such subsequent installments shall be reduced as a
result of the application of prepayments in accordance with Section 2.04 or as a
result of any optional conversions of any Long Term Series B Letter of Credit
Advances into MT Notes pursuant to Section 2.08); provided that the final such
installment shall in any event be in an amount sufficient to pay the aggregate
principal amount of such Long Term Series B Letter of Credit Advance in full and
shall occur no later than the Maturity Date with respect to the Long Term Series
B Letter of Credit Advances.

                  (ii)     The Company shall repay to the Letter of Credit
Administrative Agent, for the account of each Long Term L/C Series B Issuing
Bank and each Long Term L/C Series B Funding Lender that has made a Long Term
Series B Letter of Credit Advance after the Payment Date on which the first
scheduled principal installment is due in respect of the Long Term Trade Series
Notes and Long Term Working Capital Series Notes, the outstanding principal
amount of each such Long Term Series B Letter of Credit Advance in equal
quarterly installments (as such

                                       21

<PAGE>

installments shall be reduced as a result of the application of prepayments in
accordance with Section 2.04 or as a result of any optional conversions of any
Long Term Series B Letter of Credit Advances into MT Notes pursuant to Section
2.08) beginning on the Payment Date that is the first scheduled principal
payment date of the Long Term Working Capital Series Notes immediately following
the date such Long Term Series B Letter of Credit Advance is made and ending on
the Maturity Date with respect to the Long Term Series B Letter of Credit
Advances; provided that the final such installment shall in any event be in an
amount sufficient to pay the aggregate principal amount of such Long Term Series
B Letter of Credit Advance in full and shall occur no later than the Maturity
Date with respect to the Long Term Series B Letter of Credit Advances.

                  (f)      (i) The Company shall repay to the Letter of Credit
Administrative Agent, for the account of each Long Term L/C Series C Issuing
Bank and each Long Term L/C Series C Funding Lender that has made a Long Term
Series C Letter of Credit Advance prior to the Payment Date on which the first
scheduled principal installment is due in respect of the Long Term Trade Series
Notes and Long Term Working Capital Series Notes, on such Payment Date, 2.5% of
the outstanding principal amount of each such Long Term Series C Letter of
Credit Advance on the date such Letter of Credit Advance was made and
thereafter, shall repay the remaining outstanding principal amount of each such
Long Term Series C Letter of Credit Advance in equal quarterly installments
beginning on the next following Payment Date and ending on the Maturity Date
with respect to the Long Term Series C Letter of Credit Advances (as such
initial repayment amount and such subsequent installments shall be reduced as a
result of the application of prepayments in accordance with Section 2.04 or as a
result of any optional conversions of any Long Term Series C Letter of Credit
Advances into MT Notes pursuant to Section 2.08); provided that the final such
installment shall in any event be in an amount sufficient to pay the aggregate
principal amount of such Long Term Series C Letter of Credit Advance in full and
shall occur no later than the Maturity Date with respect to the Long Term Series
C Letter of Credit Advances.

                  (ii)     The Company shall repay to the Letter of Credit
Administrative Agent, for the account of each Long Term L/C Series C Issuing
Bank and each Long Term L/C Series C Funding Lender that has made a Long Term
Series C Letter of Credit Advance after the Payment Date on which the first
scheduled principal installment is due in respect of the Long Term Trade Series
Notes and the Long Term Working Capital Series Notes, the outstanding principal
amount of each such Long Term Series C Letter of Credit Advance in equal
quarterly installments (as such installments shall be reduced as a result of the
application of prepayments in accordance with Section 2.04 or as a result of any
optional conversions of any Long Term Series C Letter of Credit Advances into MT
Notes pursuant to Section 2.08) beginning on the Payment Date that is the first
scheduled principal payment date of the Long Term Working Capital Series Notes
immediately following the date such Long Term Series C Letter of Credit Advance
is made and ending on the Maturity Date with respect to the Long Term Series C
Letter of Credit Advances; provided that the final such installment shall in any
event be in an amount sufficient to pay the aggregate principal amount of such
Long Term Series C Letter of Credit Advance in full and shall occur no later
than the Maturity Date with respect to the Long Term Series C Letter of Credit
Advances.

                                       22

<PAGE>

                  (g)      (i)      The Company shall repay to the Letter of
Credit Administrative Agent, for the account of the Long Term L/C Series D
Issuing Bank that has made a Long Term Series D Letter of Credit Advance prior
to the Payment Date on which the first scheduled principal installment is due in
respect of the Long Term Trade Series Notes and Long Term Working Capital
Series, on such Payment Date, 2.5% of the outstanding principal amount of each
such Long Term Series D Letter of Credit Advance on the date such Letter of
Credit Advance was made and thereafter, shall repay the remaining outstanding
principal amount of each such Long Term Series D Letter of Credit Advance in
equal quarterly installments beginning on the next following Payment Date and
ending on the Maturity Date with respect to the Long Term Series D Letter of
Credit Advances (as such initial repayment amount and such subsequent
installments shall be reduced as a result of the application of prepayments in
accordance with Section 2.04 or as a result of any optional conversions of any
Long Term Series D Letter of Credit Advances into MT Notes pursuant to Section
2.08); provided that the final such installment shall in any event be in an
amount sufficient to pay the aggregate principal amount of such Long Term Series
D Letter of Credit Advance in full and shall occur no later than the Maturity
Date with respect to the Long Term Series D Letter of Credit Advances.

                  (ii)     The Company shall repay to the Letter of Credit
Administrative Agent, for the account of the Long Term L/C Series D Issuing Bank
that has made a Long Term Series D Letter of Credit Advance after the Payment
Date on which the first scheduled principal installment is due in respect of the
Long Term Trade Series Notes and the Long Term Working Capital Series Notes, the
outstanding principal amount of each such Long Term Series D Letter of Credit
Advance in equal quarterly installments (as such installments shall be reduced
as a result of the application of prepayments in accordance with Section 2.04 or
as a result of any optional conversions of any Long Term Series D Letter of
Credit Advances into MT Notes pursuant to Section 2.08) beginning on the Payment
Date that is the first scheduled principal payment date of the Long Term Working
Capital Series Notes immediately following the date such Long Term Series D
Letter of Credit Advance is made and ending on the Maturity Date with respect to
the Long Term Series D Letter of Credit Advances; provided that the final such
installment shall in any event be in an amount sufficient to pay the aggregate
principal amount of such Long Term Series D Letter of Credit Advance in full and
shall occur no later than the Maturity Date with respect to the Long Term Series
D Letter of Credit Advances.

                  (h)      The Obligations of the Company under this Agreement
and any other agreement or instrument relating to any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances (it
being understood that any such payment by the Company is without prejudice to,
and does not constitute a waiver of, any rights the Company might have or might
acquire as a result of the payment by any Issuing Bank of any draft or the
reimbursement by the Company thereof):

                  (i)      any lack of validity or enforceability of any Loan
         Document, any Letter of Credit or any other agreement or instrument
         relating thereto (all of the foregoing being, collectively, the "L/C
         Related Documents");

                                       23

<PAGE>

                  (ii)     any change in the time, manner or place of payment
         of, or in any other term of, all or any of the Obligations of the
         Company in respect of any L/C Related Document or any other amendment
         or waiver of or any consent to departure from all or any of the L/C
         Related Documents;

                  (iii)    the existence of any claim, set-off, defense or other
         right that the Company may have at any time against any beneficiary or
         any transferee of a Letter of Credit (or any Persons for which any such
         beneficiary or any such transferee may be acting), any Issuing Bank,
         any Lender or any other Person, whether in connection with the
         transactions contemplated by the L/C Related Documents or any unrelated
         transaction;

                  (iv)     any statement or any other document presented under a
         Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect;

                  (v)      payment by any Issuing Bank under a Letter of Credit
         against presentation of a draft or certificate that does not strictly
         comply with the terms of such Letter of Credit;

                  (vi)     any exchange, release or non-perfection of any
         collateral for all or any of the Obligations of the Company in respect
         of the L/C Related Documents; or

                  (vii)    any other circumstance or happening whatsoever,
         whether or not similar to any of the foregoing, including, without
         limitation, any other circumstance that might otherwise constitute a
         defense available to, or a discharge of, the Company.

                  SECTION 2.06. Interest. (a) Scheduled Interest. The Company
shall pay interest on the unpaid principal amount of each Letter of Credit
Advance owing to a Lender from the date of such Letter of Credit Advance until
such principal amount shall be paid in full, at the following rates per annum:

                  (i)      Base Rate Advances. During such periods as such
         Letter of Credit Advance is a Base Rate Advance, a rate per annum equal
         at all times to the sum of (x) the Base Rate in effect from time to
         time plus (y) the Applicable Margin in effect from time to time with
         respect to such Letter of Credit Advance, payable in arrears quarterly
         on each Payment Date during such periods and on the date such Base Rate
         Advance shall be Converted or paid in full.

                  (ii)     Eurodollar Rate Advances. During such periods as such
         Letter of Credit Advance is a Eurodollar Rate Advance, a rate per annum
         equal at all times during each Interest Period for such Letter of
         Credit Advance to the sum of (x) LIBOR for such Interest Period for
         such Letter of Credit Advance plus (y) the Applicable Margin with
         respect to such Letter of Credit Advance in effect from time to time,
         payable in arrears on the last day of such Interest Period and on the
         date such Eurodollar Rate Advance shall be Converted or paid in full.

                  (b)      Default Interest. Upon any failure by the Company to
make any payment hereunder or under any Letter of Credit Advance Note, the
Company shall pay interest on (i) the

                                       24

<PAGE>

unpaid principal amount of each Letter of Credit Advance owing to each Lender,
payable in arrears on the dates referred to in clause (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 Letter of Credit Advance pursuant to clause (a)(i)
or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of
any interest, fee or other amount payable hereunder or under any Letter of
Credit Advance Note that is not paid when due, from the date such amount shall
be due until such amount shall be paid in full, payable in full in arrears on
any date any such amount shall be paid and on demand, at a rate per annum equal
at all times to 2% per annum above the rate per annum then required to be paid,
in the case of interest, on the Type of Letter of Credit Advance on which such
interest has accrued pursuant to clause (a)(i) or (a)(ii) above and, in all
other cases, on Eurodollar Rate Advances pursuant to clause (a)(ii) above (such
rate of interest, the "Default Rate").

                  SECTION 2.07. Interest Rate Determination. (a) The Letter of
Credit Administrative Agent shall promptly determine and shall give prompt
notice to the Company and the Lenders of the applicable interest rate determined
by the Letter of Credit Administrative Agent for purposes of Section 2.06(a)(i)
or (ii).

                  (b)      If (i) on or prior to the first day of any Interest
Period the Letter of Credit Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining LIBOR for such Interest Period or (ii) on or prior to
the first day of any Interest Period the Majority Holders with respect to a
Letter of Credit Facility advise the Letter of Credit Administrative Agent that
LIBOR for such Interest Period will not adequately and fairly reflect the cost
to such Majority Holders of making, funding or maintaining their Eurodollar Rate
Advances under such Letter of Credit Facility during such Interest Period, the
Letter of Credit Administrative Agent shall forthwith give notice thereof (an
"Alternate Rate Notice") in respect of such Interest Period to the Company and
the Lenders, whereupon until the Letter of Credit Administrative Agent gives
notice (an "Alternate Rate Rescission Notice") to the Company and the Lenders
that the circumstances giving rise to such Alternate Rate Notice no longer exist
(it being understood that the Letter of Credit Administrative Agent will give
such notice reasonably promptly after it has knowledge that such circumstances
ceased to exist), the interest rate applicable to the Eurodollar Rate Advances
under such Letter of Credit Facility shall be determined pursuant to the
provisions set forth in Section 2.07(c) or 2.07(d), as applicable.

                  (c)      Upon delivery of an Alternate Rate Notice upon the
occurrence of conditions set forth in clause (i) of Section 2.07(b), the
alternative basis for computing interest on the relevant Eurodollar Rate
Advances, which shall be payable in connection with such Interest Period shall
be the greater of (x) the Federal Funds Rate plus 0.5% or (y) the Prime Rate,
plus in each case the Applicable Margin with respect to such Eurodollar Rate
Advances. The Letter of Credit Administrative Agent shall give prompt written
notice to the Company and the Lenders of the rate of interest so determined, and
its determination thereof shall be prima facie evidence thereof, absent manifest
error.

                  (d)      Upon delivery of an Alternate Rate Notice upon the
occurrence of conditions set forth in clause (ii) of Section 2.07(b), during the
30 days next succeeding the giving of such Alternate Rate Notice, the Company
and the Letter of Credit Administrative

                                       25

<PAGE>

Agent shall negotiate in good faith in order to arrive at a mutually
satisfactory alternative basis (having the written approval of the Majority
Holders with respect to the relevant Letter of Credit Facility) for computing
interest on the Eurodollar Rate Advances outstanding under such Letter of Credit
Facility (the "Alternative Basis Interest Rate"), which shall be payable in
connection with such Interest Period in order to compensate the Lenders of the
relevant Letter of Credit Advances for the inadequate interest rate resulting
from the occurrence of the conditions specified in clause (ii) of this Section
2.07(b). If within such 30-day period, the Company and the Letter of Credit
Administrative Agent agree in writing upon the Alternative Basis Interest Rate,
such Alternative Basis Interest Rate shall be payable to all Lenders under such
Letter of Credit Facility from the commencement of, and only for, the duration
of such Interest Period. If the Company and the Letter of Credit Administrative
Agent fail to agree upon an Alternative Basis Interest Rate within such 30-day
period, the Alternative Basis Interest Rate in connection with such Interest
Period payable to each Lender under such Letter of Credit Facility for such
Interest Period shall be such Alternative Basis Interest Rate as such Lender
shall determine (in a certificate delivered by such Lender to the Letter of
Credit Administrative Agent setting forth the basis of the computation of such
amount, which certificate shall be conclusive and binding for all purposes,
absent manifest error) to be necessary to compensate such Lender for its cost of
obtaining (in good faith and using commercially reasonable efforts to minimize
the interest cost to the Company) as of the commencement of such Interest Period
funds for such Interest Period in an amount equal to the principal amount of
such Lender's outstanding Eurodollar Rate Advances plus the Applicable Margin
with respect to such Eurodollar Rate Advances. The Letter of Credit
Administrative Agent shall notify the Company of each such determination as
promptly as practicable. As the negotiations described in this Section 2.07(d)
and any resulting Alternative Basis Interest Rate are intended for the direct
benefit of the Lenders under the relevant Letter of Credit Facility, the Company
expressly covenants and acknowledges (i) that as a result of any such
negotiations following the delivery of an Alternate Rate Notice, such Lenders
shall not receive a lower rate of interest on their Eurodollar Rate Advances
than they would have received had there not been such negotiations, and (ii)
that such negotiations shall in no event cause, justify or give rise to any
delay or reduction in the payment of interest, principal or other amounts
payable by the Company under this Agreement or any Letter of Credit Advance
Note.

                  (e)      Notwithstanding subsections (a) through (d) above, if
(i) the circumstances in clause (i) of subsection (b) above arise in respect of
ascertaining LIBOR for the initial Interest Period occurring after any
Conversion hereunder of any Base Rate Advances made under any Letter of Credit
Facility to Eurodollar Rate Advances under such Letter of Credit Facility or
(ii) the circumstances in clause (ii) of subsection (b) above arise in respect
of the making, funding or maintaining of Eurodollar Rate Advances to be made,
funded or maintained upon the Conversion hereunder of any Base Rate Advances
made under any Letter of Credit Facility to Eurodollar Rate Advances under such
Letter of Credit Facility, in each such case the provisions in subsections (a)
through (d) above shall not apply and such Base Rate Advances shall not be
converted to Eurodollar Rate Advances until the Letter of Credit Administrative
Agent gives notice to the Company that the circumstances in clause (i) or (ii)
of subsection (b), respectively, no longer exist (it being understood that the
Letter of Credit Administrative Agent will give such notice reasonably promptly
after it has knowledge that such circumstances ceased to exist). Three Business
Days after the date of such notification, all such Base Rate Advances shall
automatically be Converted to Eurodollar Rate Advances.

                                       26

<PAGE>

                  SECTION 2.08. Conversion of Advances. (a) Subject to the
provisions in Section 2.10, Base Rate Advances comprising the same Borrowing
shall be automatically Converted into Eurodollar Rate Advances four Business
Days after the date such Base Rate Advances are made.

                  (b)      The Company may on any Business Day, upon notice to
the Letter of Credit Administrative Agent given not later than 11:00 A.M. (New
York City time) on the third Business Day prior to the date of the proposed
Conversion, Convert Letter of Credit Advances comprising the same Borrowing
(provided that the Company shall not convert any Letter of Credit Advance made
by an Issuing Bank pursuant to Section 2.02 upon payment of a draft drawn under
any Letter of Credit (i) unless all relevant L/C Funding Lenders have purchased
their Pro Rata Shares of such Letter of Credit Advance in accordance with
Section 2.02, (ii) unless any prepayment of such Letter of Credit Advance
required under Section 2.04(c) shall have been received by the relevant Lenders
and (iii) at any time when payments to be made under such MT Notes would be
subject to foreign exchange restrictions, controls or prohibitions under
Argentine law) into Debt evidenced by notes (the "MT Notes") issued under the
Medium Term Note Program pursuant to a supplemental indenture substantially in
the form attached hereto as Exhibit H-1 in the case of any Short Term Letter of
Credit Advances so Converted and in the form attached hereto as Exhibit H-2 in
the case of any Long Term Letter of Credit Advances so Converted, with respect
to which, in the case of MT Notes issued upon a Conversion of Letter of Credit
Advances made by any Lender under the Short Term L/C Series A Facility, the
Short Term L/C Series B Facility, the Long Term L/C Series A Facility or the
Long Term L/C Series B Facility, each of Perez Companc International S.A., Perez
Companc Ecuador and EcuadorTLC S.A. shall be a co-obligor with the Company in
respect of all Obligations thereunder, and in the case of MT Notes issued upon a
Conversion of Letter of Credit Advances made by any Lender under the Long Term
L/C Series D Facility, Pecom Energia S.A., Sucursal Bolivia shall be a
co-obligor with the Company in respect of all Obligations thereunder, in each
case pursuant to documentation in form and substance satisfactory to such
Lender. Any such Conversion shall ratably Convert Letter of Credit Advances
comprising the same Borrowing; provided that the Letter of Credit Advances of
any Lender that, as of the Conversion Date (as defined below), cannot make all
of the representations set forth in Section 8.12 hereof shall not be Converted
and such Letter of Credit Advances shall remain Letter of Credit Advances
hereunder. On the date of the proposed conversion (the "Conversion Date"), the
Company shall, pursuant to the terms of a note purchase agreement substantially
in the form attached hereto as Exhibit I, deliver or cause to be delivered to
each purchasing Lender an MT Note in the aggregate face amount to be purchased
by such Lender (or such Lender's assignee), dated the issue date and registered
in such Lender's (or assignee's) name, against delivery to the Company of (i) a
settlement agreement, in the form of Exhibit J hereto, transferring all of such
Lender's rights, title and interest in respect of all amounts owing to such
Lender by the Company in respect of the Letter of Credit Advances to be
Converted (other than in respect of interest accrued through (and including) the
day preceding the Conversion Date and any other amounts other than principal
owing or accrued in respect thereof on the Conversion Date) and (ii) the Letter
of Credit Advance Note or Letter of Credit Advance Notes, as applicable, held by
such Lender representing or evidencing the obligations of the Company with
respect to the Letter of Credit Advances to be converted. Upon the issuance of
an MT Note to a Lender (or assignee) pursuant to this Section 2.08(b), the
Company shall have no further obligations under this Agreement or any instrument
or note delivered hereunder with

                                       27

<PAGE>

respect to the Letter of Credit Advances of such Lender (or assignee) Converted
pursuant to this Section 2.08(b), and the Note Documents with respect to such MT
Notes shall supersede and replace the Loan Documents and all instruments and
notes delivered under such Loan Documents with respect to the Letter of Credit
Advances of such Lender Converted pursuant to this Section 2.08(b) (without any
such act causing the novation of the obligations under the Loan Documents);
provided that the obligations of the Company under Sections 2.09, 2.12 and 8.04
shall remain in effect to the extent that any claim thereunder relates to an
event arising prior to the Conversion Date. Upon any Conversion of Letter of
Credit Advances comprising the same Borrowing pursuant to this Section 2.08(b),
the remaining scheduled principal payments in respect of such Letter of Credit
Advances shall be ratably reduced in an aggregate amount equal to the amount of
such Letter of Credit Advances so Converted.

                  SECTION 2.09. Increased Costs. (a) If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change in
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency, (i) shall subject any Lender (or its Lending Office) to any tax, duty or
other charge with respect to one or more of its Eurodollar Rate Advances or its
obligation to make Eurodollar Rate Advances, or shall change the basis of
taxation of payments to any Lender (or its Lending Office) of the principal of
or interest on its Eurodollar Rate Advances or any other amounts due under this
Agreement or any Letter of Credit Advance Notes (except for the introduction of,
or changes in the rate of, tax on the overall net income of such Lender or its
Lending Office, or franchise taxes, imposed by the jurisdiction (or any
political subdivision or taxing authority thereof) under the laws of which such
Lender is organized, or in which such Lender's principal office or Lending
Office is located); or (ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System and minimum reserve requirements of the
European Central Bank but excluding any such requirement included in an
applicable Eurodollar Reserve Percentage), special deposit, insurance assessment
or similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (or its Lending Office) or shall impose on any
Lender (or its Lending Office) or the London interbank market any other
condition affecting the purchasing, owning, holding or maintaining of any one or
more Eurodollar Rate Advances by such Lender or the obligation of such Lender to
make Eurodollar Rate Advances and the result of any of the foregoing is to
increase the cost to such Lender (or its Lending Office) of purchasing, owning,
holding, maintaining, making or being obligated to make any one or more of its
Eurodollar Rate Advances, or to reduce the amount of any sum received or
receivable by such Lender (or its Lending Office) under the Agreement and any
one or more of its Letter of Credit Advance Notes, by an amount deemed by such
Lender to be material (excluding, for purposes of this Section 2.09 any
increased costs or any reductions resulting from any Indemnifiable Taxes (as
defined in Section 2.12) or Other Taxes (payable by the Company pursuant to
Section 2.12)), then, promptly after demand by such Lender (with a copy to the
Letter of Credit Administrative Agent), which demand shall be accompanied by a
certificate of such Lender setting forth in reasonable detail the circumstances
which give rise to such increase or reduction, the amount of the claim and the
calculation thereof (and which certificate shall be conclusive and binding for
all purposes, absent manifest error), the Company shall, to the extent that it
shall not have done

                                       28

<PAGE>

so under any other provision of this Agreement, pay to such Lender such
additional amount or amounts as will, without duplication, compensate such
Lender for such increased cost or reduction.

                  (b)      If, on or after the date hereof, any Lender shall
determine that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has the effect of reducing the rate of return on capital of
any Lender as a consequence of such Lender's purchasing, owning, maintaining or
holding any Eurodollar Rate Advances or such Lender's obligation to make
Eurodollar Rate Advances hereunder to a level below that which such Lender could
have achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Lender to be material, then from time to time, promptly after demand by
such Lender (with a copy to the Letter of Credit Administrative Agent), which
demand shall be accompanied by a certificate of such Lender setting forth in
reasonable detail the circumstances which give rise to such reduction, the
amount of the claim and the calculation thereof (and which certificate shall be
conclusive and binding for all purposes, absent manifest error), the Company
shall, to the extent that it shall not have already done so under any other
provision of this Agreement, pay to such Lender such additional amount or
amounts as will, without duplication, compensate such Lender for such reduction.

                  (c)      Each Lender will promptly notify the Company and the
Letter of Credit Administrative Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to compensation
pursuant to this Section 2.09. Each Lender will, before requesting compensation
for additional amounts pursuant to this Section 2.09, use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
minimize or eliminate the requirement of such compensation by transferring its
Letter of Credit Advances, Letter of Credit Advance Notes and its obligations to
make Letter of Credit Advances hereunder or to purchase a Pro Rata Share of any
Letter of Credit Advances hereunder, as applicable, to a different lending
office if such transfer will avoid or reduce the need for compensation for such
additional amounts and will not, in the sole judgment of such Lender, be
otherwise disadvantageous (economically or otherwise) to such Lender; provided
that no Lender shall have any obligation to provide any information as to any
possible actions or designations considered and taken or rejected by such Lender
or the reasons therefor. A certificate of any Lender claiming compensation under
this Section 2.09 and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive and binding for all purposes, absent
manifest error.

                  (d)      The Company shall not be required to compensate a
Lender as provided by this Section 2.09 if the increased cost or reduction in
respect of which such claim for additional amounts arises results solely from a
requirement which is applicable to the relevant Lender by reason of its
financial condition or assets and which is not of general application to similar
persons of a similar type in similar circumstances in the same jurisdiction.

                                       29

<PAGE>

                  SECTION 2.10. Illegality. (a) Notwithstanding any other
provision of this Agreement, if on or after the date hereof any Lender shall
notify the Letter of Credit 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 Lending Office to perform its obligations hereunder to
make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder (after such Lender has used reasonable efforts to transfer its
Eurodollar Rate Advances, its Letter of Credit Advance Notes evidencing
Eurodollar Rate Advances and its obligations to fund and maintain Eurodollar
Rate Advances to a different lending office if such transfer will avoid
illegality and shall not, in the sole judgment of such Lender, be
disadvantageous (economically or otherwise) to such Lender), each Eurodollar
Rate Advance will automatically, upon demand, Convert into a Base Rate Advance
and no Base Rate Advances shall be converted into Eurodollar Rate Advances until
the circumstances giving rise to such illegality no longer exist; provided that
on the date such circumstances no longer exist and all Lenders are able to make
Eurodollar Rate Advances hereunder, all Base Rate Advances shall automatically
be Converted into Eurodollar Rate Advances three Business Days after such date
and all Base Rate Advances made after such date shall automatically be Converted
to Eurodollar Rate Advances pursuant to Section 2.08.

                  (b)      If any L/C Funding Lender shall notify the Letter of
Credit 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 Lending Office to perform its obligations hereunder to make any Advances
under any Letter of Credit Facility or to fund or maintain any Advances under
any Letter of Credit Facility, to the extent the circumstances in subsection (a)
do not apply and after such Lender has used reasonable efforts to transfer its
Advances, its Letter of Credit Advance Notes evidencing such Advances and its
obligations to fund and maintain Advances to a different lending office if such
transfer will avoid illegality and shall not, in the sole judgment of such
Lender, be disadvantageous (economically or otherwise) to such Lender, (i) the
Company shall immediately prepay in full the then outstanding principal amount
of such Advances, together with accrued interest thereon; (ii) the obligation of
such L/C Funding Lender to make any Advances shall be suspended until such
Lender notifies the Company and the Letter of Credit Administrative Agent that
the circumstances giving rise to such suspension no longer exist; and (iii) the
Company shall deposit into the L/C Collateral Account with respect to the Letter
of Credit Facility under which such Advances were made an amount in cash equal
to the aggregate principal amount of advances such L/C Funding Lender would
otherwise have been required to make under such Letter of Credit Facility
pursuant to Section 2.02 (assuming all Letters of Credit outstanding under such
Letter of Credit Facility were fully drawn at the time of such suspension).

                  SECTION 2.11. Payments and Computations. (a) The Company shall
make each payment hereunder and under the Letter of Credit Advance Notes not
later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars
to the Letter of Credit Administrative Agent at the Agent's Account in same day
funds. With respect to funds paid to the Letter of Credit Administrative Agent,
the Letter of Credit Administrative Agent will promptly thereafter cause like
funds to be distributed (i) if such payment by the Company is in respect of
principal, interest, fees or any other Obligation then payable hereunder and
under the Letter of Credit Advance Notes to more than one Lender, to such
Lenders for the account of their respective

                                       30

<PAGE>

Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lenders and (ii) if such payment by the Company
is in respect of any Obligation then payable hereunder to one Lender, to such
Lender for the account of its 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 effective date
specified in such Assignment and Acceptance, the Letter of Credit Administrative
Agent shall make all payments hereunder and under the Letter of Credit Advance
Notes 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 effective
date directly between themselves.

                  (b)      All interest hereunder shall be computed by the
Letter of Credit Administrative Agent on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first day but
excluding the last day). Notwithstanding the foregoing, (i) during each
Alternate Rate Period, for each day that an alternative basis interest rate is
determined pursuant to Section 2.07(c) and such alternative basis interest rate
is based upon the Prime Rate as contemplated therein, interest shall be computed
on the basis of a year of 365 or 366 days, as the case may be, and paid for the
actual number of days elapsed (including the first day but excluding the last
day) and (ii) all computations of interest based on the Base Rate shall be made
on the basis of a year of 365 or 366 days, as the case may be, and paid for the
actual number of days elapsed (including the first day but excluding the last
day). Each determination by the Letter of Credit Administrative Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

                  (c)      Whenever any payment hereunder or under the Letter of
Credit Advance Notes shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest or facility fee, as the case may be; provided that, if such
extension would cause payment of interest on or principal of Eurodollar Rate
Advances to be made in the next following calendar month, such payment shall be
made on the next preceding Business Day.

                  (d)      Unless the Letter of Credit Administrative Agent
shall have received notice from the Company prior to the date on which any
payment is due to the Lenders hereunder that the Company will not make such
payment in full, the Letter of Credit Administrative Agent may assume that the
Company has made such payment in full to the Letter of Credit Administrative
Agent on such date and the Letter of Credit 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 the Company shall not have so made such payment in full to the Letter of
Credit Administrative Agent, each Lender shall repay to the Letter of Credit
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
Letter of Credit Administrative Agent, at the Federal Funds Rate.

                                       31

<PAGE>

                  SECTION 2.12. Taxes. (a) Any and all payments by the Company
hereunder or under any Letter of Credit Advance Note shall be made free and
clear of, and without withholding or deduction for or on account of, any Taxes,
excluding, (i) in the case of each Lender and the Letter of Credit
Administrative Agent, Taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by any state or foreign jurisdiction
under the laws of which such Lender or the Letter of Credit Administrative
Agent, as the case may be, is organized or any political subdivision thereof,
and (ii) in the case of each Lender, Taxes that are imposed on its overall net
income (and franchise taxes imposed in lieu thereof) by the state or foreign
jurisdiction of its Lending Office or any political subdivision thereof (all
such nonexcluded Taxes in respect of payments hereunder or under any Letter of
Credit Advance Notes collectively, "Indemnifiable Taxes"). If any Indemnifiable
Taxes are required to be withheld or deducted from any such payment, the Company
shall pay such additional amounts as may be necessary to ensure that the amounts
received by each Lender or the Letter of Credit Administrative Agent, as the
case may be, after such withholding or deduction (and after withholding or
deduction on amounts payable under this Section 2.12) shall equal the respective
amounts that would have been receivable from the Company (any such additional
amounts required to be paid by the Company, "Additional Amounts").

                  (b)      The Company shall promptly pay when due any present
or future stamp, court or documentary taxes or any other excise or property
taxes, charges or similar levies (including the Personal Property Tax) that
arise in any jurisdiction from any payment made hereunder or from the execution,
delivery, enforcement or registration of this Agreement or any other document or
instrument referred to herein or therein (collectively, "Other Taxes").

                  (c)      The Company agrees to indemnify each Lender and the
Administrative Agent for the full amount of Indemnifiable Taxes and Other Taxes,
and for the full amount of taxes of any kind imposed or asserted by any
jurisdiction on amounts payable under this Section 2.12, imposed on or paid by
any such Lender or the Letter of Credit Administrative Agent, as the case may
be, and any liability (including penalties, additions to tax interest and
expenses) arising therefrom or with respect thereto. Amounts payable by the
Company under the indemnity set forth in this subsection (c) shall be paid
within 30 days from the date on which the applicable Lender or the
Administrative Agent, as the case may be, makes written demand therefor.

                  (d)      Within 30 days after the date of any payment of Taxes
under this Section 2.12, the Company will notify the Letter of Credit
Administrative Agent of such payment and, at the request of the Letter of Credit
Administrative Agent, furnish the Letter of Credit Administrative Agent at its
address referred to in Section 8.02 the original or a certified copy of a
receipt evidencing payment thereof. Upon request, the Company shall provide the
Letter of Credit Administrative Agent with documentation reasonably satisfactory
to the Letter of Credit Administrative Agent evidencing the payment of any
Additional Amounts. Copies of such documentation shall be made available by the
Letter of Credit Administrative Agent to the Lenders upon request therefor.

                  SECTION 2.13. Notes. (a) As additional evidence of the
Company's obligation to pay the principal of and interest on the Letter of
Credit Advances as provided in this Agreement and in accordance with Section
3.02 of this Agreement, the Company shall execute and deliver to each Lender on
or prior to each Borrowing pursuant to Section 2.02, a duly

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<PAGE>

executed and notarized Letter of Credit Advance Note of the Company, in the form
of Exhibit K hereto, made payable to the order of such Lender, dated the date of
such Borrowing, in an aggregate principal amount equal to the amount of the
Letter of Credit Advance to be made by such Lender on such date. If any Lender
exercises any right in any court in Argentina under any Letter of Credit Advance
Note delivered pursuant to this Agreement, it shall not be required for such
purpose to evidence to the Company or any other Person that such Letter of
Credit Advance Note represents obligations of the Company under this Agreement
nor that any condition herein has been fulfilled. In addition, the Company
hereby agrees and covenants that it will execute and deliver any and all
amendments or endorsements to the Letter of Credit Advance Notes, and take all
further action that may in the reasonable judgment of the Letter of Credit
Administrative Agent, be necessary, or that the Letter of Credit Administrative
Agent may reasonably request from time to time, in order to ensure that the
Letter of Credit Advance Notes duly reflect the terms of this Agreement.

                  (b)      Notwithstanding discharge in full of any Letter of
Credit Advance Note, if the amount (including, without limitation, default
interest) paid or payable to any of the Lenders under such Letter of Credit
Advance Note (whether arising from the enforcement thereof in Argentina or
otherwise) is less than the amount due and payable to such Lender in accordance
with this Agreement with respect to the Letter of Credit Advance, or portion
thereof, evidenced by such Letter of Credit Advance Note, the Company agrees, to
the fullest extent it may effectively do so, to pay to such Lender upon demand
such difference in accordance with Section 2.11 hereunder and as otherwise
specified in this Agreement.

                  SECTION 2.14. Event of Sovereign Risk. The Company agrees
that, notwithstanding any foreign exchange restriction or prohibition in
Argentina, any and all payments hereunder and under the Letter of Credit Advance
Notes shall be made exclusively in Dollars in immediately available funds. In
the event any such foreign exchange restriction or prohibition is in effect, the
Company shall, during the continuance of such prohibition or restriction and at
its own expense, obtain such Dollars including, (i) by purchasing in Argentina
(in compliance with any applicable Argentine Central Bank or other Governmental
Authority regulation in force at the time of such purchase), any Dollar
denominated public or private debt or equity tradable security issued in
Argentina and tradable in foreign markets, and transferring and selling the same
outside of Argentina for Dollars or (ii) by means of any other legal and
appropriate mechanism for the acquisition of Dollars. No form of payment shall
be deemed to constitute payment of the applicable Obligation until receipt of
the full amount of Dollars due in respect thereof. All costs, expenses and taxes
payable in connection with compliance with this Section 2.14 shall be for the
account of the Company.

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

                  SECTION 3.01. Conditions Precedent to Effectiveness of Section
2.01. The obligation of each Issuing Bank to issue the Letters of Credit
specified in Section 2.01 of this Agreement shall become effective on and as of
the first date (the "Effective Date") on which the following conditions
precedent have been satisfied:

                                       33

<PAGE>

                  (a)      There shall have occurred no change or effect since
         June 30, 2002 that, individually or in the aggregate, could materially
         adversely affect the financial condition, business, properties,
         prospects or results of operations of the Company and its Subsidiaries
         taken as a whole and which could reasonably be expected to affect
         materially and adversely the Company's ability to perform its
         obligations under the Loan Documents.

                  (b)      There shall have occurred no change or effect since
         the date hereof that could be materially adverse to the Argentine, U.S.
         or international financial bank syndication or capital market
         conditions or to such regulatory, political or economic environment.

                  (c)      All letters of credit specified in Section 8.12(b)
         through (f) shall have been cancelled and delivered to the
         corresponding Issuing Banks and all promissory notes and instruments
         issued in connection with reimbursement obligations in respect of such
         letters of credit shall have been cancelled and delivered to the
         Company.

                  (d)      All governmental and third party consents and
         approvals necessary in connection with the transactions contemplated
         hereby, if any, shall have been obtained (without the imposition of any
         conditions that are not acceptable to the Lenders) and shall remain in
         effect.

                  (e)      The Company shall have notified each Lender and the
         Letter of Credit Administrative Agent in writing, at least one day in
         advance, as to the proposed Effective Date.

                  (f)      On the Effective Date, the following statements shall
         be true and the Letter of Credit Administrative Agent shall have
         received for the account of each Lender a certificate signed by a duly
         authorized officer of the Company, dated the Effective Date, stating
         that:

                           (i)      The representations and warranties referred
                  to in Section 4.01 are correct on and as of the Effective
                  Date, and

                           (ii)     No event has occurred and is continuing that
                  constitutes a Default.

                  (g)      On the Effective Date, the Company shall deposit (i)
         $8,878,147.33 into the Long Term L/C Series A Account; (ii)
         $4,798,671.87 into the Long Term L/C Series B Account; (iii)
         $2,175,720.24 into the Long Term L/C Series C Account; and (iv)
         $1,208,733.47 into the Long Term L/C Series D Account.

                  (h)      The receipt by the Company of all necessary
         governmental, regulatory and other approvals (including CNV approval),
         if any, for the consummation of the transactions contemplated herein.

                  (i)      Creditors of the Company holding an aggregate
         principal amount of Debt of at least $673,487,697.39 shall have agreed
         to purchase, and simultaneously with the issuance of the Letters of
         Credit hereunder, the Company shall have issued Short Term

                                       34

<PAGE>

         Trade Series Notes in an aggregate principal amount of $75,693,000;
         Long Term Trade Series Notes in an aggregate principal amount of
         $286,262,000; Short Term Working Capital Series Notes in an aggregate
         principal amount of $55,633,000; and Long Term Working Capital Series
         Notes in an aggregate principal amount of $181,824,000, pursuant to the
         Note Purchase Agreement and in accordance with the terms of the
         Indenture.

                  (j)      All conditions set forth in Section 14 of the Note
         Purchase Agreement (other than the condition set forth in clause 14.13
         thereof) shall have been satisfied.

                  (k)      The Company shall have paid to each Lender the full
         amount set forth opposite such Lender's name on Schedule III hereto.

                  (l)      The Letter of Credit Administrative Agent shall have
         received, on behalf of the Lenders, on or before the Effective Date the
         following, each dated the Effective Date (except for the letter
         referred to in clause (xi) of this Section 3.01(l)), in form and
         substance satisfactory to the Lenders and the Letter of Credit
         Administrative Agent and (except for the Letter of Credit Advance
         Notes) in sufficient copies for each Lender:

                           (i)      Certified copies and English translations of
                  (A) the resolutions of the Board of Directors of the Company
                  approving this Agreement and each other Loan Document to which
                  it is or is to be a party and the transactions contemplated
                  thereby, (B) the Estatutos of the Company as in effect on the
                  date the resolutions specified in clause (A) were adopted and
                  the absence of any change or amendment to such document since
                  such date and (C) all documents evidencing other necessary
                  corporate action and governmental approvals, if any, with
                  respect to, this Agreement and each other Loan Document and
                  the transactions contemplated hereby and thereby.

                           (ii)     A favorable opinion of Shearman & Sterling,
                  New York counsel to the Company, in form and substance
                  satisfactory to the Lenders.

                           (iii)    A favorable opinion of Cleary, Gottlieb,
                  Steen & Hamilton, New York counsel to the Lenders and the
                  Letter of Credit Administrative Agent, in form and substance
                  satisfactory to the Lenders.

                           (iv)     A favorable opinion of Hector Daniel Casal,
                  in-house counsel to the Company, in form and substance
                  satisfactory to the Lenders.

                           (v)      A favorable opinion of Bruchou Fernandez
                  Madero Lombardi & Mitrani, Argentine counsel to the Company,
                  in form and substance satisfactory to the Lenders.

                           (vi)     A favorable opinion of Marval, O'Farrell and
                  Mairal, Argentine counsel to the Lenders and the Letter of
                  Credit Administrative Agent, in form and substance
                  satisfactory to the Letter of Credit Administrative Agent and
                  the Lenders.

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<PAGE>

                           (vii)    A favorable opinion of Walkers S.P.V.,
                  counsel to Perez Companc Ecuador, in form and substance
                  satisfactory to the Lenders.

                           (viii)   A favorable opinion of Moreno Baldivieso,
                  counsel to Perez Companc International, S.A., in form and
                  substance satisfactory to the Lenders.

                           (ix)     A favorable opinion of Gonzalez, Pena
                  Herrera & Asociados, counsel to EcuadorTLC S.A., in form and
                  substance satisfactory to the Lenders.

                           (x)      An excess payments and intercreditor
                  agreement dated as of the date hereof shall have been executed
                  and delivered by each Lender and New Note Holder.

                           (xi)     A letter from the Process Agent dated on or
                  before the date hereof, in form and substance satisfactory to
                  the Lenders, pursuant to which the Process Agent agrees to act
                  as Process Agent on behalf of the Company, the Co-Obligors and
                  Pecom Energia S.A., Sucursal Bolivia with respect to the Loan
                  Documents.

                  SECTION 3.02. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Letter of Credit Administrative Agent responsible for the transactions
contemplated by this Agreement shall have received notice from such Lender prior
to the date that the Company, by notice to the Lenders, designates as the
proposed Effective Date, specifying its objection thereto.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01. Representations and Warranties of the Company.
The Company hereby makes the representations and warranties set forth in Annex B
hereto.

                                    ARTICLE V

                            COVENANTS OF THE COMPANY

                  SECTION 5.01. Covenants. The Company shall perform and observe
each covenant set forth in Annex C hereto under the terms and conditions set
forth therein. In addition, the Company shall notify the Lenders under any
Letter of Credit Facility of any event, when it becomes aware, that would
entitle a beneficiary to draw under any Letter of Credit issued under such
Letter of Credit Facility. The Company agrees, for so long as any Applicable
Debt under the Short Term L/C Series C Facility, the Long Term L/C Series C
Facility or the Long Term L/C Series D Facility remains unpaid or outstanding,
that it shall not enter into or permit to exist (a) any amendment or
modification of any agreement or transaction with the beneficiary under each of
the Short Term Series C Letters of Credit, the Long Term Series C

                                       36

<PAGE>

Letters of Credit and the Long Term Series D Letter of Credit which has the
effect of extending the period of time that the Company is required to provide
such Letters of Credit as collateral or (b) any transactions with the
beneficiary under each of the Short Term Series C Letters of Credit, the Long
Term Series C Letters of Credit and the Long Term Series D Letter of Credit not
specified on Schedule 5.01, except for any transactions for which no collateral
is required to be posted by the Company, including, without limitation, (i) any
commodity hedging transaction whose purpose is the unwinding of any transaction
set forth on Schedule 5.01 or (ii) any transaction involving the purchase of
call options, put options, call swaptions, put swaptions or any other type of
commodity options.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  SECTION 6.01. Events of Default. If any Event of Default set
forth in Annex D hereto with respect to a Tranche of Letter of Credit Advances
shall occur and be continuing, the Letter of Credit Administrative Agent shall
at the request, or may with the consent, of the Majority Holders with respect to
the Letter of Credit Facility under which such Tranche of Letter of Credit
Advances was made, by notice to the Company, (i) declare all such Letter of
Credit Advances, all interest thereon and all other amounts payable under the
Applicable Transaction Documents with respect to such Tranche of Letter of
Credit Advances to be forthwith due and payable, whereupon such Tranche of
Letter of Credit Advances, all such interest and all such 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
Company, and (ii) to the extent required by the terms thereof, by notice to each
party required under the terms of any agreement in support of which a Letter of
Credit is issued under the Letter of Credit Facility under which such Tranche of
Letter of Credit Advances was made, declare all Obligations under such agreement
due and payable; provided that in the event of an actual or deemed entry of an
order for relief with respect to the Company or any Material Subsidiary under
clauses (i), (k) or (m) of the Events of Default set forth in Annex D, such
Tranche of Letter of Credit Advances, all such interest and all such 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 Company.

                  SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If (i) any Event of Default set forth in Annex D with respect to any
Tranche of Letter of Credit Advances issued under a Letter of Credit Facility
shall occur and be continuing or (ii) on any date on which there are no
outstanding Letter of Credit Advances under a Letter of Credit Facility, an
Event of Default would exist on such date with respect to any outstanding Letter
of Credit Advance made under such Letter of Credit Facility, the Letter of
Credit Administrative Agent may, or shall at the request of the Majority Holders
with respect to such Letter of Credit Facility, irrespective of whether it is
taking any of the actions described in Section 6.01 or otherwise, make demand
upon the Company to, and forthwith upon such demand the Company will, pay to the
Letter of Credit Administrative Agent on behalf of the Lenders under such Letter
of Credit Facility, in same day funds at the Letter of Credit Administrative
Agent's office designated in such demand, for deposit in the L/C Collateral
Account for such Letter of Credit

                                       37

<PAGE>

Facility, an amount equal to the aggregate Available Amounts of all Letters of
Credit issued under such Letter of Credit Facility then outstanding. If at any
time the Letter of Credit Administrative Agent determines that any funds held in
such L/C Collateral Account are subject to any right or claim of any Person
other than the Letter of Credit Administrative Agent and the Lenders under such
Letter of Credit Facility or that the total amount of such funds is less than
the aggregate Available Amounts of all Letters of Credit issued under such
Letter of Credit Facility then outstanding, the Company will, forthwith upon
demand by the Letter of Credit Administrative Agent, pay to the Letter of Credit
Administrative Agent, as additional funds to be deposited and held in such L/C
Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amounts over (b) the total amount of funds, if any, then held in such
L/C Collateral Account that the Letter of Credit Administrative Agent determines
to be free and clear of any such right and claim. Upon the drawing of any Letter
of Credit issued under such Letter of Credit Facility, funds on deposit in such
L/C Collateral Account shall be applied to reimburse the relevant Issuing Bank
or L/C Funding Lenders, as applicable, to the extent permitted by applicable
law.

                                   ARTICLE VII

                    THE LETTER OF CREDIT ADMINISTRATIVE AGENT

                  SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Letter of Credit Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to the Letter of
Credit Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement and the other Loan Documents (including, without
limitation, enforcement or collection of the Letter of Credit Advance Notes),
the Letter of Credit 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 Required Lenders, and such instructions shall be
binding upon all Lenders and all holders of Letter of Credit Advance Notes;
provided, however, that the Letter of Credit Administrative Agent shall not be
required to take any action that exposes the Letter of Credit Administrative
Agent to personal liability or that is contrary to this Agreement or applicable
law. The Letter of Credit Administrative Agent agrees to give to each Lender
prompt notice of each notice given to it by the Company pursuant to the terms of
this Agreement. The Letter of Credit Administrative Agent shall exercise
remedies under the L/C Collateral Accounts Security Agreement on behalf of the
Lenders under each Letter of Credit Facility in respect of the collateral
pledged in favor of the Letter of Credit Administrative Agent on behalf of such
Lenders only at the written direction of the Majority Holders with respect to
such Letter of Credit Facility.

                  SECTION 7.02. Letter of Credit Administrative Agent's
Reliance, Etc. Neither the Letter of Credit Administrative Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement and
the other Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the
Letter of Credit

                                       38

<PAGE>

Administrative Agent: (i) may treat the payee of any Letter of Credit Advance
Note as the holder thereof until the Letter of Credit Administrative Agent
receives and accepts an Assignment and Acceptance entered into by the Lender
that is the payee of such Letter of Credit Advance Note, as assignor, and an
assignee, as provided in Section 8.06; (ii) may consult with legal counsel
(including counsel for the Company), independent public accountants and other
experts selected by it and shall not be liable 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; (iii) 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 and the other Loan Documents; (iv) 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 and the other Loan Documents on the
part of the Company or to inspect the property (including the books and records)
of the Company; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (vi) shall incur no liability under or in respect of this Agreement
or any other Loan Document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopier, telegram or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

                  SECTION 7.03. JPMorgan Chase Bank and Affiliates. With respect
to its obligations to make Letter of Credit Advances hereunder, the Letter of
Credit Advances made by it and the Letter of Credit Advance Notes issued to it,
JPMorgan Chase Bank shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not the Letter of Credit Administrative Agent; and the terms
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include
JPMorgan Chase Bank in its individual capacity. JPMorgan Chase Bank and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, the Company, any of its Subsidiaries and any
Person who may do business with or own securities of the Company or any such
Subsidiary, all as if JPMorgan Chase Bank were not the Letter of Credit
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 Letter of Credit
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 Letter of Credit 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 Letter of Credit Administrative Agent (to the extent not reimbursed by the
Company), ratably according to the respective principal amounts of the Letter of
Credit Advance Notes then held by each of them (or if no Letter of Credit
Advance Notes are at the time outstanding or if any Letter of Credit

                                       39

<PAGE>

Advance Notes are held by Persons that are not Lenders, ratably according to the
aggregate amounts of Letter of Credit Advances with respect to all Letter of
Credit Facilities required to be purchased by such Lender, in the case of an L/C
Funding Lender, as set forth in the Register, and, in the case of an Issuing
Bank, the aggregate amounts of Letter of Credit Advances required to be made by
such Issuing Bank under all Letter of Credit Facilities as set forth in the
Register), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Letter of Credit Administrative Agent in any way relating
to or arising out of the Loan Documents or any action taken or omitted by the
Letter of Credit Administrative Agent under the Loan Documents (collectively,
the "Indemnified Costs"), provided that no Lender shall be liable for any
portion of the Indemnified Costs resulting from the Letter of Credit
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Letter of
Credit Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by the Letter of Credit
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, the Loan Documents, to the extent that the
Letter of Credit Administrative Agent is not reimbursed for such expenses by the
Company. In the case of any investigation, litigation or proceeding giving rise
to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by the Letter of Credit
Administrative Agent, any Lender or a third party.

                  SECTION 7.06. Successor Letter of Credit Administrative Agent.
The Letter of Credit Administrative Agent may resign at any time by giving not
less than 30 days' written notice thereof to the Lenders and the Company and may
be removed at any time with or without cause by the Required Lenders. Upon any
such resignation or removal, the Required Lenders shall have the right to
appoint a successor Letter of Credit Administrative Agent. If no successor
Letter of Credit Administrative Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Letter of Credit Administrative Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Letter of Credit
Administrative Agent, then the retiring Letter of Credit Administrative Agent
may, on behalf of the Lenders, appoint a successor Letter of Credit
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States or of any State thereof and having a combined capital and
surplus of at least U.S.$50,000,000. Upon the acceptance of any appointment as
Letter of Credit Administrative Agent hereunder by a successor Letter of Credit
Administrative Agent, such successor Letter of Credit Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, discretion,
privileges and duties of the retiring Letter of Credit Administrative Agent, and
the retiring Letter of Credit Administrative Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Letter of Credit
Administrative Agent's resignation or removal hereunder as Letter of Credit
Administrative Agent, the provisions of this Article VII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Letter
of Credit Administrative Agent under this Agreement.

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<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Letter of Credit Advance Notes or any other
Loan Document, nor consent to any departure by the Company therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Required Lenders where such action shall be applicable to all Letter of Credit
Facilities or, if such action affects only one Letter of Credit Facility, the
Designated Lenders of such Letter of Credit Facility; provided that (a) any
amendment or waiver of any provision contained in the Negative Covenants
Applicable to Applicable Debt Under Short Term L/C Series A Facility, Long Term
L/C Series A Facility, Short Term L/C Series B Facility and Long Term L/C Series
B Facility shall require at all times, the written consent of the Designated
Lenders with respect to each of the Short Term L/C Series A Facility, the Short
Term L/C Series B Facility, the Long Term L/C Series A Facility and the Long
Term L/C Series B Facility and (b) any amendment or waiver of (i) the third
sentence of Section 5.01 or (ii) subsection (h)(vi) of the Affirmative Covenants
in Annex C shall require, at all times, the written consent of the Designated
Lenders under each of the Short Term L/C Series C Facility, the Long Term L/C
Series C Facility and the Long Term L/C Series D Facility; and, in each case,
the obtainment of such consent shall be sufficient for the effectiveness of such
amendment or waiver; and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and signed by all
the Lenders affected thereby, do any of the following: (a) waive any of the
conditions specified in Section 3.01, (b) subject the Lenders to any additional
obligations, (c) reduce the principal of, or interest on, the Letter of Credit
Advance Notes or any fees or other amounts payable hereunder or thereunder, (d)
postpone any date fixed for any payment of principal of, or interest on, the
Letter of Credit Advance Notes or any fees or other amounts payable hereunder or
thereunder, (e) change the definition of "Required Lenders", "Majority Holders"
or "Designated Lenders" or otherwise change the number of Lenders that shall be
required for the Lenders or any of them to take any action hereunder or under
any Letter of Credit Advance Note, (f) limit the liability of the Company under
any of the Loan Documents, (g) change the currency or any place of payment to be
made hereunder or under any Letter of Credit Advance Note, (h) change the
ranking of the Letter of Credit Advances, (i) change the governing law of this
Agreement or the Letter of Credit Advance Notes, (j) decrease the amounts
required to be deposited in the L/C Collateral Accounts hereunder or release any
material portion of the collateral pledged under the L/C Collateral Accounts
Security Agreement to secure the Obligations owing to the Lenders hereunder or
(k) amend this Section 8.01; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Letter of Credit
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Letter of Credit Administrative Agent
under this Agreement or any Letter of Credit Advance Note.

                  SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed
or delivered, if to the Company, at its address at Maipu 1, Piso 20, Buenos
Aires, Argentina, Telephone: +5411-4344-6694, Facsimile: +5411-4344-

                                       41

<PAGE>

6325, Attention: Luis Sas; if to any Issuing Bank or any L/C Funding Lender
party to this Agreement on the date hereof, at its Lending Office specified
opposite its name on Schedule I or II, as applicable, hereto; if to any other
Lender, at its Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Letter of Credit
Administrative Agent, at its address at One Chase Manhattan Plaza, 8th Floor,
New York, NY 10081, Telephone: +212-552-7242, Facsimile: +212-552-5646,
Attention: Lascelles D. Thompson; or, as to the Company or the Letter of Credit
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
Company and the Letter of Credit Administrative Agent. All such notices and
communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company or confirmed by telex answerback, respectively, except that notices and
communications to the Letter of Credit Administrative Agent pursuant to Article
II, III or VII shall not be effective until received by the Letter of Credit
Administrative Agent. Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement or the Letter of Credit
Advance Notes or of any Exhibit hereto to be executed and delivered hereunder
shall be effective as delivery of a manually executed counterpart thereof.

                  SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender or the Letter of Credit Administrative Agent to exercise, and no
delay in exercising, any right hereunder or under any Letter of Credit Advance
Note 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 and Expenses. (a) The Company agrees to
pay the reasonable fees and expenses of Cleary, Gottlieb, Steen & Hamilton and
Marval, O'Farrell & Mairal, as counsel for the Letter of Credit Administrative
Agent and the Lenders with respect to the preparation, execution and delivery of
the Loan Documents. The Company further agrees to pay all reasonable
out-of-pocket costs and expenses of the Letter of Credit Administrative Agent
and the Lenders, if any (including, without limitation, reasonable counsel fees
and expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the Letter of Credit Advance
Notes, the other Loan Documents and the other documents to be delivered
hereunder, including, without limitation, reasonable fees and expenses of
counsel for the Letter of Credit Administrative Agent and each Lender in
connection with the enforcement of rights under this Section 8.04(a).

                  (b)      The Company agrees to indemnify and hold harmless the
Letter of Credit Administrative Agent and each Lender and each of their
Affiliates and their officers, directors, employees, agents and advisors (each,
an "Indemnified Party") from and against any and all claims, damages, losses,
costs and other liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) the Loan Documents, any of the transactions contemplated
thereby or the actual or proposed use of the proceeds of the Letter of Credit

                                       42

<PAGE>

Advances; provided that no Indemnified Party shall have any right to be
indemnified hereunder for its own willful misconduct or gross negligence, as
determined in a final, non-appealable judgment by a court of competent
jurisdiction. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 8.04(b) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by the Company, its directors, shareholders or creditors or an Indemnified Party
or any other Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated. The Company
also agrees not to assert any claim against the Letter of Credit Administrative
Agent, any Lender, any of their Affiliates, or any of their respective
directors, officers, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to the Loan Documents, any of the transactions
contemplated therein or the actual or proposed use of the proceeds of the Letter
of Credit Advances.

                  (c)      If (i) the conditions set forth in Section 3.01 are
not satisfied on the date proposed by the Company as the Effective Date pursuant
to Section 3.01(e) or (ii) any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Company to or for the account of a Lender
other than on the last day of the Interest Period for such Letter of Credit
Advance, as a result of a payment or Conversion pursuant to Section 2.04 (other
than as a result of any prepayment pursuant to Section 2.04(c)), 2.08(b) or
2.10, acceleration of the maturity of the Letter of Credit Advance Notes
pursuant to Section 6.01 or for any other reason, then in each case, the Company
shall, promptly upon demand by such Lender (with a copy of such demand to the
Letter of Credit Administrative Agent), pay to the Letter of Credit
Administrative Agent for the account of such Lender any LIBOR Funding Costs
incurred by such Lender incurred in connection with such payment or Conversion;
provided that such Lender shall have delivered to the Company a certificate as
to the amount of such loss or expense, which certificate shall be conclusive and
binding for all purposes, absent manifest error.

                  (d)      Without prejudice to the survival of any other
agreement of the Company hereunder or under any other Loan Document, the
agreements and obligations of the Company contained in Sections 2.10, 2.13 ,
8.04, 8.07, 8.09, 8.10 and 8.11 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Loan
Documents.

                  SECTION 8.05. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Company and the Letter of
Credit Administrative Agent and when the Letter of Credit Administrative Agent
shall have been notified by each Lender that such Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Company, the
Letter of Credit Administrative Agent and each Lender and their respective
successors and assigns, except that the Company 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). (a) Each
Lender may assign to one or more Persons all or a portion of each Letter of
Credit Advance owing to it; provided that (i) the aggregate principal amount of
such Letter of Credit Advance being assigned (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall, if the entire
principal amount of such Letter of Credit Advance is not so assigned, in no
event be less

                                       43

<PAGE>

than U.S.$100,000 (ii) each such assignment shall be to a Person who is able to
make the representations set forth in Section 8.12 and (iii) the parties to each
such assignment shall execute and deliver to the Letter of Credit Administrative
Agent, with a copy to the Company, for the Letter of Credit Administrative
Agent's acceptance and recording in the Register, an Assignment and Acceptance,
together with any Letter of Credit Advance Note evidencing all or part of such
Letter of Credit Advance subject to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and have the rights of a Lender hereunder with respect to the rights
assigned under such Assignment and Acceptance and (y) the Lender assignor
thereunder shall relinquish its rights under this Agreement to the extent of
such assignment (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender's rights under this Agreement,
such Lender shall cease to be a party hereto).

                  (b)      Each L/C Funding Lender may assign to one or more
Persons all or a portion of its obligations hereunder to purchase a Pro Rata
Share of Letter of Credit Advances resulting from a draw under any Letter of
Credit issued under any Letter of Credit Facility with the consent of the
Issuing Bank that issued such Letter of Credit; provided that (i) the aggregate
amount of such obligation being assigned (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall, if the entire
remaining obligations of such assigning Lender to purchase Letter of Credit
Advances is not so assigned, in no event be less than U.S.$100,000 (ii) each
such assignment shall be to a Person who is able to make the representations set
forth in Section 8.12 and (iii) the parties to each such assignment shall
execute and deliver to the Letter of Credit Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and have the rights of a Lender hereunder with respect
to the rights assigned under such Assignment and Acceptance and (y) the Lender
assignor thereunder shall relinquish its rights under this Agreement to the
extent of such assignment (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights under this
Agreement, such Lender shall cease to be a party hereto).

                  (c)      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 any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
Company or the performance or observance by the Company of any of its
obligations under this Agreement or any other Loan Document or any other
instrument or document furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the

                                       44

<PAGE>

financial statements referred to in subsection (f) of the Representations and
Warranties set forth in Annex B 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 Letter of Credit 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 appoints and
authorizes the Letter of Credit Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement as are delegated to the Letter of Credit Administrative Agent by the
terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.

                  (d)      The Letter of Credit 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 the Lenders and the relevant Pro Rata
Shares of each such Lender with respect to the Letter of Credit Advances under
each Letter of Credit Facility resulting from a draw under the relevant Letter
of Credit and/or relevant amounts required to be retained by each such Lender
upon the making of each Letter of Credit Advance by it, and principal amount of
the Advances owing to, each 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 Company, the Letter of Credit Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Company or any Lender at any reasonable time and
from time to time upon reasonable prior notice.

                  (e)      Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and assignee, together with any Letter of Credit
Advance Note or Letter of Credit Advance Notes subject to such assignment, the
Letter of Credit Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit L hereto, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Company.
Within five Business Days after its receipt of such notice, the Company, at its
own expense, shall, in case of any assignment made pursuant to Section 8.06(a),
execute and deliver to the Letter of Credit Administrative Agent in exchange for
any surrendered Letter of Credit Advance Note a new Letter of Credit Advance
Note to the order of such assignee in an amount equal to the aggregate principal
amount of Letter of Credit Advances assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained any principal amount of
Letter of Credit Advances hereunder, a new Letter of Credit Advance Note to the
order of the assigning Lender in an amount equal to the aggregate principal
amount of Letter of Credit Advances retained by it hereunder. Such new Letter of
Credit Advance Note or Letter of Credit Advance Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Letter of Credit Advance Note or Letter of Credit Advance Notes, shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit K hereto.

                                       45

<PAGE>

                  (f)      Each Lender may sell participations to one or more
banks or other entities (other than the Company or any of its Affiliates) in or
to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its obligations to make
Letter of Credit Advances hereunder or to purchase a Pro Rata Share of any
Letter of Credit Advances hereunder, any Letter of Credit Advances owing to it
and any Letter of Credit Advance Note or Letter of Credit Advance Notes held by
it); provided, that (i) such Lender's obligations under this Agreement
(including, without limitation, its obligation to make Letter of Credit Advances
hereunder and to purchase a Pro Rata Share of any Letter of Credit Advances
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Letter of Credit Advance
Note for all purposes of this Agreement, (iv) the Company, the Letter of Credit
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 and (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of this Agreement, any Letter of Credit Advance Note or any other Loan
Document, or any consent to any departure by the Company therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Letter of Credit Advance Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation, or
postpone any date fixed for any payment of principal of, or interest on, the
Letter of Credit Advance Notes or any fees or other amounts payable hereunder,
in each case to the extent subject to such participation. The Company's right to
convert any Letter of Credit Advance pursuant to Section 2.08 shall not be
affected or limited in any way by any sale or purchase of a participation
pursuant to this Section 8.06(f).

                  (g)      Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.06 or in connection with any securitization, hedge or other transaction under
which payments are to be made by reference to this Agreement, any Letter of
Credit or Letter of Credit Advance or any of the Company and its Subsidiaries,
disclose to the assignee, participant or counterparty or proposed assignee,
participant or counterparty, any information relating to the Company furnished
to such Lender by or on behalf of the Company.

                  (h)      Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Letter of Credit Advances owing to it and the Letter of Credit Advance Note held
by it) in favor of any Federal Reserve Bank in accordance with Regulation A of
the Board of Governors of the U.S. Federal Reserve System.

                  SECTION 8.07. GOVERNING LAW. THIS AGREEMENT AND THE LETTER OF
CREDIT ADVANCE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

                  SECTION 8.08. 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. Delivery of an executed counterpart of a signature page

                                       46

<PAGE>

to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.

                  SECTION 8.09. Jurisdiction; Waiver of Immunities. (a) The
Company hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States sitting in New York City, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to any Loan Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. The Company agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The Company hereby irrevocably appoints CT Corporation System (the "Process
Agent"), with an office on the date hereof at 111 Eighth Avenue, New York, New
York 10011, United States, as its agent to receive on behalf of the Company and
its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by mailing or delivering a copy of such process to the Company in care
of the Process Agent at the Process Agent's above address, and the Company
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. As an alternative method of service, the Company also
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the Company at its
address specified in Section 8.02. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or the Letter of Credit Advance Notes in the courts
of any jurisdiction.

                  (b)      The Company irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to any Loan Document in any New York State
or federal court. The Company hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

                  (c)      To the extent that the Company has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, the Company hereby irrevocably and unconditionally waives such
immunity in respect of its obligations under this Agreement and the Letter of
Credit Advance Notes and, without limiting the generality of the foregoing,
agrees that the waivers set forth in this subsection (c) shall have the fullest
scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.

                  (d)      Nothing in this Section 8.10 shall affect the right
of any Lender or the Letter of Credit Administrative Agent to serve legal
process in any other manner permitted by law or affect the right of any Lender
or the Letter of Credit Administrative Agent to bring any

                                       47

<PAGE>

action or proceeding against the Company or its property in the courts or other
jurisdictions, including, without limitation, the courts of the Ciudad Autonoma
de Buenos Aires.

                  SECTION 8.10. Judgment Currency. (a) If, for the purposes of
obtaining judgment in any court, it is necessary to convert a sum due hereunder
or under the Letter of Credit Advance Notes in U.S. dollars into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Letter of Credit Administrative
Agent or each Lender, as the case may be, could purchase U.S. dollars with such
other currency in New York City at 11:00 A.M. (New York City time) on the
Business Day preceding that on which final, nonappealable judgment is given.

                  (b)      The obligations of the Company in respect of any sum
due to the Letter of Credit Administrative Agent or any of the Lenders hereunder
or under the Letter of Credit Advance Notes shall, notwithstanding any judgment
in a currency other than U.S. dollars, be discharged only to the extent that on
the Business Day following receipt by the Letter of Credit Administrative Agent
or such Lender, as the case may be, of any sum adjudged to be so due in such
other currency, the Letter of Credit Administrative Agent or any Lender, as the
case may be, may, in accordance with normal, reasonable banking procedures,
purchase U.S. dollars with such other currency. If the amount of U.S. dollars so
purchased is less than the sum originally due to the Letter of Credit
Administrative Agent or such Lender, in U.S. dollars, the Company agrees, to the
fullest extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify the Letter of Credit
Administrative Agent or such Lender, as the case may be, against such loss. If
the amount of U.S. dollars so purchased exceeds the sum originally due to the
Letter of Credit Administrative Agent or such Lender by the Company, each of the
Letter of Credit Administrative Agent and such Lender, as the case may be, shall
remit to the Company such excess.

                  SECTION 8.11. Waiver of Jury Trial. Each of the Company, the
Letter of Credit Administrative Agent and the Lenders hereby irrevocably waives
all right to trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating to this
Agreement or the Letter of Credit Advance Notes or the actions of the Letter of
Credit Administrative Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.

                  SECTION 8.12. Representations and Acknowledgments of Lenders.
(a) Each of the Lenders listed on the signature pages hereof, and any successor
Person which becomes a Lender, makes the following representations to the
Company as of the date hereof or as of the date it becomes a Lender hereunder,
as the case may be:

                  (i)      such Lender's Lending Office is authorized to accept
         deposits and make loans in the jurisdiction of its location;

                  (ii)     if such Lender is a "U.S. person" within the meaning
         of Rule 902 promulgated under the Securities Act, such Lender is a
         "qualified institutional buyer" within the meaning of Rule 144A under
         the Securities Act and has such knowledge and experience in financial
         and business matters as to be capable of evaluating the merits and

                                       48

<PAGE>

         risks of its investment in MT Notes issued to it upon any Conversion of
         its Letter of Credit Advances and that such Lender and any accounts for
         which such Lender is acting are each able to bear the economic risk of
         such investment;

                  (iii)    if such Lender is a "U.S. person" within the meaning
         of Rule 902 promulgated under the Securities Act, such Lender is
         acquiring the Letter of Credit Advance Notes and MT Notes issued upon
         any Conversion of any of its Lender of Credit Advances for its own
         account and not with a view to their distribution, or for one or more
         accounts (each of which is an institutional "accredited investor") as
         to each of which it exercises sole investment discretion; and

                  (iv)     if such Lender is a "U.S. person" within the meaning
         of Rule 902 promulgated under the Securities Act, such Lender
         acknowledges that MT Notes issued upon any Conversion of its Lender of
         Credit Advances will not be registered under the Securities Act and
         will constitute "restricted securities" within the meaning of Rule
         144(a)(3) under the Securities Act that may only be resold pursuant to
         an effective registration statement or an available exemption from the
         registration requirements of the Securities Act.

                  (b)      Each Lender party hereto that is a party to or
beneficiary of the Letter of Credit and Reimbursement Agreement dated as of
March 21, 2001 among the Company, the issuers named therein and Deutsche Bank AG
London, as administrative agent (as amended, amended and restated, supplemented
or otherwise modified from time to time, the "OCP Letter of Credit Agreement")
or a party to or beneficiary of a participation agreement entered into pursuant
to Section 8.07 of the OCP Letter of Credit Agreement (each such participation
agreement, as amended, amended and restated, supplemented or otherwise modified
from time to time, a "Participation Agreement") hereby agrees that, as of the
Effective Date and after giving effect to the transactions contemplated herein
and delivery of each letter of credit issued pursuant to the OCP Letter of
Credit Agreement by the beneficiaries thereof for cancellation, the OCP Letter
of Credit Agreement and such Participation Agreement shall be terminated and the
Company shall have no Obligations under or in respect of the OCP Letter of
Credit Agreement or such Participation Agreement other than with respect to
those provisions of the OCP Letter of Credit Agreement or such Participation
Agreement set forth on Schedule 8.12(b) hereto.

                  (c)      CAI hereby agrees that, as of the Effective Date and
after giving effect to the transactions contemplated herein and delivery of the
Letter of Credit No. CRE99705 A issued by it on July 31, 2002 in favor of J.
Aron and Company (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "CAI Letter of Credit") by the beneficiary
thereof for cancellation, the letter agreement, in respect of undertaking
reimbursement obligations in respect of the CAI Letter of Credit, dated July 24,
2002 and the letter from the Company to CAI dated September 18, 2002, requesting
an extension of the CAI Letter of Credit (each such letter, as amended,
supplemented or otherwise modified from time to time, the "CAI Letters") shall
be terminated and the Company shall have no Obligations under the CAI Letters,
other than with respect to those provisions of the CAI Letter dated July 24,
2002 set forth on Schedule 8.12(c) hereto.

                                       49

<PAGE>

                  (d)      West LB hereby agrees that, as of the Effective Date
and after giving effect to the transactions contemplated herein and delivery of
the Irrevocable Standby Letter of Credit No. 22703100839WLB issued in favor of
J. Aron and Company (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "West LB Letter of Credit") by the beneficiary
thereof for cancellation, the Letter of Credit Reimbursement Agreement dated as
of March 28, 2000 made by Perez Companc S.A. in favor of West LB (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"West LB Letter of Credit Agreement") shall be terminated; and the Company shall
have no Obligations under the West LB Letter of Credit Agreement, other than
with respect to those provisions of the West LB Letter of Credit Agreement set
forth on Schedule 8.12(d) hereto.

                  (e)      Mizuho hereby agrees that, as of the Effective Date
and after giving effect to the transactions contemplated herein and delivery of
the Irrevocable Stand-by Letter of Credit No. SL 001194475 issued by it in favor
of J. Aron and Company (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Mizuho Letter of Credit") by the
beneficiary thereof for cancellation, the Letter of Credit Reimbursement
Agreement dated as of August 28, 2000 made by the Company in favor of The
Industrial Bank of Japan, Limited (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Mizuho Letter of
Credit Agreement") shall be terminated; and the Company shall have no
Obligations under or in respect of the Mizuho Letter of Credit Agreement, other
than with respect to those provisions of the Mizuho Letter of Credit Agreement
set forth on Schedule 8.12(e) hereto.

                  (f)      HVB hereby agrees that, as of the Effective Date and
after giving effect to the transactions contemplated herein and delivery of the
Letter of Credit SB103695 issued by it in favor of J. Aron and Company (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "HVB Letter of Credit") by the beneficiary thereof for cancellation,
the Continuing Reimbursement Agreement dated as of May 18, 2002 made by each of
the Company and Pecom Energia S.A., Sucursal Bolivia (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "HVB Letter
of Credit Agreement") shall be terminated; and neither the Company nor Pecom
Energia S.A., Sucursal Bolivia shall have any Obligations under or in respect of
the HVB Letter of Credit Agreement, other than with respect to those provisions
of the HVB Letter of Credit Agreement set forth on Schedule 8.12(f) hereto.

                  SECTION 8.13. No Liability of Lenders. The Company assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither any Lender nor
any of its officers or directors shall be liable or responsible for: (a) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (b) the validity, sufficiency
or genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by any Lender against presentation of
documents that substantially comply in all material respects with the terms of
any Letter of Credit, or (d) any other circumstances whatsoever in making or
failing to make payment under any such Letter of Credit, except that the Company
shall have a claim against any Lender, and such Lender shall be liable to the
Company, to the extent of any direct, but not consequential, damages suffered by
the Company that the Company proves were caused by

                                       50

<PAGE>

(i) such Lender's willful misconduct or gross negligence as determined in a
final, non-appealable judgment by a court of competent jurisdiction in
determining whether documents presented under such Lender's Letter of Credit
comply with the terms of such Letter of Credit or (ii) such Lender's failure to
make lawful payment under its Letter of Credit after the presentation to it of
certificates strictly complying with the terms and conditions of such Letter of
Credit.

                  SECTION 8.14. Right of Set-Off. Upon the occurrence and during
the continuance of any Event of Default, and so long as any payment obligation
is owing hereunder or under any Letter of Credit Advance Note by the Company to
the Letter of Credit Administrative Agent or any Lender, each such Lender and
each of its Affiliates is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time,
held and other indebtedness at any time owing by such Lender or such Affiliate
to or for the credit or the account of the Company against any and all of the
obligations of the Company now or hereafter existing under this Agreement or
under any Letter of Credit Advance Note held by such Lender, whether or not such
Lender shall have made any demand under this Agreement or under any Letter of
Credit Advance Note and although such obligations may be unmatured. The rights
of each Lender and its Affiliates under this Section 8.14 are in addition to
other rights and remedies that such Lender and its Affiliates may have. Any
Lender exercising its rights under this Section 8.14 shall give notice thereof
to the Company and the Letter of Credit Administrative Agent promptly after the
exercise of such rights and the Letter of Credit Administrative Agent shall, in
turn, give notice to the Lenders; provided that failure to give such notice
shall not affect the validity of such exercise.

                                       51

<PAGE>

                  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.

                                        PECOM ENERGIA S.A.

                                        By _________________________________
                                           Name:
                                           Title:

                                        JPMORGAN CHASE BANK,
                                        as Letter of Credit Administrative Agent

                                        By _________________________________
                                           Name:
                                           Title:

<PAGE>

                                  Issuing Banks

                                        [INSERT SIGNATURE BLOCKS OF ISSUING
                                        BANKS]

                                        By _________________________________
                                           Name:
                                           Title:

                                  L/C Funding Lenders

                                        [INSERT SIGNATURE BLOCKS OF L/C
                                        FUNDING LENDERS]

                                        By _________________________________
                                           Name:
                                           Title:

<PAGE>

                              CONSENT AND AGREEMENT

         Each of the undersigned hereby agrees that it shall be hereby joined as
a joint and several obligor under the Letter of Credit Issuance and
Reimbursement Agreement dated as of October 2, 2002, as amended from time to
time (the "L/C Agreement"), jointly and severally liable, together with the
Company and each other Co-Obligor party to this Consent and Agreement, solely
for all Obligations of the Company under the Letter of Credit Issuance and
Reimbursement Agreement with respect to the Short Term L/C Series A Facility and
the Short Term Series A Letter of Credit Advances made thereunder; the Long Term
L/C Series A Facility and the Long Term Series A Letter of Credit Advances made
thereunder; the Short Term L/C Series B Facility and the Short Term Series B
Letter of Credit Advances made thereunder; and the Long Term Series B Facility
and the Long Term Series B Advances made thereunder (collectively, the "Joined
Obligations").

         Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the L/C Agreement.

         For purposes of Section 8.02 of the L/C Agreement, the following
addresses shall apply:

                  (i)      With respect to Perez Companc International S.A., its
         address at K.M. 3 1/2 Antigua Carretera A Cochabamba, Santa Cruz de la
         Sierra, Bolivia, Telephone: +59-1-33-556-100, Facsimile:
         +59-1-33-556-200, Attention: Roberto Dipinto Cafiero;

                  (ii)     With respect to Perez Companc Ecuador, its address at
         Walkers House, Mary Street, P.O. Box 265 G, Georgetown, Grand Cayman,
         Cayman Island, Telephone: +345-945-3727, Facsimile: +345-949-7886; and

                  (iii)    With respect to EcuadorTLC S.A., its address at Suiza
         209 y Eloy Alfaro, Edificio Azul 6(degree)piso, Quito, Ecuador,
         Telephone: +5932-22-72963, Facsimile: +5932-2459-101, Attention:
         Horacio Begaries.

         Each of the Co-Obligors party to this Consent and Agreement makes the
representations and warranties, as to itself and its Subsidiaries only, set
forth in subsections (a), (b), (c), (d), (e), (k), (l), (m), (o), (p), (r), (s),
(t), (u) and (v) of Annex B to the L/C Agreement and any reference in each such
subsection (including in any defined terms used therein) to "the Company" shall
be deemed a reference to such Co-Obligor, provided that each such representation
shall be made with respect to only the Applicable Debt referred to therein with
respect to which it has a co-obligation and the Applicable Transaction Documents
referred to therein to which it is a party and provided, further, that with
respect to subsections (r), (s), (t) and (v), in the case of Perez Companc
International, each such representation shall be made only in respect of the
laws of Bolivia; in the case of EcuadorTLC S.A., each such representation shall
be made only in respect of the laws of Ecuador; and in the case of Perez Companc
Ecuador, each such representation shall be made only in respect of the laws of
the Cayman Islands.

<PAGE>

         Sections 8.05, 8.07, 8.08, 8.09, 8.10, 8.11, 8.13 and 8.14 of the L/C
Agreement are incorporated herein by reference and shall apply (solely with
respect to and in connection with the Joined Obligations) to each of the
undersigned mutatis mutandi as if each such party were the Company.

PEREZ COMPANC INTERNATIONAL S.A.

By:__________________________________
   Name:
   Title:

PEREZ COMPANC ECUADOR

By:__________________________________
   Name:
   Title:

ECUADORTLC S.A.

By:__________________________________
   Name:
   Title:

<PAGE>

                              CONSENT AND AGREEMENT

         The undersigned hereby agrees that it shall be hereby joined as a joint
and several obligor under the Letter of Credit Issuance and Reimbursement
Agreement dated as of October 2, 2002, as amended from time to time (the "L/C
Agreement"), jointly and severally liable, together with the Company, solely for
all Obligations of the Company under the L/C Agreement with respect to the Long
Term L/C Series D Facility and the Long Term Series D Letter of Credit Advances
made thereunder (collectively, the "Joined Obligations").

         Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the L/C Agreement.

         For purposes of Section 8.02 of the L/C Agreement, the following
address shall apply:

                  Pecom Energia S.A., Sucursal Bolivia
                  KM. 3 1/2 Antigua Carretera A Cochabamba
                  Santa Cruz de la Sierra, Bolivia
                  Telephone: +59-1-33-556-100
                  Facsimile: +59-1-33-556-200
                  Attention: Roberto Dipinto Cafiero

         Pecom Energia S.A., Sucursal Bolivia makes the representations and
warranties, as to itself and its Subsidiaries only, set forth in subsections
(a), (b), (c), (d), (e), (k), (l), (m), (o), (p), (r), (s), (t), (u) and (v) of
Annex B to the Letter of Credit Issuance and Reimbursement Agreement and any
reference in each such subsection (including in any defined terms used therein)
to "the Company" shall be deemed a reference to Pecom Energia S.A., Sucursal
Bolivia, provided that each such representation shall be made with respect to
only the Applicable Debt referred to therein with respect to which it has a
co-obligation and the Applicable Transaction Documents referred to therein to
which it is a party and provided, further, that with respect to subsections (r),
(s), (t) and (v), each such representation shall be made only in respect of the
laws of Bolivia.

         Pecom Energia S.A., Sucursal Bolivia covenants and agrees that, so long
as any Obligation in respect of the Available Amounts of the Long Term Series D
Letter of Credit or any Long Term Series D Letter of Credit Advances shall
remain unpaid or outstanding it shall:

         (a)      (i) within 120 days after the end of each fiscal year, furnish
to the Long Term L/C Series D Issuing Bank statements of its financial condition
(including at least a balance sheet and a statement of income) for such fiscal
year; and (ii) within a reasonable time after written request by the Long Term
L/C Series D Issuing Bank, to furnish any information reasonably requested
regarding its business affairs or financial condition, including but not limited
to any written information regarding its finances or business that shall be
furnished to any other institutional creditor; and,

<PAGE>

         (b)      (i) maintain all of its Property useful and necessary in the
business conducted by it in good working order and condition, ordinary wear and
tear excepted and (ii) maintain insurance with creditworthy insurance companies
against such risks and in such amounts as are usually maintained or insured
against in Bolivia, and any other jurisdiction in which it conducts its
operations, by other companies of established repute engaged in the same or a
similar business; and

         (c)      cause its obligations under the L/C Agreement to at all times
rank at least pari passu with all its other present and future unsecured and
unsubordinated indebtedness, except for indebtedness ranking senior by operation
of law (but not by contract or agreement); and

         (d)      not (i) consolidate or merge with or into any other Person or
(ii) sell, lease or otherwise transfer, directly or indirectly, all or
substantially all of its assets to any other Person, if such action in the
reasonable judgment of the Long Term L/C Series D Issuing Bank materially
affects the ability of Pecom Energia S.A., Sucursal Bolivia to perform its
payment obligations under the L/C Agreement; provided that Pecom Energia S.A.,
Sucursal Bolivia may merge with another Person if (A) it is the surviving
corporation to such merger and after giving effect to any such merger no Event
of Default under Annex D hereto, or event which, with the passage of time or the
giving of notice, would constitute an Event of Default under Annex D hereto,
shall have occurred and be continuing or (B) (I) in the sole and reasonable
judgment of the Long Term L/C Series D Issuing Bank, the surviving entity has a
credit worthiness the same or better than Pecom Energia S.A., Sucursal Bolivia
at the date of the merger and (II) in the sole judgment of the Long Term L/C
Series D Issuing Bank, the ability of the surviving entity to perform its
payment obligations under the L/C Agreement is not materially less than that of
Pecom Energia S.A., Sucursal Bolivia at the date of the merger.

         Sections 8.05, 8.07, 8.08, 8.09, 8.10, 8.11, 8.13 and 8.14 of the L/C
Agreement are incorporated herein by reference and shall apply (solely with
respect to and in connection with the Joined Obligations) to the undersigned
mutatis mutandi as if it were the Company.

PECOM ENERGIA S.A., SUCURSAL BOLIVIA

By:__________________________________
   Name:
   Title:

<PAGE>

                                                                      SCHEDULE I
                                                                   ISSUING BANKS

SHORT TERM L/C SERIES A FACILITY

<TABLE>
<CAPTION>
                                                                Aggregate Face Amount of Short Term L/C Series A
                                                                                Letter of Credit
 Name of Issuing Bank                    Lending Office               Required to be Issued on Effective Date
----------------------------------------------------------------------------------------------------------------
<S>                                <C>                          <C>
                                   Deutsche Bank AG New York
                                   Branch
                                   60 Wall Street, 25th Floor
                                   New York, NY 10005
                                   Attn: Carl Carrier
Deutsche Bank AG New               Telephone: +212-602-2753
    York Branch                    Facsimile: +212-797-0473                        $4,500,000

----------------------------------------------------------------------------------------------------------------
</TABLE>

SHORT TERM L/C SERIES B FACILITY

<TABLE>
<CAPTION>
                                                                Aggregate Face Amount of Short Term L/C Series B
                                                                                Letter of Credit
 Name of Issuing Bank                    Lending Office               Required to be Issued on Effective Date
----------------------------------------------------------------------------------------------------------------
<S>                                <C>                          <C>
                                   Deutsche Bank AG New York
                                   Branch
                                   60 Wall Street, 25th Floor
                                   New York, NY 10005
                                   Attn: Carl Carrier
 Deutsche Bank AG New              Telephone: +212-602-2753
     York Branch                   Facsimile: +212-797-0473                        $1,500,000

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

SHORT TERM L/C SERIES C FACILITY

<TABLE>
<CAPTION>
                                                                Aggregate Face Amount of Short Term L/C Series C
                                                                                Letter of Credit
  Name of Issuing Bank                   Lending Office               Required to be Issued on Effective Date
----------------------------------------------------------------------------------------------------------------
<S>                                <C>                          <C>
                                   9 quai du President Paul
                                   Doumer
                                   92920 Paris La Defense
                                   Cedex - France
                                   Attention: Viviane
                                   Madelaine
                                   Telephone: +331-4189-3208
                                   Facsimile: +331-4189-1521

                                   With a Copy of all Notices
                                   to: Mathieu Vidal/Florence
                                   Gaymard/Dominique Mazel
                                   Telephone: +331-4189-
                                   6489/+331-4189-
                                   3932/+331-4189-2630
Credit Agricole Indosuez           Facsimile: +331-4189-3969                      $6,000,000

----------------------------------------------------------------------------------------------------------------
                                   Mizuho Corporate Bank,
                                   Ltd.
                                   Americas Corporate
                                   Banking Division No.3
                                   1251 Avenue of the
                                   Americas
                                   New York, NY 10020
                                   Attn: Marco Aponte
                                   Telephone: +212-282-3533
Mizuho Corporate Bank, Ltd.        Facsimile: +212-282-4488                       $10,000,000

----------------------------------------------------------------------------------------------------------------
                                   WestLB AG
                                   New York Branch
                                   1211 Avenue of the
                                   Americas
                                   New York, NY 10036
                                   Telephone: +212-852-6314
                                   Facsimile: +212-597-8388
      WestLB AG                    Attention: Ravi Sood                           $6,000,000

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES A FACILITY

<TABLE>
<CAPTION>
                                                                Aggregate Face Amount of Long Term L/C Series A
                                                                                Letter of Credit
 Name of Issuing Bank                    Lending Office               Required to be Issued on Effective Date
---------------------------------------------------------------------------------------------------------------
<S>                                <C>                          <C>
                                   Deutsche Bank AG New
                                   York Branch
                                   60 Wall Street, 25th Floor
                                   New York, NY 10005
                                   Attn:  Carl Carrier
Deutsche Bank AG New               Telephone: +212-602-2753
    York Branch                    Facsimile: +212-797-0473                       $54,450,000

---------------------------------------------------------------------------------------------------------------
                                   BNP PARIBAS
                                   787 Seventh Avenue, 30th
                                   Floor
                                   New York, NY 10019
                                   Attention: Raquel
                                   Latuff/Marilynn Zamuz
                                   Telephone: +212-841-
                                   2031/+212-841-3669
    BNP PARIBAS                    Facsimile: +212-841-2537                       $19,000,000

---------------------------------------------------------------------------------------------------------------
                                   Citibank N.A.
                                   C/o Citicorp North
                                   America, Inc.
                                   3800 Citibank Center,
                                   Building F1
                                   Tampa, FL 33610
                                   Attention: Luz
                                   Smith/Norma Cordero
                                   Telephone: +813-604-
                                   7164/+813-604-7174
    Citibank N.A.                  Facsimile: +813-604-7175                       $80,000,000

---------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES B FACILITY

<TABLE>
<CAPTION>
                                                                Aggregate Face Amount of Long Term L/C Series B
                                                                                Letter of Credit
 Name of Issuing Bank                    Lending Office               Required to be Issued on Effective Date
---------------------------------------------------------------------------------------------------------------
<S>                                <C>                          <C>
                                   Deutsche Bank AG New
                                   York Branch
                                   60 Wall Street, 25th Floor
                                   New York, NY 10005
                                   Attn: Carl Carrier
 Deutsche Bank AG New              Telephone: +212-602-2753
 York Branch                       Facsimile: +212-797-0473                       $28,700,000
---------------------------------------------------------------------------------------------------------------

                                   BNP PARIBAS
                                   787 Seventh Avenue, 30th
                                   Floor
                                   New York, NY 10019
                                   Attention: Raquel
                                   Latuff/Marilynn Zamuz
                                   Telephone: +212-841-
                                   2031/+212-841-3669
     BNP PARIBAS                   Facsimile: +212-841-2537                       $11,000,000
---------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES C FACILITY

<TABLE>
<CAPTION>
                                                                Aggregate Face Amount of Long Term L/C Series C
                                                                                Letter of Credit
      Name of Issuing Bank               Lending Office               Required to be Issued on Effective Date
---------------------------------------------------------------------------------------------------------------
<S>                                <C>                          <C>
                                   9 quai du President Paul
                                   Doumer
                                   92920 Paris La Defense
                                   Cedex - France
                                   Attention: Viviane
                                   Madelaine
                                   Telephone: +331-4189-
                                   3208
                                   Facsimile: +331-4189-1521

                                   With a Copy of all Notices
                                   to: Mathieu Vidal/Florence
                                   Gaymard/Dominique Mazel
                                   Telephone: +331-4189-
                                   6489/+331-4189-
                                   3932/+331-4189-2630
    Credit Agricole Indosuez       Facsimile: +331-4189-3969                      $4,000,000

---------------------------------------------------------------------------------------------------------------
                                   WestLB AG
                                   New York Branch
                                   1211 Avenue of the
                                   Americas
                                   New York, NY 10036
                                   Telephone: +212-852-6314
                                   Facsimile: +212-597-8388
         WestLB AG                 Attention: Ravi Sood                           $14,000,000

---------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES D FACILITY

<TABLE>
<CAPTION>
                                                                Aggregate Face Amount of Long Term L/C Series D
                                                                                Letter of Credit
 Name of Issuing Bank                    Lending Office              Required to be Issued on Effective Date
---------------------------------------------------------------------------------------------------------------
<S>                                <C>                          <C>
                                   Bayerische Hypo-und
                                   Vereinsbank AG, New York
                                   Branch
                                   150 East 42nd Street
                                   New York, NY 10017
  Bayerische Hypo-und              Attn: Frederick Schlomann
Vereinsbank AG New York            Telephone: +212-672-5370
         Branch                    Facsimile: +212-672-5909                       $10,000,000

---------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                                     SCHEDULE II

                                  L/C FUNDING LENDERS EXISTING ON EFFECTIVE DATE

SHORT TERM L/C SERIES A FACILITY

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                          Aggregate Commitment to
                                                        Purchase Principal Amount of
                                                       Letter of Credit Advances from
                                                       Deutsche Bank AG in Respect of
                                                      its Short Term Series A Letter of
      Name of
L/C Funding Lender            Lending Office                       Credit                  Pro Rata Share
---------------------------------------------------------------------------------------------------------
<S>                       <C>                         <C>                                  <C>
                          Banque Europeenne
                          Pour L'Amerique
                          Latine (B.E.A.L.) S.A.
                          Buenos Aires Branch
                          Av.L.N. Alem 855, P.
                          31
                          C1001AAD
                          Buenos Aires
                          Attention: Susana
                          Mancini
 Banque Europeenne        Telephone: +5411-
  Pour L'Amerique         5776-0085
 Latine (B.E.A.L.)        Facsimile: +5411-
     S.A.                 5776-0090                             $4,500,000                      100%

---------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

SHORT TERM L/C SERIES B FACILITY

<TABLE>
<CAPTION>
                                                   Aggregate Commitment to Purchase
                                                    Principal Amount of Letter of
       Name of                                      Credit Advances from Deutsche
     L/C Funding                                   Bank in Respect of its Short Term
       Lender                Lending Office            Series B Letter of Credit         Pro Rata Share
-------------------------------------------------------------------------------------------------------
<S>                      <C>                       <C>                                   <C>
                         Banque Europeenne
                         Pour L'Amerique
                         Latine (B.E.A.L.) S.A.
                         Buenos Aires Branch
                         Av.L.N. Alem 855, P.
                         31
                         C1001AAD
                         Buenos Aires
                         Attention: Susana
                         Mancini
     Banque              Telephone: +5411-
 Europeenne Pour         5776-0085
L'Amerique Latine        Facsimile: +5411-
 (B.E.A.L.) S.A.         5776-0090                           $1,500,000                      100%

-------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

SHORT TERM L/C SERIES C FACILITY

<TABLE>
<CAPTION>
                                                        Aggregate Commitment to
                                                     Purchase Principal Amount of
    Name of                                         Letter of Credit Advances from
  L/C Funding                                      CAI in Respect of its Short Term
   Lender                    Lending Office            Series C Letter of Credit         Pro Rata Share
-------------------------------------------------------------------------------------------------------
<S>                      <C>                       <C>                                   <C>
                         Mizuho Corporate
                         Bank, Ltd.
                         Americas Corporate
                         Banking Division No.3
                         1251 Avenue of the
                         Americas
                         New York, NY 10020
                         Attn: Marco Aponte
                         Telephone: +212-282-
    Mizuho               3533
Corporate Bank,          Facsimile: +212-282-
    Ltd.                 4488                                $ 2,727,273                     45.455%

-------------------------------------------------------------------------------------------------------
                         WestLB AG
                         New York Branch
                         1211 Avenue of the
                         Americas
                         New York, NY 10036
                         Telephone: +212-852-
                         6314
                         Facsimile: +212-597-
                         8388
     WestLB AG           Attention: Ravi Sood                $ 1,636,364                     27.273%

-------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

SHORT TERM L/C SERIES C FACILITY

<TABLE>
<CAPTION>
                                                        Aggregate Commitment to
                                                     Purchase Principal Amount of
    Name of                                         Letter of Credit Advances from
 L/C Funding                                        Mizuho in Respect of its Short
    Lender                   Lending Office         Term Series C Letter of Credit       Pro Rata Share
-------------------------------------------------------------------------------------------------------
<S>                      <C>                        <C>                                  <C>
                         9 quai du President
                         Paul Doumer
                         92920 Paris La Defense
                         Cedex - France
                         Attention: Viviane
                         Madelaine
                         Telephone: +331-4189-
                         3208
                         Facsimile: +331-4189-
                         1521

                         With a Copy of all
                         Notices to: Mathieu
                         Vidal/Florence
                         Gaymard/Dominique
                         Mazel
                         Telephone: +331-4189-
                         6489/+331-4189-
                         3932/+331-4189-2630
   Credit Agricole       Facsimile:
      Indosuez           +331-4189-3969                      $2,727,273                     27.273%

-------------------------------------------------------------------------------------------------------
                         WestLB AG
                         New York Branch
                         1211 Avenue of the
                         Americas
                         New York, NY 10036
                         Telephone: +212-852-
                         6314
                         Facsimile: +212-597-
                         8388
      WestLB AG          Attention: Ravi Sood                $2,727,273                     27.273%

-------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

SHORT TERM L/C SERIES C FACILITY

<TABLE>
<CAPTION>
                                                        Aggregate Commitment to
                                                     Purchase Principal Amount of
                                                     Letter of Credit Advances from
    Name of                                             West LB in Respect of its
  L/C Funding                                        Short Term Series C Letter of
    Lender                   Lending Office                    Credit                    Pro Rata Share
-------------------------------------------------------------------------------------------------------
<S>                      <C>                         <C>                                 <C>
                         9 quai du President
                         Paul Doumer
                         92920 Paris La Defense
                         Cedex - France
                         Attention: Viviane
                         Madelaine
                         Telephone: +331-4189-
                         3208
                         Facsimile: +331-4189-
                         1521

                         With a Copy of all
                         Notices to: Mathieu
                         Vidal/Florence
                         Gaymard/Dominique Mazel
                         Telephone: +331-4189-
                         6489/+331-4189-
                         3932/+331-4189-2630
Credit Agricole          Facsimile: +331-4189-
  Indosuez               3969                                $1,636,364                     27.273%

-------------------------------------------------------------------------------------------------------
                         Mizuho Corporate
                         Bank, Ltd.
                         Americas Corporate
                         Banking Division No.3
                         1251 Avenue of the
                         Americas
                         New York, NY 10020
                         Attn: Marco Aponte
                         Telephone: +212-282-
    Mizuho               3533
Corporate Bank,          Facsimile: +212-282-
    Ltd.                 4488                                $2,727,273                     45.455%

-------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES A FACILITY

<TABLE>
<CAPTION>
                                                                   Aggregate
                                                                 Commitment to
                                                               Purchase Principal
                                                                Amount of Letter
                                                               of Credit Advances
                                                                 from Deutsche
                                                               Bank in Respect of
      Name of                                                   its Long Term
   L/C Funding                                                 Series A Letter of
      Lender                      Lending Office                    Credit             Pro Rata Share
-----------------------------------------------------------------------------------------------------
<S>                      <C>                                   <C>                     <C>
                         Banco Latinoamericano de
                         Exportaciones S.A. - New York
                         Agency
                         708 Third Avenue
                         16th Floor
                         New York, New York 10017
                         Attention: Pedro Toll
                         Telephone: +212-754-9191
                         Facsimile: +212-753-9060

                         With a Copy of All Notices to:
                         Banco Latinoamericano de
                         Exportaciones S.A.
     Banco               Calle 50 y Aquilino de la Guardia
Latinoamericano de       Panama, Republica de Panama
de Exportaciones         Attention: Lourdes Huang
S.A. - New York          Telephone: +507-210-8500
    Agency               Facsimile: +507-269-6333                 $ 5,000,000              9.183%

-----------------------------------------------------------------------------------------------------
                         Vereins -Und Westbank AG
                         Alter Wall 22
                         G 20457
                         Hamburg
                         Germany
                         Attention: Mr. Peter Jens
    Vereins -Und         Telephone: +4940-3692-2009
     Westbank AG         Facsimile: +4940-3692-4155               $10,000,000             18.365%

-----------------------------------------------------------------------------------------------------
                         Bayerische Hypo-und Vereinsbank
                         AG, New York Branch
  Bayerische             150 East 42nd Street
   Hypo-und              New York, NY 10017
Vereinsbank AG           Attn: Frederick Schlomann
  New York               Telephone: +212-672-5370
   Branch                Facsimile: +212-672-5909                 $ 5,000,000              9.183%

-----------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                   Aggregate
                                                                 Commitment to
                                                               Purchase Principal
                                                                Amount of Letter
                                                               of Credit Advances
                                                                 from Deutsche
                                                               Bank in Respect of
    Name of                                                     its Long Term
 L/C Funding                                                   Series A Letter of
    Lender                        Lending Office                    Credit             Pro Rata Share
-----------------------------------------------------------------------------------------------------
<S>                      <C>                                   <C>                     <C>
                         BankBoston N.A.
                         100 Rustcraft Road
                         Dedham, MA 02026
                         Attention: Lee Shay/Idaliz Rivera
                         Telephone: +781-467-2529
   BankBoston N.A.       Facsimile: +781-467-2094                 $23,950,000             43.985%

-----------------------------------------------------------------------------------------------------
                         Banque Europeenne Pour
                         L'Amerique Latine (B.E.A.L.) S.A.
                         Buenos Aires Branch
                         Av.L.N. Alem 855, P. 31
   Banque                C1001AAD
Europeenne Pour          Buenos Aires
  L'Amerique             Attention: Susana Mancini
Latine (B.E.A.L.)        Telephone: +5411-5776-0085
     S.A.                Facsimile: +5411-5776-0090               $10,500,000             19.284%

-----------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES B FACILITY

<TABLE>
<CAPTION>
                                                        Aggregate Commitment to
                                                     Purchase Principal Amount of
                                                     Letter of Credit Advances from
   Name of                                           Deutsche Bank in Respect of its
 L/C Funding                                          Long Term Series B Letter of
   Lender                      Lending Office                   Credit                    Pro Rata Share
--------------------------------------------------------------------------------------------------------
<S>                      <C>                         <C>                                  <C>
                         BankBoston N.A.
                         100 Rustcraft Road
                         Dedham, MA 02026
                         Attention: Lee
                         Shay/Idaliz Rivera
                         Telephone: +781-467-
                         2529
BankBoston               Facsimile: +781-467-
   N.A                   2094                               $6,700,000                       23.345%

--------------------------------------------------------------------------------------------------------
                         Banque Europeenne
                         Pour L'Amerique
                         Latine (B.E.A.L.) S.A.
                         Buenos Aires Branch
                         Av.L.N. Alem 855, P.
                         31
                         C1001AAD
                         Buenos Aires
                         Attention: Susana
    Banque               Mancini
Europeenne Pour          Telephone: +5411-
  L'Amerique             5776-0085
    Latine               Facsimile: +5411-
(B.E.A.L.) S.A.          5776-0090                          $3,500,000                       12.195%

--------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES C FACILITY

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                          Aggregate Commitment to
                                       Purchase Principal Amount of
  Name of                             Letter of Credit Advances from
L/C Funding                           CAI in Respect of its Long Term
   Lender        Lending Office          Series C Letter of Credit      Pro Rata Share
--------------------------------------------------------------------------------------
<S>           <C>                     <C>                               <C>
              WestLB AG
              New York Branch
              1211 Avenue of the
              Americas
              New York,
              NY
              10036
              Telephone: +212-
              852-6314
              Facsimile: +212-597-
              8388
WestLB AG     Attention: Ravi Sood             $  3,111,111                77.778%
--------------------------------------------------------------------------------------
</TABLE>

<PAGE>

LONG TERM L/C SERIES C FACILITY

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                             Aggregate Commitment to
                                          Purchase Principal Amount of
  Name of                                Letter of Credit Advances from
L/C Funding                              West LB in Respect of its Long
   Lender           Lending Office       Term Series C Letter of Credit    Pro Rata Share
----------------------------------------------------------------------------------------
<S>               <C>                    <C>                               <C>
                  9 quai du President
                  Paul Doumer
                  92920 Paris La
                  Defense Cedex -
                  France
                  Attention: Viviane
                  Madelaine
                  Telephone: +331-
                  4189-3208
                  Facsimile: +331-
                  4189-1521

                  With a Copy of all
                  Notices to: Mathieu
                  Vidal/Florence
                  Gaymard/Dominique
                  Mazel
                  Telephone: +331-
                  4189-6489/+331-
                  4189-3932/+331-
                  4189-2630
Credit Agricole   Facsimile: +331-
   Indosuez       4189-3969                      $   3,111,111               22.222%
----------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                  SCHEDULE III

                                  UP-FRONT FEES

<TABLE>
<CAPTION>
---------------------------------------------------------------------
                                                  TOTAL AMOUNT OF UP-
            NAME OF LENDER                            FRONT FEE
---------------------------------------------------------------------
<S>                                               <C>
Banco Latinoamericano de Exportaciones S.A.
           - New York Agency                         $   21,978.17
---------------------------------------------------------------------
            BankBoston N.A.                          $  134,726.16
---------------------------------------------------------------------
 Banque Europeenne Pour L'Amerique Latine
            (B.E.A.L.) S.A.                          $  183,077.73
---------------------------------------------------------------------
  Bayerische Hypo-und Vereinsbank AG New
              York Branch                            $   65,934.50
---------------------------------------------------------------------
              BNP PARIBAS                            $  131,869.00
---------------------------------------------------------------------
             Citibank N.A.                           $  400,000.00
---------------------------------------------------------------------
       Credit Agricole Indosuez                      $   47,582.53
---------------------------------------------------------------------
   Deutsche Bank AG New York Branch                  $   81,319.22
---------------------------------------------------------------------
      Mizuho Corporate Bank, Ltd.                    $  106,666.67
---------------------------------------------------------------------
       Vereins -Und Westbank AG                      $   43,956.33
---------------------------------------------------------------------
</TABLE>
<PAGE>

                                                                  EXECUTION COPY

                                                                         Annex A

                             INDEX OF DEFINED TERMS

                  "Acquired Debt" means Debt of a Person or any of its
Subsidiaries existing at the time such Person becomes a Material Subsidiary or
at the time it merges or consolidates with the Company or any of its Material
Subsidiaries or is assumed in connection with the acquisition of assets from
such Person. Such Debt shall be deemed to have been incurred at the time such
Person becomes a Material Subsidiary or at the time it merges or consolidates
with the Company or a Material Subsidiary or at the time such Debt is assumed in
connection with the acquisition of assets from such Person.

                  "Additional Amounts" (i) with respect to payments made in
respect of the New Notes, has the meaning specified in Section 2.8 of the
Supplemental Indentures and (ii) with respect to payments made in respect of the
Letter of Credit Facilities, has the meaning specified in Section 2.12 of the
Letter of Credit Issuance and Reimbursement Agreement.

                  "Adjusted Argentine GAAP" means Argentine GAAP, without giving
effect to any proportional consolidation of the Financial Statement of jointly
controlled corporations that are under the joint control of the Company and one
or more Persons other than a Subsidiary.

                  "Adjusted EBITDA" means, with respect to any period and as
calculated on a Quarterly Basis (a) the net sales less cost of sales and
administrative, selling and exploration expenses plus/minus (b) the sum of (i)
depreciation expense, (ii) amortization expense and (iii) dividends and advisory
fees received on a recurring basis from any Affiliates, in each case on a
Consolidated basis, determined in accordance with Adjusted Argentine GAAP.

                  "Administrative Questionnaire" means, with respect to each New
Note Holder, an administrative questionnaire in the form supplied by the New
Notes Administrative Agent and submitted to the Trustee, with a copy to the New
Notes Administrative Agent, duly completed by such New Note Holder.

                  "Advances" means Base Rate Advances and Eurodollar Rate
Advances.

                  "Affiliate" means, as to any Person, any other Person that
controls, is controlled by or is under common control with such Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; provided,
that beneficial ownership of more than 50% of the Voting Stock of a Person shall
be deemed to be control.

                  "Agent's Account" means the account of the Company maintained
with the Letter of Credit Administrative Agent at its office at JPMorgan Chase
Bank, New York, New York,

                                       1

<PAGE>

United States, ABA # 021000021, Account No. 323225241 Account Name: Pecom
Energia Clearing Account, Attention: Lascelles Thompson.

                  "Alternate Rate Notice" has the meaning specified (a) with
respect to the Long Term Trade Series Note, in Section 2.7 of the Long Term
Trade Series Supplemental Indenture, (b) with respect to the Short Term Trade
Series Note, in Section 2.7 of the Short Term Trade Series Supplemental
Indenture, (c) with respect to the Long Term Working Capital Series Note, in
Section 2.7 of the Long Term Working Capital Series Supplemental Indenture, (d)
with respect to the Short Term Working Capital Series Note, in Section 2.7 of
the Short Term Working Capital Series Supplemental Indenture, and (e) with
respect to the Letter of Credit Advances, Section 2.07(b) of the Letter of
Credit Issuance and Reimbursement Agreement.

                  "Alternate Rate Period" means any period from and including
the date on which the New Notes Administrative Agent or the Letter of Credit
Administrative Agent, as the case may be, shall have given an Alternate Rate
Notice to the Issuer (a) with respect to the Long Term Trade Series Note,
pursuant to Section 2.7 of the Long Term Trade Series Supplemental Indenture,
(b) with respect to the Short Term Trade Series Note, pursuant to Section 2.7 of
the Short Term Trade Series Supplemental Indenture, (c) with respect to the Long
Term Working Capital Series Note, pursuant to Section 2.7 of the Long Term
Working Capital Series Supplemental Indenture, (d) with respect to the Short
Term Working Capital Series Note, pursuant to Section 2.7 of the Short Term
Working Capital Series Supplemental Indenture, and (e) with respect to the
Letter of Credit Advances, pursuant to Section 2.11(c) of the Letter of Credit
Issuance and Reimbursement Agreement, and in each case continuing thereafter,
unless the Calculation Agent or the Letter of Credit Administrative Agent, as
the case may be, shall have given an Alternate Rate Rescission Notice in respect
of such Alternate Rate Notice, in which case such Alternate Rate Period shall
continue only to, but excluding, the date upon which such Alternate Rate
Rescission Notice is given.

                  "Alternate Rate Rescission Notice" has the meaning specified
(a) with respect to the Long Term Trade Series Note, in Section 2.7 of the Long
Term Trade Series Supplemental Indenture, (b) with respect to the Short Term
Trade Series Note, in Section 2.7 of the Short Term Trade Series Supplemental
Indenture, (c) with respect to the Long Term Working Capital Series Note, in
Section 2.7 of the Long Term Working Capital Series Supplemental Indenture, (d)
with respect to the Short Term Working Capital Series Note, in Section 2.7 of
the Short Term Working Capital Series Supplemental Indenture, and (e) with
respect to the Letter of Credit Advances, Section 2.07(b) of the Letter of
Credit Issuance and Reimbursement Agreement.

                  "Alternative Basis Interest Rate" has the meaning specified
(a) with respect to the Long Term Trade Series Note, in Section 2.3.5 of the
Long Term Trade Series Supplemental Indenture, (b) with respect to with respect
to the Short Term Trade Series Note, in Section 2.3.5 of the Short Term Trade
Series Supplemental Indenture, (c) with respect to the Long Term Working Capital
Series Note, in Section 2.3.5 of the Long Term Working Capital Series
Supplemental Indenture, (d) with respect to the Short Term Working Capital
Series Note, in Section 2.3.5 of the Short Term Working Capital Series
Supplemental Indenture, (e) with respect to the Letter of Credit Advances,
Section 2.07(b) of the Letter of Credit Issuance and Reimbursement Agreement.

                                       2

<PAGE>

                  "Applicable Agent Party" means (a) with respect to Applicable
Debt consisting of Letter of Credit Advances, the Letter of Credit
Administrative Agent and (b) with respect to Applicable Debt consisting of New
Notes issued under a Supplemental Indenture, the New Notes Administrative Agent
party to such Supplemental Indenture.

                  "Applicable Debt" means, with respect to any Event of Default,
covenant or representation or warranty, the Debt issued relating to the
Transaction Document to which the annex containing such Event of Default,
covenant, representation or warranty is attached, except that with respect to
any Event of Default, covenant, representation or warranty relating to the
Letter of Credit Issuance and Reimbursement Agreement, Applicable Debt shall
mean, with respect to any Letter of Credit Facility and without duplication (x)
the Obligations in respect of the Available Amounts of the Letters of Credit
issued under such Letter of Credit Facility and (y) the Letter of Credit
Advances under such Letter of Credit Facility.

                  "Applicable Interest Coverage Ratio" means, with respect to
any period of four fiscal quarters of the Company, (a) if all such fiscal
quarters occur in the same calendar year, the number specified below under such
calendar year and (b) otherwise, the number equal to (i)(A) the number of such
fiscal quarters occurring in the earlier calendar year specified below
multiplied by the number specified below under such calendar year plus (B) the
number of such quarters occurring in the later calendar year specified below,
multiplied by the number specified below under such calendar year, divided by
(ii) four:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Year:        2002        2003        2004       2005       2006      2007
-------------------------------------------------------------------------
<S>          <C>         <C>         <C>        <C>        <C>       <C>
             2.25        2.75        3.00       3.00       3.00      3.00
-------------------------------------------------------------------------
</TABLE>

                  "Applicable Leverage Ratio" means, as of any date of
determination, (a) if all consecutive fiscal quarters of the Company for which
Financial Statements are required to be filed with the CNV ending on or prior to
such date of determination occur within the same calendar year, the number
specified below under such calendar year, and (b) otherwise, the number equal to
(i) (A) the number of such four consecutive quarters prior to such date of
determination occurring in the earlier calendar year specified below, multiplied
by the number specified below under such calendar year, plus (B) the number of
such four consecutive quarters prior to such date of determination occurring in
the later calendar year specified below, multiplied by the number specified
below under such calendar year, divided by (ii) four:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Year:        2002        2003        2004       2005       2006      2007
-------------------------------------------------------------------------
<S>          <C>         <C>         <C>        <C>        <C>       <C>
             5.00        4.50        3.50       3.00       3.00      3.00
-------------------------------------------------------------------------
</TABLE>

                  "Applicable LIBOR Rate" means, for any particular Interest
Period, LIBOR plus the Applicable Margin.

                  "Applicable Margin" means, as of any date:

                                       3

<PAGE>

                  (a)      with respect to the Long Term Trade Series Notes,
         4.00% per annum,

                  (b)      with respect to the Short Term Trade Series Notes,
         3.75% per annum;

                  (c)      with respect to the Long Term Working Capital Series
         Notes, 4.75% per annum;

                  (d)      with respect to the Short Term Working Capital Series
         Notes, 4.00% per annum;

                  (e)      with respect to the Long Term Letter of Credit
         Advances, 4.75% per annum; and

                  (f)      with respect to the Short Term Letter of Credit
         Advances, 4.00% per annum,

except that:

                  (i)      for so long as any Governmental Rule is in effect or
         any governmental policy is being implemented through action or inaction
         by any Governmental Authority that materially impairs the ability of
         the Company or any of its Subsidiaries to export goods or services or
         to deposit and maintain in accounts in countries that are members of
         the Organization of Economic Cooperation and Development freely
         disposable Dollars received from collections of receivables arising
         from sales of such goods and services, and

                  (ii)     such Governmental Rule or policy either:

                           (A)      relates to crude oil and/or oil derivatives,
                  or

                           (B)      results in the Company's not being able to
                  meet a ratio specified in subsection (s) of Annex D,

the Applicable Margin shall be 4.75% for the Long Term Trade Series Notes and
4.00% for the Short Term Trade Series Notes.

                  "Applicable Transaction Documents" means (a) with respect to
Applicable Debt consisting of Letter of Credit Advances with respect to a Letter
of Credit Facility, the Loan Documents with respect to such Letter of Credit
Advances under such Letter of Credit Facility; and (b) with respect to any
Applicable Debt consisting of New Notes, the Note Documents with respect to such
New Notes.

                  "Applicable Transaction Parties" means (a) with respect to
Applicable Debt under a Letter of Credit Facility, the Lenders that have made or
have the obligation to make Letter of Credit Advances under such Letter of
Credit Facility (including for the avoidance of doubt any L/C Funding Lender
required to purchase any portion of such Letter of Credit Advance) and (b)

                                       4

<PAGE>

with respect to Applicable Debt consisting of New Notes, the New Note Holders
holding such New Notes.

                  "Argentina" means the Republic of Argentina.

                  "Argentine GAAP" means generally accepted accounting
principles as required to be applied by CNV and as in effect from time to time
in Argentina.

                  "Asset Sale" means any sale, lease, transfer or other
disposition of any Property (including any casualty to any Property except with
respect to any casualty in respect of which the insurance proceeds received are
less than U.S.$250,000) consummated at any time after the Effective Date,
including, without limitation, as a result of an expropriation or
nationalization.

                  "Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and accepted by the Letter of Credit Administrative
Agent, in substantially the form of Exhibit L to the Letter of Credit Issuance
and Reimbursement Agreement.

                  "Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at such
time (assuming compliance at such time with all conditions to drawing).

                  "Available Asset Sale Proceeds" shall mean, as of any date of
determination and with respect to each Asset Sale (excluding Asset Sales in the
ordinary course of business) consummated by the Company or any of its
Subsidiaries prior to such date, the aggregate Net Cash Proceeds received by the
Company or any of its Subsidiaries in respect of such Asset Sale, to the extent
that such Net Cash Proceeds (i) have not been, and are not required to be,
applied to prepay principal of Letter of Credit Advances and New Notes and/or to
be deposited to L/C Collateral Accounts in respect of Letter of Credit
Facilities and (ii) have not previously been applied to any Capital Expenditure
of the Company as permitted by Section (e)(ii) of the Negative Covenants set
forth in Annex C.

                  "Bankruptcy Law" means Argentine Law No. 24,522 or any other
applicable law that amends, supplements or supersedes Argentine Law No. 24,522
and any other applicable bankruptcy, insolvency, reorganization or other similar
law of any applicable jurisdiction.

                  "Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the highest of:

                  (a)      the arithmetic average of the rate of interest
         announced (i) by JPMorgan Chase Bank in New York, New York, from time
         to time as JPMorgan Chase's base rate; (ii) by Citibank, N.A. in New
         York, New York from time to time as Citibank's base rate; and (iii) by
         Deutsche Bank AG in New York, New York from time to time as Deutsche
         Bank' s base rate;

                  (b)      the sum (adjusted to the nearest 1/16th of 1% or, if
         there is no nearest 1/16th of 1%, to the next higher 1/16th of 1%) of
         (i) 1/2 of 1% per annum, plus (ii) the rate obtained by dividing (A)
         the latest three-week moving average of secondary market morning
         offering rates in the United States for three-month certificates of
         deposit

                                       5

<PAGE>

         of major United States money market banks, such three-week moving
         average (adjusted to the basis of a year of 360 days) being determined
         weekly on each Monday (or, if such day is not a Business Day, on the
         next succeeding Business Day) for the three-week period ending on the
         previous Friday by the Letter of Credit Administrative Agent on the
         basis of such rates reported by certificate of deposit dealers to and
         published by the Federal Reserve Bank of New York or, if such
         publication shall be suspended or terminated, on the basis of
         quotations for such rates received by the Letter of Credit
         Administrative Agent from three New York certificate of deposit dealers
         of recognized standing selected by the Letter of Credit Administrative
         Agent , by (B) a percentage equal to 100% minus the average of the
         daily percentages specified during such three-week period by the Board
         of Governors of the U.S. Federal Reserve System (or any successor) for
         determining the maximum reserve requirement (including, but not limited
         to, any emergency, supplemental or other marginal reserve requirement)
         for JPMorgan Chase Bank with respect to liabilities consisting of or
         including (among other liabilities) three-month U.S. dollar
         non-personal time deposits in the United States, plus (iii) the average
         during such three-week period of the annual assessment rates estimated
         by the Letter of Credit Administrative Agent for determining the then
         current annual assessment payable by JPMorgan Chase Bank to the Federal
         Deposit Insurance Corporation (or any successor) for insuring U.S.
         dollar deposits of JPMorgan Chase Bank in the United States; and

                  (c)      1/2 of one percent per annum above the Federal Funds
         Rate.

                  "Base Rate Advance" means a Letter of Credit Advance that
bears interest as provided in Section 2.06(a)(i) of the Letter of Credit
Issuance and Reimbursement Agreement.

                  "Beneficial Owner" means any Person who holds a beneficial
interest in a New Note through a Participant or an Indirect Participant.

                  "Block 18" means a 70% share of all concessionaire rights
relating to the concession known as Block 18, including without limitation 70%
of all rights of the concessionaire under the Contrato de Participaciones para
la Exploracion de Hidrocarburos y Explotacion de Petroleo Crudo en el Bloque 18
del Mapa Catastral Petrolero Ecuatoriano dated as of December 19, 1995 between
Amoco Ecuador B.V. and Empresa Estatal Petroleos del Ecuador, (which were
ultimately assigned and acquired by the Company and certain of its Subsidiaries
pursuant to a sequence of actions variously approved by Acuerdo Ministerial No.
336 of June 4, 1996, Acuerdo Ministerial No. 76 of September 29, 1997, Acuerdo
Ministerial No. 079 of November 4, 1997, Acuerdo Ministerial No. 089 of January
6, 1998, Acuerdo Ministerial No. 142 of April 9, 2001, Acuerdo Ministerial No.
146 of April 19, 2001 and Acuerdo Ministerial No. 155 of May 17, 2001),
facilities related thereto and the oil production in connection therewith, and
all future proceeds or receivables related to any of the foregoing.

                  "Block 31" means all concessionaire rights relating to the
concession known as Block 31, including without limitation all rights of the
concessionaire under the Contrato de Participaciones para la Exploracion de
Hidrocarburos y Explotacion de Petroleo dated July 26, 1996 between Perez
Companc Ecuador and Empresa Estatal de Petroleos del Ecuador, facilities

                                       6

<PAGE>

related thereto and the oil production in connection therewith, and all future
proceeds or receivables related to any of the foregoing.

                  "Board of Directors" means the board of directors of the
Company.

                  "Borrowing" means a borrowing consisting of Letter of Credit
Advances of the same Type made on the same day and under the same Letter of
Credit Facility by the Lenders.

                  "Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City or Buenos Aires with
respect to normal banking or foreign exchange transactions and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London, England interbank market.

                  "Calculation Agent" means the New Notes Administrative Agent
for purposes of the Supplemental Indentures and (b) the Letter of Credit
Administrative Agent for purposes of the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Capital Expenditures" means, for any period, the sum (without
duplication) of:

                  (a)      all expenditures (whether in cash or otherwise, and
         including the aggregate principal amount of all Debt (including
         obligations under capital leases) assumed or incurred in connection
         with any such expenditures) made, by the Company or any of its
         Subsidiaries for equipment, fixed assets, real property or
         improvements, or for replacements or substitutions therefor or
         additions thereto, that have been or should be, in accordance with
         Adjusted Argentine GAAP, reflected as additions to property, plant or
         equipment on a consolidated balance sheet of the Company;

                  (b)      all loans and advances to, purchases and other
         acquisitions of equity and Debt of, capital contributions to and other
         investments in Unconsolidated Persons; and

                  (c)      all expenditures (whether in cash or otherwise, and
         including the aggregate principal amount of all Debt (including
         obligations under capital leases) assumed or incurred in connection
         with any such expenditures) made, by the Company or any of its
         Subsidiaries during such period in acquiring equity capital of any
         Person that becomes a Subsidiary of the Company,

in each case during such period, except that the accrual of interest on any loan
or advance to or Debt of any Unconsolidated Person, whether or not capitalized,
shall not be deemed to be a Capital Expenditure.

                  "Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of common stock and preferred stock of such Person, (ii) with respect
to any Person that is not a corporation, any and all partnership or other equity
or ownership interests of such Person; and (iii) any warrants, rights or options
to purchase any of the instruments or interests referred to in (i) or (ii).

                                       7

<PAGE>

                  "Cash" means Dollars.

                  "Change of Control" means,

                  (a)      except in the case where Petroleo Brasileiro S.A.
         ("Petrobras") has (either directly or indirectly through one or more of
         its Subsidiaries) beneficial ownership of Voting Stock of the Company
         (or other securities convertible into such Voting Stock) representing
         50% or more of the combined voting power of all Voting Stock of the
         Company immediately following such acquisition, the acquisition by any
         Person or two or more Persons acting in concert of:

                           (i)      beneficial ownership (within the meaning of
                  Rule 13d-3 of the Securities and Exchange Commission under the
                  Securities Exchange Act of 1934) directly or indirectly,
                  whether by virtue of (a) the issuance, sale or other
                  disposition of Capital Stock of the Company or a direct or
                  indirect holder of Capital Stock of the Company, (b) a merger,
                  consolidation or sale of assets involving the Company, a
                  Subsidiary of the Company or a direct or indirect holder of
                  Capital Stock of the Company, (c) any voting trust or other
                  agreement to which the Company or any such holder is a party
                  or is subject, or (d) otherwise, of Voting Stock of the
                  Company (or other securities convertible into such Voting
                  Stock) representing 50% or more of the combined voting power
                  of all Voting Stock of the Company, or

                           (ii)     the power (whether by contract or otherwise)
                  to appoint and/or remove the majority of the members of the
                  Board of Directors or other governing body of the Company or
                  otherwise to direct or cause the direction of the affairs and
                  policies of the Company, or

                  (b)      the dissolution of the Company, whether or not
         otherwise in compliance with the provisions of the Indenture and the
         Supplemental Indentures.

                  "Clearstream" means Clearstream, Banking, societe anonyme.

                  "CNV" means the National Securities Commission of Argentina
(Comision Nacional de Valores), which at the date hereof is located at 25 de
Mayo, 175 Buenos Aires, Argentina, or, if at any time after the execution of the
Documents, the CNV is not existing and performing the duties now assigned to it
under Argentine Law, then the body performing such duties at such time.

                  "CNV Filing" means the filing of certain documents with the
CNV required pursuant to Article 75, Chapter VI of the Regulations of the CNV
(as amended and restated by General Resolution No. 368/2001 of the CNV or any
further amendment or restatement).

                  "Company" means Pecom Energia, S.A.

                                       8

<PAGE>

                  "Consolidated" refers to the consolidation of accounts in
accordance with Adjusted Argentine GAAP.

                  "Consolidated Assets" means, as of any date of determination,
the total assets as of such date as reflected in the Financial Statements
required to be filed by the Company with the CNV prior to such date.

                  "Conversion Date" has the meaning specified in Section 2.08(b)
of the Letter of Credit Issuance and Reimbursement Agreement.

                  "Convert", "Conversion" and "Converted" each refers to either
of (i) a conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.08(a) of the Letter of Credit Issuance and Reimbursement
Agreement or (ii) the conversion of Advances into Debt evidenced by MT Notes
pursuant to Section 2.08(b) of the Letter of Credit Issuance and Reimbursement
Agreement.

                  "Converted A/B Notes" means all New Notes issued upon a
Conversion of any Letter of Credit Advances under the Short Term L/C Series A
Facility, the Long Term L/C Series A Facility, the Short Term L/C Series B
Facility and the Long Term L/C Series B Facility.

                  "Converted D Notes" means all New Notes issued upon a
Conversion of any Letter of Credit Advances under the Long Term L/C Series D
Facility.

                  "Co-Obligors" shall mean, collectively, Perez Companc
International S.A., Perez Companc Ecuador, Ecuador TLC S.A. and Pecom Energia
S.A., Sucursal Bolivia.

                  "Debt" of any Person means, without duplication and whether or
not required by Argentine GAAP to be recorded as a liability, actual or
contingent, (a) all indebtedness of such Person for borrowed money, (b) all
Obligations of such Person for the deferred purchase price of Property or
services (other than trade payables not overdue by more than 90 days incurred in
the ordinary course of such Person's business), (c) all Obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, (d)
all Obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to Property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
Property), (e) all Obligations of such Person as lessee under leases that have
been or should be, in accordance with U.S. GAAP recorded as capital leases, (f)
all Obligations, contingent or otherwise, of such Person in respect of
acceptances, letters of credit or similar extensions of credit, (g) all
Obligations of such Person in respect of Hedge Agreements, (h) all Guaranteed
Debt, and (i) all Debt referred to in clauses (a) through (h) above (including
Guaranteed Debt) secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Debt. Debt outstanding under any Hedge Agreement shall be valued (a) in
the case of a Hedge Agreement documented pursuant to the Master Agreement
(Multicurrency-Cross Border) published by the International Swap and Derivatives
Association, Inc. (capitalized terms used in this paragraph and not otherwise
defined in this Agreement having the respective meanings

                                       9

<PAGE>

specified in such master agreement), the amount, if any, that would be payable
by the Company or any of its Subsidiaries to its counterparty to such Hedge
Agreement, as if (i) such Hedge Agreement was being terminated early on such
date of determination, (ii) the Company or its Subsidiary was the sole "Affected
Party", and (iii) the counterparty was the sole party determining such payment
amount (with the counterparty making such determination pursuant to the
provisions of the form of such master agreement); or (b) in the case of a Hedge
Agreement traded on an exchange, the mark-to-market value of such Hedge
Agreement, which will be the unrealized loss on such Hedge Agreement to the
Company or its Subsidiary party to such Hedge Agreement based on the settlement
price of such Hedge Agreement on such date of determination, and (c) in all
other cases, the mark-to-market value of such Hedge Agreement, which will be the
amount, if any, that, would be payable by the Company or any of its Subsidiaries
to its counterparty to such Hedge Agreement if (i) such Hedge Agreement were
terminated early on such date of determination, (ii) the methodology of
calculating the amount owed or owing were the most favorable to the counterparty
under such Hedge Agreement, and (iii) the counterparty was the sole party
determining such payment amount (in accordance with the provisions of such Hedge
Agreement). For purposes of the Transaction Documents fluctuations in the value
of any Hedge Agreement as described in the preceding sentence, changes in
Exchange Rates (including de-pesofication), re-evaluation of index mechanisms
and other fluctuations which have the effect of increasing the nominal value of
the Company's Debt but which do not represent receipt of cash or other assets by
the Company shall not, in each case, be deemed an incurrence of Debt.

                  "Debt Service" means, for any period, the sum (computed
without duplication) of all principal payments scheduled to be made by the
Company and its Subsidiaries in respect of Debt during such period, plus
Interest Expense for such period.

                  "Default" means, with respect to the Applicable Debt, any
Event of Default or any event that would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.

                  "Default Rate" has the meaning specified in Section 2.06(b) of
the Letter of Credit Issuance and Reimbursement Agreement.

                  "Designated Lenders" means,

                  (a)      with respect to any Letter of Credit Facility, the
         Lenders owed, or holding at least 66-2/3% of the sum of:

                           (i)      the then outstanding aggregate principal
                  amount of Letter of Credit Advances under such Facility,

                           (ii)     the then aggregate amount of the obligations
                  of all Funding Lenders to purchase their Pro Rata Shares of
                  the Letter of Credit Advances required to be made (assuming
                  the full drawdown of the then outstanding Available Amounts of
                  all Letters of Credit) under such Facility, and

                           (iii)    the then aggregate amount of the obligations
                  of all Issuing Banks to retain the amounts of all Letter of
                  Credit Advances required to be made by

                                       10

<PAGE>

                  them under such Facility (assuming the full drawdown of the
                  then outstanding Available Amounts of the Letters of Credit);

                  (b)      with respect to holders of any series New Notes at
         least 66-2/3% of the then outstanding aggregate principal amount of
         such series of New Notes at such time;

                  "Distribution Agreement" means the Distribution Agreement
between the Issuer and J.P. Morgan Securities Inc. dated May 6, 1998 relating to
the Issuer's U.S.$1,000,000,000 Medium-Term Note Program.

                  "Dollars" means the lawful currency of the United States.

                  "Ecuadorian Assets" means the OCP Shares, the Sucursal Shares,
Block 18, Block 31, all other assets in Ecuador owned by the Company or any
Subsidiary, all facilities related thereto, all oil production in connection
therewith, and all future proceeds or receivables related to any of the
foregoing

                  "Effective Date" has the meaning specified in Section 3.01 of
the Letter of Credit Issuance and Reimbursement Agreement.

                  "Eligible Trade Transactions" means all exports of goods and
services by the Company and its Subsidiaries.

                  "Eligible Trade Transactions Report" means a quarterly report
setting forth a description of the Eligible Trade Transactions during such
fiscal quarter, along with shipment dates, currencies, supplier or buyer names
and payment terms with respect to such Eligible Trade Transactions.

                  "Environmental Laws" means all applicable laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants currently as
in force from time to time in the applicable jurisdiction.

                  "Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear System.

                  "Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the U.S. Federal Reserve
System, as in effect from time to time.

                  "Eurodollar Business Day" means a day (other than a Saturday
or Sunday) on which dollar deposits may be dealt in on the London inter-bank
market.

                  "Eurodollar Rate Advance" means a Letter of Credit Advance
that bears interest as provided in Section 2.06(a)(ii) of the Letter of Credit
Issuance and Reimbursement Agreement.

                                       11

<PAGE>

                  "Eurodollar Reserve Percentage" means, for any Interest Period
for all Eurodollar Rate Advances comprising part of the same Borrowing or New
Notes, as applicable, the reserve percentage applicable two Business Days before
the first day of such Interest Period under regulations issued from time to time
by the Board of Governors of the U.S. Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for a member
bank of the U.S. Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities as
defined in Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.

                  "Events of Default" with respect to the Applicable Date, has
the meaning specified in Annex D.

                  "Excess Cash" means, for any fiscal year, an amount equal to
the greater of zero and the sum of (a) the aggregate net cash provided by (used
in) operating activities as reflected on the Consolidated Financial Statements
of the Company for such fiscal year and as calculated on a Quarterly Basis,
minus (b) Permitted Capital Expenditure for such fiscal year to the extent
incurred during such fiscal year, minus (c) Net Financial Liabilities Paid for
such fiscal year.

                  "Exchange Rate" means (a) for any date, (i) with respect to
Argentine pesos to be converted to Dollars, the rate for the purchase of Dollars
with Argentine pesos (or any other legal tender of Argentina for such date)
quoted by Reuters page ARSIB= offer prices as of 3:00 P.M., Buenos Aires time on
such date and (ii) with respect to any other non-Dollar currency to be converted
to Dollars, the noon dollar buying rate in The City of New York for cable
transfers of the non-Dollar currency to be converted to Dollars published by the
Federal Reserve Bank of New York and (b) for any period, the average of the
Exchange Rates calculated for each Business Day of such period. With respect to
the determination of the Exchange Rate between Dollars and Argentine pesos, in
the event that Reuters page ARSIB= does not quote a rate for such date or
period, such Exchange Rate will be determined in accordance with the CME/EMTA
ARS Industry Survey Rate which is published on the Reuters Screen EMTA Page, the
EMTA website (www.emta.org) and the CME website (www.cme.com) by approximately
1:00 p.m., Buenos Aires time, on such date or period.

                  "Existing Property" means Property owned by the Company and
its Subsidiaries on the date hereof (or equity of entities owning solely assets
owned by the Company and its Subsidiaries on the date hereof).

                  "Expiration Date" shall mean, with respect to any Letter of
Credit, the date on which such Letter of Credit is fully drawn, expires,
terminates or is cancelled in accordance with its terms.

                  "Facility Fee Payment Date" shall have the meaning ascribed
thereto in Section 2.03(a)(i) of the Letter of Credit Issuance and Reimbursement
Agreement.

                                       12

<PAGE>

                  "Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
U.S. 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 that is a Business Day, the average of the quotations for
such day on such transactions received by the New Notes Administrative Agent or
the Letter of Credit Administrative Agent, as the case may be, from three
Federal funds brokers of recognized standing selected by it.

                  "Financial Statements" means the consolidated balance sheets,
related statement of income and statement of cash flow, of any Person, in the
case of the Company, prepared in accordance with Argentine GAAP.

                  "Governmental Approval" means any authorization, consent,
approval, license, ruling, permit, concession, certification, exemption, filing,
variance, order, judgment, decree, publication, notice to, declaration of or
with or registration by or with any Governmental Authority.

                  "Governmental Authority" means any government or any state,
department or other political subdivision thereof, or any governmental body,
agency, authority (including without limitation any central bank or taxing
authority) or instrumentality (including without limitation any court or
tribunal) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any corporation,
partnership or other entity directly or indirectly owned by or subject to the
control of any of the foregoing.

                  "Governmental Rule" means any constitution, statute, law,
regulation, ordinance, rule, judgment, order, decree, permit, concession, grant,
franchise, license, agreement, directive, guideline, requirement of, or other
governmental restriction or any similar form of decision of or determination by,
or any interpretation or administration of any of the foregoing by, any
Governmental Authority.

                  "Guaranteed Debt" of any Person means all Debt of others
guarantied directly or indirectly in any manner by such Person, or in effect
guarantied directly or indirectly by such Person through an agreement or
commitment (a) to pay or purchase such Debt or to advance or supply funds for
the payment or purchase of such Debt, (b) to purchase, sell or lease (as lessee
or lessor) property, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Debt or to assure the holder of
such Debt against loss, (c) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (d)
otherwise to assure a creditor against loss.

                  "Hedge Agreements" means, with respect to any Person, interest
rate swap agreements, interest rate cap or collar agreements or arrangements
designed to protect such Person or its Subsidiaries against fluctuations in
interest rates, as in effect from time to time, currency swaps agreements,
forward exchange rate agreements, foreign currency options or futures, exchange
rate collar agreements, exchange rate insurance and other agreements or
arrangements designed to provide protection against fluctuations in currency
exchange rates.

                                       13

<PAGE>

                  "Holding Office" means any particular office or branch through
which a New Note Holder holds a New Note.

                  "Indemnified Party" has the meaning for purposes of (a) the
Letter of Credit Issuance and Reimbursement Agreement as specified in Section
8.04(b) of the Letter of Credit Issuance and Reimbursement Agreement (b) the
Long Term Trade Series Supplemental Indenture as specified in Section 6.9 of the
Long Term Trade Supplemental Indenture, (c) the Short Term Trade Series
Supplemental Indenture as specified in Section 6.9 of the Short Term Trade
Supplemental Indenture, (d) the Long Term Working Capital Series Supplemental
Indenture as specified in Section 6.9 of the Long Term Working Capital
Supplemental Indenture, and (e) the Short Term Working Capital Series
Supplemental Indenture as specified in Section 6.9 of the Short Term Working
Capital Supplemental Indenture.

                  "Indenture" means the Amended and Restated Indenture between
the Company and Citibank, N.A. as trustee (and The Bank of New York as successor
trustee), dated as of August 1, 2002, as amended, amended and restated or
modified from time to time.

                  "Indirect Participant" means a Person who holds an interest in
a New Note through a Participant.

                  "Interest Expense" means, for any period, the sum of, without
duplication determined on a Consolidated basis for the Company and its
Subsidiaries:

                  (a)      the aggregate of accrued cash and non-cash interest
         expense and other financial expense (and to the extent not accrued, any
         amount expended, capitalized, or paid by the Company and its
         Subsidiaries) of the Company and its Subsidiaries for such period
         including, without limitation (whether or not constituting interest
         expense in accordance with Adjusted Argentine GAAP):

                           (i)      any amortization or accretion of Debt
                  discount or any interest accrued on Debt of the Company in the
                  form of additional Debt,

                           (ii)     any amortization of deferred financing
                  costs,

                           (iii)    the net results, whether positive or
                  negative, of (A) costs accrued less (B) payments received
                  under any interest rate swap agreements, interest rate cap or
                  collar agreements or arrangements designed to protect against
                  fluctuations in interest rates (including amortization of
                  fees),

                           (iv)     all capitalized interest,

                           (v)      the interest portion of any Debt consisting
                  of deferred payment obligations,

                           (vi)     commissions, discounts and other fees and
                  charges incurred in respect of letters of credit or bankers'
                  acceptances, and

                                       14

<PAGE>

                           (vii)    any interest expense on Guaranteed Debt of
                  the Company or one of its Subsidiaries or secured by a Lien on
                  the assets of the Company or one of its Subsidiaries (whether
                  or not such guarantee or Lien is called upon); and

                  (b)      the interest component of capital lease Obligations
         accrued and/or scheduled to be accrued (and to the extent not accrued,
         any amount expended, capitalized or paid by the Company and its
         Subsidiaries) during such period.

                  "Interest Period" means, (a) for each Trade Series Note or
Working Capital Series Note, the period commencing on (and including) the date
of the Takedown with respect to such Trade Series Note or Working Capital Series
Note, respectively, or the last day of the preceding Interest Period, as
applicable, and ending on (but excluding) the next succeeding Payment Date and
(b) for each Eurodollar Advance, comprising part of the same Borrowing, the
period commencing on the date of such Eurodollar Rate Advance or the date of
Conversion of any Base Rate Advance into such Eurodollar Rate Advance, and
ending on the next succeeding Payment Date and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on (but excluding) the next succeeding Payment Date; provided that,
in each case,

                  (i)      if any Interest Period would end on a day other than
         a Business Day, such Interest Period shall be extended to the next
         succeeding Business Day unless such next succeeding Business Day would
         fall in the next calendar month, in which case such Interest Period
         shall end on the next preceding Business Day, and

                  (ii)     the final Interest Period shall end on Maturity Date
         with respect to such Trade Series Note, Working Capital Note or
         Eurodollar Rate Advance, as applicable.

                  "Issuing Banks" means the Short Term L/C Series A Issuing
Bank, the Short Term L/C Series B Issuing Bank, the Short Term L/C Series C
Issuing Banks, the Long Term L/C Series A Issuing Banks, the Long Term L/C
Series B Issuing Banks, the Long Term L/C Series C Issuing Banks and the Long
Term L/C Series D Issuing Bank and any permitted assignee thereof.

                  "L/C Accrual Rate" shall mean (i) with respect to any Letter
of Credit issued under a Short Term Letter of Credit Facility, 4.00% per annum
and (ii) with respect to any Letter of Credit issued under a Long Term Letter of
Credit Facility, 4.75% per annum.

                  "L/C Collateral Accounts" means the Long Term L/C Series A
Account, the Long Term L/C Series B Account, the Long Term L/C Series C Account,
the Long Term L/C Series D Account, the Short Term L/C Series A Account, the
Short Term L/C Series B Account and the Short Term L/C Series C Account.

                  "L/C Collateral Accounts Security Agreement" means the
Security Agreement dated October 4, 2002 between the Company and JPMorgan Chase
Bank as the Letter of Credit Administrative Agent and account bank.

                  "L/C Funding Lenders" means each Person set forth on Schedule
II of the Letter of Credit Issuance and Reimbursement Agreement as an L/C
Funding Lender under a Letter of

                                       15

<PAGE>

Credit Facility and each Person that shall become an L/C Funding Lender pursuant
to Section 8.06 of the Letter of Credit Issuance and Reimbursement Agreement for
so long as such Person shall be a party to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "L/C Related Documents" has the meaning specified in Section
2.05(h)(i) of the Letter of Credit Issuance and Reimbursement Agreement.

                  "Lenders" means the Issuing Banks, the L/C Funding Lenders and
each Person that shall become a party to the Letter of Credit Issuance and
Reimbursement Agreement pursuant to Section 8.06 of the Letter of Credit
Issuance and Reimbursement Agreement.

                  "Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Lending Office" opposite its name on Schedule I
or Schedule II, as applicable, or in the Assignment and Acceptance pursuant to
which it became a Lender, as the case may be, or such other office of such
Lender as such Lender may from time to time specify to the Company and the
Letter of Credit Administrative Agent.

                  "Letters of Credit" means the Short Term Series A Letter of
Credit, the Short Term Series B Letter of Credit, the Short Term Series C
Letters of Credit, the Long Term Series A Letters of Credit, the Long Term
Series C Letters of Credit and the Long Term Series D Letter of Credit.

                  "Letter of Credit Administrative Agent" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Letter of Credit Advance Note" means a promissory note of the
Company payable to the order of any Issuing Bank or any L/C Funding Lender, in
substantially the form of Exhibit K of the Letter of Credit Issuance and
Reimbursement Agreement, evidencing the indebtedness of the Company to such
Lender resulting from any Letter of Credit Advance made by such Lender, as
amended.

                  "Letter of Credit Advances" means the Short Term Series A
Letter of Credit Advances, the Short Term Series B Letter of Credit Advances,
the Short Term Series C Letter of Credit Advances, the Long Term Series A Letter
of Credit Advances, the Long Term Series B Letter of Credit Advances, the Long
Term Series C Letter of Credit Advances and the Long Term Series D Letter of
Credit Advances and a "Tranche" of Letter of Credit Advances shall be a
reference to all Letter of Credit Advances made under the same Letter of Credit
Facility.

                  "Letter of Credit Facilities" means the Short Term L/C Series
A Facility, the Short Term L/C Series B Facility, the Short Term L/C Series C
Facility, the Long Term L/C Series A Facility, the Long Term L/C Series B
Facility, the Long Term L/C Series C Facility and the Long Term L/C Series D
Facility.

                  "Letter of Credit Issuance and Reimbursement Agreement" means
the Letter of Credit Issuance and Reimbursement Agreement dated as of October 2,
2002 among the Company, the Letter of Credit Administrative Agent, the Issuing
Banks and the L/C Funding Lenders.

                                       16

<PAGE>

                  "Leverage Index" means, at any date of determination, the
ratio of

                  (i) the amount that is equal to:

                                    (A)      the aggregate outstanding principal
                           amount of Consolidated Debt of the Company (excluding
                           Subordinated Debt) as of such date (if not
                           denominated in Dollars, converted into Dollars at the
                           applicable Exchange Rate on such date) (without
                           giving effect to any prepayment or repayment referred
                           to in clause (C) below), minus

                                    (B)      the value of the cash and
                           investments thereof credited to the L/C Collateral
                           Accounts as of such date, minus

                                    (C)      the portion of the proceeds of any
                           Debt incurred on such date that is:

                                             (1)      applied to the prepayment
                                    or repayment of Consolidated Debt, or

                                             (2)      deposited into L/C
                                    Collateral Accounts that are subject to
                                    Liens permitted under subsection (a) of the
                                    Negative Covenants applicable to all
                                    Applicable Debt,

                           at the time of such incurrence or that is outstanding
                           on such date but is required so to be and is applied
                           or deposited by the earlier of (x) the 30th day after
                           such incurrence and (y) the end of the fiscal quarter
                           of the Company in which such incurrence occurs, to

                  (ii)     Consolidated Adjusted EBITDA of the Company
(calculated on a Quarterly Basis) for the period of four fiscal quarters ending
on or most recently prior to such day for which Financial Statements are
required to be filed with the CNV.

                  "LIBOR" means, for any particular Interest Period, the rate
per annum determined by the Calculation Agent (any such determination to be
conclusive, absent manifest error):

                  (a)      on the basis of the offered rate for deposits of not
         less than U.S. $1,000,000 having a maturity equal to such Interest
         Period, which appears on the display designated as page "3750" on the
         Telerate Service (or such other page as may replace page 3750 on that
         service for the purpose of displaying London interbank offered rates of
         major banks) (or, if such display is not available at any such time, a
         comparable display, as determined in the sole discretion of, and
         selected by, the Calculation Agent or the Letter of Credit
         Administrative Agent, as the case may be, of London interbank offered
         rates of major banks as may be available from a similar service)
         ("Telerate Page 3750") as of 11:00 A.M., London time, on the Eurodollar
         Business Day that is two Eurodollar Business Days before the first day
         of such Interest Period, provided that if such rates do not appear or
         otherwise are not available, then LIBOR will be determined as described
         in clause (b) below, and (ii) if an Alternate Rate Rescission Notice
         has been given during

                                       17

<PAGE>

         such Interest Period, then LIBOR will be determined as provided in this
         clause (a) as of 11:00 A.M., London time, on the Eurodollar Business
         Day immediately following the date on which such Alternate Rate
         Rescission Notice was given, it being understood and agreed by the
         parties hereto the Applicable LIBOR Rate based on the LIBOR as
         determined pursuant to this subclause (ii) shall apply for each
         remaining day of such Interest Period after the Alternate Period ended
         by the giving of such Alternate Rate Rescission Notice.

                  (b)      for a LIBOR interest determination date on which no
         offered rate for the Interest Period specified herein may be determined
         as described in (a) above, the Calculation Agent or the Letter of
         Credit Administrative Agent, as the case may be, will request the
         principal London offices of each of four major banks in the London
         interbank market, as selected by such Calculation Agent or Letter of
         Credit Administrative Agent, to provide such Calculation Agent or
         Letter of Credit Administrative Agent with its offered quotations for
         deposits in Dollars, commencing on the first day of such Interest
         Period, to prime banks in the London interbank market at approximately
         11:00 A.M. (London time) on such interest determination date and in a
         principal amount not less than U.S.$1,000,000 for such Interest Period
         that is representative of a single transaction in such market at such
         time. If at least three such quotations are provided, LIBOR with
         respect to such Interest Period will be the interest rate per annum
         equal to the rate per annum obtained by the arithmetic mean (rounded
         upwards to the nearest 1/16th of 1%) of such quotations. If fewer than
         three quotations are provided, LIBOR with respect to such Interest
         Period will be the interest rate per annum equal to the arithmetic mean
         (rounded upwards to the nearest 1/16th of 1%) of the rates quoted at
         approximately 11:00 A.M. (New York City time) on such interest
         determination date by three major banks in New York City selected by
         the such Calculation Agent or Letter of Credit Administrative Agent for
         the applicable interest period in Dollars to leading European banks
         and/or banks incorporated in the United States of America, commencing
         on the first day of such Interest Period, and in a principal amount not
         less than U.S.$1,000,000 for such Interest Period that is
         representative of a single transaction in such market at such time.

                  "LIBOR Funding Costs" means any loss or expense which (i) a
New Note Holder or Lender may sustain or incur as a consequence of a payment or
prepayment of any New Notes or Letter of Credit Advances, as applicable, on any
day that is not the last day of the applicable Interest Period or (ii) a
Purchaser may incur as a consequence of any postponement or failure to issue any
New Notes, including, in each case, without limitation, any such loss (excluding
loss of the Applicable Margin) or expense arising from the reemployment of funds
obtained by such New Note Holder, Purchaser or Lender or from amounts payable by
such New Note Holder, Purchaser or Lender to lenders of funds obtained by such
New Notes or Letter of Credit Advances, as applicable.

                  "Lien" means any mortgage, pledge, hypothecation, lien,
security interest or other charge, encumbrance of any kind or nature whatsoever,
including, without limitation, the lien or retained title of a conditional
vendor, or any other arrangement having substantially the same economic or
practical effect of the foregoing and any easement, right of way or other
encumbrance on title to real property, provided that the lessee in respect of
any lease required to

                                       18

<PAGE>

be recorded as a capital lease under U.S. GAAP shall be deemed to have incurred
a Lien on the Property leased thereunder.

                  "Loan Document" means each of, and "Loan Documents" means all
of, with respect to the Letter of Credit Advances under each Letter of Credit
Facility, the Letter of Credit Issuance and Reimbursement Agreement, the Letter
of Credit Advance Notes evidencing such Letter of Credit Advances and the L/C
Collateral Accounts Security Agreement, in each case as amended or otherwise
modified from time to time.

                  "Long Term Debt" means Debt (excluding Debt under the
Transaction Documents) that by its terms matures more than one year after the
date of determination or matures within one year from such date but is renewable
or extendible, at the option of such Person, to a date more than one year after
such date or arises under a revolving credit or similar agreement that obligates
the lender or lenders to extend credit during a period of more than one year
after such date.

                  "Long Term L/C Facilities" means the Long Term L/C Series A
Facility, the Long Term L/C Series B Facility, the Long Term L/C Series C
Facility and the Long Term L/C Series D Facility.

                  "Long Term L/C Lenders" means the Long Term L/C Series A
Funding Lenders, the Long Term L/C Series B Funding Lenders, the Long Term L/C
Series C Funding Lenders and all Issuing Banks under the Long Term L/C Series A
Facility, the Long Term L/C Series B Facility, the Long Term L/C Series C
Facility and the Long Term L/C Series D Facility.

                  "Long Term L/C Series A Account" has the meaning specified in
Section 6 of the L/C Collateral Accounts Security Agreement.

                  "Long Term L/C Series A Facility" means an amount equal to
$153,450,000, which amount represents the maximum aggregate amount available to
be drawn under the Long Term Series A Letters of Credit and the maximum
aggregate amount of Long Term Series A Letter of Credit Advances to be made by
the Long Term L/C Series A Issuing Banks and the Long Term L/C Series A Funding
Lenders with respect to drawings under such Long Term Series A Letters of Credit
pursuant to the terms and conditions of the Letter of Credit Issuance and
Reimbursement Agreement, and the rights and obligations of the Company, the Long
Term L/C Series A Issuing Banks and Long Term L/C Series A Funding Lenders in
respect of such Long Term Series A Letters of Credit and Long Term Series A
Letter of Credit Advances.

                  "Long Term L/C Series A Funding Lenders" means the banks,
financial institutions and other institutional lenders listed on Schedule II of
the Letter of Credit Issuance and Reimbursement Agreement as the Long Term L/C
Series A Funding Lenders and each Person that shall become a Long Term L/C
Series A Funding Lender under the Letter of Credit Issuance and Reimbursement
Agreement pursuant to Section 8.06 of such agreement.

                  "Long Term L/C Series A Issuing Bank" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                                       19

<PAGE>

                  "Long Term L/C Series A Lenders" means the Long Term L/C
Series A Issuing Bank and the Long Term L/C Series A Funding Lenders.

                  "Long Term L/C Series B Account" has the meaning specified in
Section 6 of the L/C Collateral Accounts Security Agreement.

                  "Long Term L/C Series B Facility" means an amount equal to
$39,700,000, which amount represents the maximum aggregate amount available to
be drawn under the Long Term Series B Letters of Credit and the maximum
aggregate amount of Long Term Series B Letter of Credit Advances to be made by
the Long Term L/C Series B Issuing Banks and the Long Term L/C Series B Funding
Lenders with respect to drawings under such Long Term Series B Letters of Credit
pursuant to the terms and conditions of the Letter of Credit Issuance and
Reimbursement Agreement, and the rights and obligations of the Company, the Long
Term L/C Series B Issuing Banks and Long Term L/C Series B Funding Lenders in
respect of such Long Term Series B Letter of Credit and Long Term Series B
Letter of Credit Advances.

                  "Long Term L/C Series B Funding Lenders" means the banks,
financial institutions and other institutional lenders listed on Schedule II of
the Letter of Credit Issuance and Reimbursement Agreement as the Long Term L/C
Series B Funding Lenders and each Person that shall become a Long Term L/C
Series B Funding Lender under the Letter of Credit Issuance and Reimbursement
Agreement pursuant to Section 8.06 of such agreement.

                  "Long Term L/C Series B Issuing Bank" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Long Term L/C Series B Lenders" means the Long Term L/C
Series B Issuing Bank and the Long Term L/C Series B Funding Lenders.

                  "Long Term L/C Series C Account" has the meaning specified in
Section 6 of the L/C Collateral Accounts Security Agreement.

                  "Long Term L/C Series C Facility" means an amount equal to
$18,000,000, which amount represents the maximum aggregate amount available to
be drawn under the Long Term Series C Letters of Credit and the maximum
aggregate amount of Long Term Series C Letter of Credit Advances to be made by
the Long Term L/C Series C Issuing Banks and the Long Term L/C Series C Funding
Lenders with respect to drawings under such Long Term Series C Letters of Credit
pursuant to the terms and conditions of the Letter of Credit Issuance and
Reimbursement Agreement, and the rights and obligations of the Company, the Long
Term L/C Series C Issuing Banks and Long Term L/C Series C Funding Lenders in
respect of such Long Term Series C Letters of Credit and Long Term Series C
Letter of Credit Advances.

                  "Long Term L/C Series C Funding Lenders" means the banks,
financial institutions and other institutional lenders listed on Schedule II of
the Letter of Credit Issuance and Reimbursement Agreement as the Long Term L/C
Series C Funding Lenders and each Person that shall become a Long Term L/C
Series C Funding Lender under the Letter of Credit Issuance and Reimbursement
Agreement pursuant to Section 8.06 of such agreement.

                                       20

<PAGE>

                  "Long Term L/C Series C Issuing Bank" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Long Term L/C Series C Lenders" means the Long Term L/C
Series C Issuing Bank and the Long Term L/C Series C Funding Lenders.

                  "Long Term L/C Series D Account" has the meaning specified in
Section 6 of the L/C Collateral Accounts Security Agreement.

                  "Long Term L/C Series D Facility" means an amount equal to
$10,000,000, which amount represents the maximum aggregate amount available to
be drawn under the Long Term Series D Letter of Credit and the maximum aggregate
amount of Long Term Series D Letter of Credit Advances to be made by the Long
Term L/C Series D Issuing Bank with respect to drawings under the Long Term
Series D Letter of Credit pursuant to the terms and conditions of the Letter of
Credit Issuance and Reimbursement Agreement, and the rights and obligations of
the Company and the Long Term L/C Series D Issuing Bank in respect of the Long
Term Series D Letter of Credit and Long Term Series D Letter of Credit Advances.

                  "Long Term L/C Series D Issuing Bank" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Long Term Letter of Credit Advances" means the Long Term
Series A Letter of Credit Advances, the Long Term Series B Letter of Credit
Advances, the Long Term Series C Letter of Credit Advances and the Long Term
Series D Letter of Credit Advances.

                  "Long Term Letters of Credit" means the Long Term Series A
Letters of Credit, the Long Term Series B Letters of Credit, the Long Term
Series C Letters of Credit and the Long Term Series D Letter of Credit.

                  "Long Term MT Notes" means notes issued pursuant to a
supplemental indenture in the form of Exhibit H-2 to the Letter of Credit
Issuance and Reimbursement Agreement upon a Conversion of Letter of Credit
Advances pursuant to Section 2.08(b) of the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Long Term New Notes" means the Long Term Working Capital
Series Notes, Long Term Trade Series Notes and Long Term MT Notes.

                  "Long Term Series A Letters of Credit" has the meaning set
forth in Section 2.01(a)(iv) of the Letter of Credit Issuance and Reimbursement
Agreement.

                  "Long Term Series A Letter of Credit Advance" means an advance
by a Lender to the Company pursuant to Section 2.02(a)(iv) of the Letter of
Credit Issuance and Reimbursement Agreement.

                  "Long Term Series B Letters of Credit" has the meaning set
forth in Section 2.01(a)(v) of the Letter of Credit Issuance and Reimbursement
Agreement.

                                       21

<PAGE>

                  "Long Term Series B Letter of Credit Advance" means an advance
by a Lender to the Company pursuant to Section 2.02(b)(v) of the Letter of
Credit Issuance and Reimbursement Agreement.

                  "Long Term Series C Letters of Credit" has the meaning set
forth in Section 2.01(a)(vi) of the Letter of Credit Issuance and Reimbursement
Agreement.

                  "Long Term Series C Letter of Credit Advance" means an advance
deemed made by a Lender to the Company pursuant to Section 2.02(a)(vi) of the
Letter of Credit Issuance and Reimbursement Agreement.

                  "Long Term Series D Letters of Credit" has the meaning set
forth in Section 2.01(a)(vi) of the Letter of Credit Issuance and Reimbursement
Agreement.

                  "Long Term Series D Letter of Credit Advance" means an advance
deemed made by a Lender to the Company pursuant to Section 2.02(a)(vii) of the
Letter of Credit Issuance and Reimbursement Agreement.

                   "Long Term Series D Letters of Credit" has the meaning set
forth in Section 2.01(a)(vii) of the Letter of Credit Issuance and Reimbursement
Agreement.

                  "Long Term Series D Letter of Credit Advance" means an advance
deemed made by a Lender to the Company pursuant to Section 2.02(a)(vi) of the
Letter of Credit Issuance and Reimbursement Agreement.

                  "Long Term Trade Series Agent" has the meaning set forth in
Section 6.1.1 of the Long Term Trade Supplemental Indenture.

                  "Long Term Trade Series Holder" means, as to any outstanding
Long Term Trade Series Note, a Holder of such Long Term Trade Series Note.

                  "Long Term Trade Series Notes" has the meaning set forth in
Section 2.1 of the Long Term Trade Series Supplemental Indenture.

                  "Long Term Trade Series Supplemental Indenture" means the
Second Supplemental Indenture dated as of October 4, 2002 among the Company, The
Bank of New York, as Trustee, Co-Security Registrar, Authenticating Agent,
Paying Agent and Transfer Agent in New York, Banco Rio de la Plata S.A., as
Security Registrar, Argentine Paying Agent and Transfer Agent in Argentina and
JPMorgan Chase Bank, as Administrative Agent and Calculation Agent.

                  "Long Term Working Capital Series Agent" has the meaning set
forth in Section 6.1.1 of the Long Term Working Capital Series Supplemental
Indenture.

                  "Long Term Working Capital Series Holder" means, as to any
outstanding Long Term Working Capital Series Note a Holder of such Long Term
Working Capital Series Note.

                                       22

<PAGE>

                  "Long Term Working Capital Series Notes" has the meaning set
forth in Section 2.1 of the Long Term Working Capital Series Supplemental
Indenture.

                  "Long Term Working Capital Series Supplemental Indenture"
means the Fourth Supplemental Indenture dated as of October 4, 2002 among the
Company, The Bank of New York, as Trustee, Co-Security Registrar, Authenticating
Agent, Paying Agent and Transfer Agent in New York, Banco Rio de la Plata S.A.,
as Security Registrar, Argentine Paying Agent and Transfer Agent in Argentina
and JPMorgan Chase Bank, as Administrative Agent and Calculation Agent.

                  "Majority Holders" means,

                  (a)      with respect to any Letter of Credit Facility, the
         Lenders owed, or holding at least a majority in interest of the sum of:

                           (i)      the then outstanding aggregate principal
                  amount of Letter of Credit Advances under such Letter of
                  Credit Facility,

                           (ii)     the then aggregate amount of the obligations
                  of all Funding Lenders to purchase their Pro Rata Shares of
                  the Letter of Credit Advances required to be made (assuming
                  the full drawdown of the then outstanding Available Amounts of
                  all Letters of Credit) under such Facility, and

                           (iii)    the then aggregate amount of the obligations
                  of Issuing Banks to retain amounts of all Letter of Credit
                  Advances required to be made by them under such Facility
                  (assuming the full drawdown of the then outstanding Available
                  Amount) of the Letter of Credits);

                  (b)      with respect to any series of New Notes, holders of
         at least a majority in interest of the then outstanding aggregate
         principal amount of such Series of New Notes at such time;

                  "Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a whole.

                  "Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a whole and
(b) the ability of the Company or any Co-Obligor party thereto to perform its
obligations under any Transaction Document.

                  "Material Subsidiary" means any Subsidiary of the Company
whose total assets exceed 1.5% of the Company's Consolidated Assets (as shown on
the Company's most recent Financial Statements required to be delivered to the
Applicable Transaction Parties with respect to the Applicable Debt).

                  "Maturity Date" means (a) with respect to the Long Term Letter
of Credit Advances, October 4, 2007, (b) with respect to the Short Term Letter
of Credit Advances,

                                       23

<PAGE>

October 4, 2003, (c) with respect to the Long Term New Notes October 4, 2007 and
(d) with respect to the Short Term New Notes October 3, 2003.

                  "Medium Term Note Program" means the Medium Term Note Program
established pursuant to a resolution of the shareholders of the Company adopted
on April 8, 1998 and a resolution of the Board of Directors of the Company
adopted on April 17, 1998, and to an extraordinary resolution of the
shareholders of the Company adopted on June 20, 2002 and a resolution of the
Board of Directors of the Company adopted on June 7, 2002, for the issuance of
medium term notes pursuant to the Indenture, in accordance with which the
Company is authorized to issue from time to time up to an aggregate principal
amount outstanding at any time up to U.S. $2,500,000,000 of securities in one or
more series.

                  "MT Notes" means the Short Term MT Notes and the Long Term MT
Notes.

                  "Net Cash Proceeds" means, with respect to any Asset Sale or
the incurrence or issuance of any Debt or the sale or issuance of any equity
interest by any Person, the aggregate amount of cash received from time to time
(whether as initial consideration or through payment or disposition of deferred
consideration) by or on behalf, or on account of, such Person in connection with
such transaction after deducting therefrom only (without duplication) (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
legal fees, finder's fees and other similar fees and commissions, (b) the taxes
paid or payable in respect of such Asset Sale after taking into account any
reduction in Consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements and (c) the amount of any Debt
secured by a Lien on any asset subject to such Asset Sale that, by the terms of
such transaction, is required to be repaid upon such disposition, in each case
to the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, actually paid to a Person that is not an Affiliate
of such Person or the Company or any Affiliate of the Company and are properly
attributable to such transaction or to the Property that is the subject thereof.

                  "Net Financial Liabilities Paid" means, with respect to any
period, an amount equal to:

                  (a)      the aggregate principal amount of Consolidated Debt
         of the Company paid or prepaid during such period (other than any
         principal amount of Short Term New Notes or Short Term Letter of Credit
         Advances paid on a date other than their respective Maturity Dates,
         unless paid ratably with payments of principal of Long Term New Notes,
         Long Term Letter of Credit Advances and Long Term MT Notes), plus

                  (b)      the aggregate amounts deposited into all L/C
         Collateral Accounts during such period (other than any amounts
         deposited into the Short Term L/C Series A Account, the Short Term L/C
         Series B Account or the Short Term L/C Series C Account unless (A)
         deposits are made ratably into the Long Term L/C Series A Account, the
         Long Term L/C Series B Account, the Long Term L/C Series C Account and
         the Long Term L/C Series D Account (or payments are made ratably on the
         related Long Term Letter of Credit Advances) and (B) payments are made
         ratably of principal of Long Term New Notes and Long Term Letter of
         Credit Advances), less

                                       24

<PAGE>

                  (c)      the aggregate principal amount of Consolidated Debt
         incurred by the Company during such period and the aggregate amount of
         cash released from all L/C Collateral Accounts during such period for
         the Company's account, provided that the Net Financial Liabilities Paid
         shall at no time be less than zero and provided, further that amounts
         paid or incurred in respect of Project Finance Debt and Subordinated
         Debt shall not be included in the determination of Net Financial
         Liabilities Paid.

                  "New Debt Amounts" means, with respect to any fiscal quarter
of the Company, the sum of (computed without duplication):

                  (b)      the aggregate Net Cash Proceeds received by the
         Company and its Subsidiaries during such fiscal quarter from Debt
         (other than Subordinated Debt and Project Finance Debt) incurred by
         them during such fiscal quarter (if not denominated in Dollars,
         converted into Dollars at the Exchange Rate applicable at the date of
         incurrence), minus

                  (c)      the aggregate principal amount of Debt of the Company
         and its Subsidiaries (other than Subordinated Debt and Project Finance
         Debt) repaid or prepaid during such fiscal quarter (if not denominated
         in Dollars, converted into Dollars at the Exchange Rate applicable at
         the date of such repayment or prepayment), minus

                  (d)      the aggregate amount deposited into L/C Collateral
         Accounts during such fiscal quarter.

For purposes of this definition, any amounts drawn or disbursed under any
acceptance, letter of credit or similar extension of credit (other than any
Letter of Credit or any trade or standby letter of credit issued for the account
of the Company or any Subsidiary in accordance with normal business practices)
as to which the Company or any of its Subsidiaries would have any Obligations,
whether or not such amounts were received by the Company or its Subsidiaries,
will be considered Net Cash Proceeds received by the Company and its
Subsidiaries during the fiscal quarter in which such drawing or disbursement
occurred.

                  "New Note Holder" means, as to any outstanding New Note, the
registered holder of such New Note.

                  "New Notes" means the Trade Series Notes, the Working Capital
Series Notes and the MT Notes.

                  "New Notes Administrative Agent" means JPMorgan Chase Bank.

                  "Note Documents" means (a) with respect to the Long Term Trade
Series Notes, the Long Term Trade Series Supplemental Indenture, the Note
Purchase Agreement, and the Long Term Trade Series Notes, (b) with respect to
the Long Term Working Capital Series Notes, the Long Term Working Capital Series
Supplemental Indenture, the Note Purchase Agreement, and the Long Term Working
Capital Series Notes, (c) with respect to the Short Term Trade Series Notes, the
Short Term Trade Series Supplemental Indenture, the Note Purchase Agreement, and
the Short Term Trade Series Notes, (d) with respect to the Short Term Working
Capital Series Notes, the Short Term Working Capital Series Supplemental
Indenture, the Note

                                       25

<PAGE>

Purchase Agreement, and the Short Term Working Capital Series Notes, and (e)
with respect to any series of MT Notes, the supplemental indenture pursuant to
which such Notes are issued, the note purchase agreement pursuant to which such
Notes are acquired and the notes evidencing such MT Notes.

                  "Note Payment" means, with respect to any New Notes, the sum
(computed without duplication) payable by the Company of all principal and
interest plus any default interest, and all fees, expenses, reimbursements and
other amounts, payable in respect of any Obligation, accrued and unpaid,
including, without limitation, fees, expenses, reimbursements, indemnities and
Additional Amounts pursuant to such New Notes, the Applicable Transaction
Documents related to such New Notes and the Base Indenture (as it relates to
such New Notes).

                  "Note Purchase Agreement" means the Note Purchase Agreement
dated as of October 2, 2002 among the Company, the Purchasers named therein and
JPMorgan Chase Bank as agent.

                  "Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including, without
limitation, any liability of such Person on any claim, whether or not the right
of any creditor to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such claim is
discharged, stayed or otherwise affected by any proceeding referred to in
Sections (f), (g) and (h) of Annex D. Without limiting the generality of the
foregoing, the Obligations of the Company under the Applicable Transaction
Documents with respect to the Applicable Debt include (a) the obligation to pay
principal, interest, letter of credit commissions, charges, expenses, fees,
attorneys' fees and disbursements, indemnities and other amounts payable by the
Company under any such Applicable Transaction Document and (b) the obligation of
the Company to reimburse any amount in respect of any of the foregoing that the
Applicable Agent Party with respect to the Applicable Debt or any Applicable
Transaction Party with respect to Applicable Debt, in its sole discretion, may
elect or be required to pay or advance on behalf of the Company or its
Subsidiaries.

                  "OCP Agreements" means (a) the Amended and Restated Initial
Shipper Transportation Agreement between Oleoducto de Crudos Pesados (OCP)
Ecuador S.A. and Perez Companc Ecuador dated as of May 29, 2001; (b) the
Performance Guarantee Agreement dated as of May 29, 2001 made by Pecom Energia
S.A. in favor of Oleoducto de Crudos Pesados (OCP) Ltd.; (c) the Amended and
Restated Owners Agreement among Oleoducto de Crudos Pesados (OCP) Ltd., Perez
Companc International S.A. and the other parties thereto dated as of May 29,
2001; and (d) the Performance Guarantee Agreement dated as of May 29, 2001 made
by Pecom Energia S.A. in favor of Oleoducto de Crudos Pesados (OCP) Ltd., in
each case as amended, amended and restated, supplemented or otherwise modified
from time to time.

                  "OCP Shares" means shares of capital stock of Oleoductos de
Crudos Pesados (OCP) Ltd., a Cayman Islands company, owned directly or
indirectly by the Company.

                  "Offering Memorandum" means the offering memorandum dated June
10, 2002, as supplemented by the supplementary offering memorandum dated July
22, 2002 and the

                                       26

<PAGE>

offering memorandum supplement dated September 12, 2002 and with respect to (i)
the Long Term Trade Series Notes the pricing supplement dated September 30,
2002, (ii) the Short Term Trade Series Notes the pricing supplement dated
September 30, 2002, (iii) the Long Term Working Capital Series Notes the pricing
supplement dated September 30, 2002 and (iv) the Short Term Working Capital
Series Notes the pricing supplement dated September 30, 2002, in each case,
prepared by the Company in respect of the Medium-Term Notes Program.

                  "Other Taxes" has the meaning specified in Section 2.12(b) of
the Letter of Credit Issuance and Reimbursement Agreement.

                  "Participant" means, with respect to DTC, Euroclear or
Clearstream, Luxembourg, Persons who have accounts with DTC, Euroclear or
Clearstream, Luxembourg, respectively (and, with respect to DTC, shall include
Euroclear and Clearstream, Luxembourg).

                  "Payment Date" means the fourth day of each of April, July,
October and January.

                  "Permitted Capital Expenditure" means for each fiscal year of
the Company, the amount set forth opposite to that year in the table in Section
(e)(iii)(A) of the Negative Covenants set forth in Annex C.

                  "Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company or other entity, or a
government or any political subdivision or agency thereof.

                  "Personal Property Tax" means the tax imposed pursuant to
Argentine Personal Property Tax Law and Decree No. 127/96, as amended by Decree
No. 812/96, as the same may be further amended after the date hereof.

                  "Pesos" means the lawful currency of Argentina.

                  "PORTAL" means The Private Offerings, Resales and Trading
through the Automated Linkages Market of The National Association of Securities
Dealers, Inc.

                  "Prime Rate" means the arithmetic average of the rate of
interest per annum publicly announced from time to time by JPMorgan Chase Bank,
Deutsche Bank AG and Citibank, N.A. as their respective prime rate in effect at
their respective principal offices in New York City. The Prime Rate is not
intended to be the lowest rate of interest charged by JPMorgan Chase Bank,
Deutsche Bank AG or Citibank, N.A. in connection with extensions of credit to
debtors.

                  "Project Finance Debt" means Debt incurred or existing in
connection with the financing (but not refinancing) of any Property in
connection with a project of any Person, including the acquisition, development,
expansion, renovation, upgrade or other modification or construction of such
project, if the person or persons providing such financing agree, whether or not
expressly, to look to the Property financed and the revenues arising out of, or
other proceeds of realization from, such Property as the sole source of
repayment for the monies advanced, with recourse to those revenues and proceeds
and Property forming the subject matter of such Property (including, without
limitation, credit support provided by third parties (other than a

                                       27

<PAGE>

Subsidiary of the Company) without recourse to the Company or a Subsidiary,
insurance, contracts and shares or other rights of ownership in the entity or
entities that own the relevant Property) and other Property ancillary thereto
but without recourse to any other Property of the Company or a Subsidiary;
provided that recourse shall not be deemed to exist by reason of normal and
customary sponsor support arrangements including, but not limited to, sponsor
completion guaranties. For the avoidance of doubt, Long Term Debt of Perez
Companc de Venezuela S.A. under a credit facility including International
Finance Corporation as a lender shall be deemed to be Project Finance Debt,
provided that (i) such Debt is incurred for acquisitions, construction,
development, improvements and/or repairs for the hydro-carbon business in
Venezuela of Perez Companc de Venezuela S.A. and ancillary purposes and (ii) the
aggregate principal amount of such Debt does not exceed $400,000,000 (or its
equivalent in other currencies).

                  "Project Financing" means financing obtained through the
incurrence of Project Finance Debt.

                  "Pro Rata Share" of any Letter of Credit Advance made upon a
draw under a Letter of Credit issued under any Letter of Credit Facility means,
with respect to any L/C Funding Lender at any time, the product of the amount of
such Letter of Credit Advance (taking into account any prepayment of such Letter
of Credit Advance to be effected pursuant to Section 2.04(c) of the Letter of
Credit Issuance and Reimbursement Agreement) multiplied by the percentage set
forth in the Register at such time next to such L/C Funding Lender's name
representing the percentage of each Letter of Credit Advance made upon a draw
under such Letter of Credit required to be purchased by such L/C Funding Lender.

                  "Property" means any asset, revenue, present or future, or
other property, tangible or intangible, real or personal, including without
limitation, any right to receive income.

                  "Quarterly Basis" means, with respect to any financial
calculation set forth in Annex C involving a determination of any item set forth
in the Company's Consolidated statements of income or statements of cash flow
for any period of one or more fiscal quarters of the Company, that such
calculation shall be made on the basis of each such fiscal quarter's results as
set forth in the quarterly financial statements relating to such fiscal quarter
individually (as adjusted to reflect financial statements prepared on the basis
of Adjusted Argentine GAAP), without giving effect to any subsequent adjustments
to the information set forth in such quarterly financial statements for
inflation or exchange rate fluctuations and after converting such item into
Dollars at the Exchange Rate applicable to such quarter.

                  "Register" has the meaning specified in Section 8.06(d) of the
Letter of Credit Issuance and Reimbursement Agreement.

                  "Required Holders" means at any time with respect to any
series of New Notes, the New Note Holders holding New Notes representing at
least 66-2/3% of the then outstanding aggregate principal amount of such series
of New Notes.

                  "Required Lenders" means at any time Lenders owed at least
66-2/3% of the sum of (i) the then outstanding aggregate unpaid principal
amounts of the Letter of Credit Advances,

                                       28

<PAGE>

(ii) the then aggregate amount of the obligations of all L/C Series Funding
Lenders to purchase their Pro Rata Shares of the Letter of Credit Advances
required to be made by the Issuing Banks assuming the full drawdown of the then
outstanding Available Amounts of all Letters of Credit and (iii) the then
aggregate amount of the obligations of the Issuing Banks to retain the Letter of
Credit Advances required to be made by them (assuming the full drawdown of the
then outstanding Available Amounts with respect to the Letters of Credit).

                  "Sale of Ecuadorian Assets" has the meaning specified in
Section (b) of the Covenants Applicable to Applicable Debt Under Short Term L/C
Series A Facility, Long Term L/C Series A Facility, Short Term L/C Series B
Facility and Long Term L/C Series B Facility and Converted A/B Notes set forth
in Annex C.

                  "Satisfied in Cash" means, with respect to a Note Payment
obligation with respect to each of the Trade Series Notes and Working Capital
Series Notes, the receipt by the Paying Agent (or the Argentine Paying Agent, if
applicable) for the benefit of the Trade Series Holders or Working Capital
Series Holders, as applicable, under the terms of the applicable Supplemental
Indenture of an amount in Cash paid by the Issuer in satisfaction of such Note
Payment obligation, it being understood and agreed that such Note Payment
obligation of the Issuer will be deemed reduced by, and to the extent of, such
payment.

                  "Securities Act" means the United States Securities Act of
1933, as amended.

                  "Settlement Agreement" has the meaning specified in Section 5
of the Note Purchase Agreement.

                  "Short Term Debt" of any Person means the principal amount of
Debt that by its terms matures within one year after the date of determination
and is not renewable or extendable solely and unconditionally at the option of
such Person to a date that is more than one year after the date of
determination. With respect to any calculation of Short Term Debt on any date,
Short Term Debt in respect of the reimbursement obligation under the Letter of
Credit Issuance and Reimbursement Agreement shall equal the amount of Debt that
the Company would incur (assuming a full drawdown of all Letters of Credit on
such date) and that would mature in its entirety within a year from such date.

                  "Short Term L/C Facilities" means the Short Term L/C Series A
Facility, the Short Term L/C Series B Facility and the Short Term L/C Series C
Facility.

                  "Short Term L/C Series A Account" has the meaning specified in
Section 6 of the L/C Collateral Accounts Security Agreement.

                  "Short Term L/C Series A Facility" means an amount equal to
$4,500,000, which amount represents the maximum aggregate amount available to be
drawn under the Short Term Series A Letter of Credit and the maximum aggregate
amount of Short Term Series A Letter of Credit Advances to be made by the Short
Term L/C Series A Issuing Bank and the Short Term L/C Series A Funding Lenders
with respect to drawings under the Short Term Series A Letter of Credit pursuant
to the terms and conditions of the Letter of Credit Issuance and Reimbursement
Agreement, and the rights and obligations of the Company, the Short Term L/C
Series A Issuing

                                       29

<PAGE>

Bank and Short Term L/C Series A Funding Lenders in respect of the Short Term
Series A Letters of Credit and Short Term Series A Letter of Credit Advances.

                  "Short Term L/C Series A Funding Lender" means the banks,
financial institutions and other institutional lenders listed on Schedule II of
the Letter of Credit Issuance and Reimbursement Agreement as the Short Term L/C
Series A Funding Lenders and each Person that shall become a Short Term L/C
Series A Funding Lender under the Letter of Credit Issuance and Reimbursement
Agreement pursuant to Section 8.06 of such agreement.

                  "Short Term L/C Series A Issuing Bank" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Short Term L/C Series A Lenders" means the Short Term L/C
Series A Issuing Bank and the Short Term L/C Series A Funding Lenders.

                  "Short Term L/C Series B Account" has the meaning specified in
Section 6 of the L/C Collateral Accounts Security Agreement.

                  "Short Term L/C Series B Facility" means an amount equal to
$1,500,000, which amount represents the maximum aggregate amount available to be
drawn under the Short Term Series B Letter of Credit and the maximum aggregate
amount of Short Term Series B Letter of Credit Advances to be made by the Short
Term L/C Series B Issuing Bank and the Short Term L/C Series B Funding Lenders
with respect to drawings under the Short Term Series B Letter of Credit pursuant
to the terms and conditions of the Letter of Credit Issuance and Reimbursement
Agreement, and the rights and obligations of the Company, the Short Term L/C
Series B Issuing Bank and Short Term L/C Series B Funding Lenders in respect of
the Short Term Series B Letter of Credit and Short Term Series B Letter of
Credit Advances.

                  "Short Term L/C Series B Funding Lender" means the banks,
financial institutions and other institutional lenders listed on Schedule II of
the Letter of Credit Issuance and Reimbursement Agreement as the Short Term L/C
Series B Funding Lenders and each Person that shall become a Short Term L/C
Series B Funding Lender under the Letter of Credit Issuance and Reimbursement
Agreement pursuant to Section 8.06 of such agreement..

                  "Short Term L/C Series B Issuing Bank" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Short Term L/C Series B Lenders" means the Short Term L/C
Series B Issuing Bank and the Short Term L/C Series B Funding Lenders.

                  "Short Term L/C Series C Account" has the meaning specified in
Section 6 of the L/C Collateral Accounts Security Agreement.

                  "Short Term L/C Series C Facility" means an amount equal to
$22,000,000, which amount represents the maximum aggregate amount available to
be drawn under the Short Term Series C Letters of Credit and the maximum
aggregate amount of Short Term Series C Letter of Credit Advances to be made by
the Short Term L/C Series C Issuing Banks and the Short Term L/C Series C
Funding Lenders with respect to drawings under such Short Term

                                       30

<PAGE>

Series C Letters of Credit pursuant to the terms and conditions of the Letter of
Credit Issuance and Reimbursement Agreement, and the rights and obligations of
the Company, the Short Term L/C Series C Issuing Banks and Short Term L/C Series
C Funding Lenders in respect of such Short Term Series C Letters of Credit and
Short Term Series C Letter of Credit Advances.

                  "Short Term L/C Series C Funding Lender" means the banks,
financial institutions and other institutional lenders listed on Schedule II of
the Letter of Credit Issuance and Reimbursement Agreement as the Short Term L/C
Series C Funding Lenders and each Person that shall become a Short Term L/C
Series C Funding Lender under the Letter of Credit Issuance and Reimbursement
Agreement pursuant to Section 8.06 of such agreement.

                  "Short Term L/C Series C Issuing Banks" has the meaning
specified in the recital of parties to the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Short Term L/C Series C Lenders" means the Short Term L/C
Series C Issuing Banks and the Short Term L/C Series C Funding Lenders.

                  "Short Term Letters of Credit" means the Short Term Series A
Letter of Credit, the Short Term Series B Letters of Credit and the Short Term
Series C Letters of Credit.

                  "Short Term Letter of Credit Advances" means the Short Term
Series A Letter of Credit Advances, the Short Term Series B Letter of Credit
Advances and the Short Term Series C Letter of Credit Advances.

                  "Short Term MT Notes" means notes issued pursuant to a
supplemental indenture in the form of Exhibit H-1 to the Letter of Credit
Issuance and Reimbursement Agreement upon a Conversion of Letter of Credit
Advances pursuant to Section 2.08(b) of the Letter of Credit Issuance and
Reimbursement Agreement.

                  "Short Term New Notes" means the Short Term Trade Series
Notes, the Short Term Working Capital Series Notes and the Short Term MT Notes.

                  "Short Term Series A Letter of Credit" has the meaning set
forth in Section 2.01(a)(i) of the Letter of Credit Issuance and Reimbursement
Agreement.

                  "Short Term Series A Letters of Credit Advance" means an
advance by a Lender to the Company pursuant to Section 2.02(a)(i) of the Letter
of Credit Issuance and Reimbursement Agreement.

                  "Short Term Series B Letter of Credit" has the meaning set
forth in Section 2.01(a)(ii) of the Letter of Credit Issuance and Reimbursement
Agreement.

                  "Short Term Series B Letter of Credit Advance" means an
advance by a Lender to the Company pursuant to Section 2.02(a)(ii) of the Letter
of Credit Issuance and Reimbursement Agreement.

                  "Short Term Series C Letter of Credit" has the meaning set
forth in Section 2.01(a)(iii) of the Letter of Credit Issuance and Reimbursement
Agreement.

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<PAGE>

                  "Short Term Series C Letter of Credit Advance" means an
advance by a Lender to the Company pursuant to Section 2.02(a)(iii) of the
Letter of Credit Issuance and Reimbursement Agreement.

                  "Short Term Trade Series Agent" has the meaning set forth in
Section 6.1.1 of the Short Term Trade Series Supplemental Indenture.

                  "Short Term Trade Series Holder" means, as to any outstanding
Short Term Trade Series Note a Holder of such Short Term Trade Series Note.

                  "Short Term Trade Series Notes" has the meaning set forth in
Section 2.1 of the Short Term Trade Series Supplemental Indenture.

                  "Short Term Trade Series Supplemental Indenture" means the
First Supplemental Indenture dated as of October 4, 2002 among the Company, The
Bank of New York, as Trustee, Co-Security Registrar, Authenticating Agent,
Paying Agent and Transfer Agent in New York, Banco Rio de la Plata S.A., as
Security Registrar, Argentine Paying Agent and Transfer Agent in Argentina and
JPMorgan Chase Bank, as Administrative Agent and Calculation Agent.

                  "Short Term Working Capital Series Agent" has the meaning set
forth in Section 6.1.1 of the Short Term Working Capital Series Supplemental
Indenture.

                  "Short Term Working Capital Series Holder" means, as to any
outstanding Short Term Working Capital Series Note a Holder of such Short Term
Working Capital Series Note.

                  "Short Term Working Capital Series Notes" has the meaning set
forth in Section 2.1 of the Short Term Working Capital Series Supplemental
Indenture.

                  "Short Term Working Capital Series Supplemental Indenture"
means the Third Supplemental Indenture dated as of October 4, 2002 among the
Company, The Bank of New York, as Trustee, Co-Security Registrar, Authenticating
Agent, Paying Agent and Transfer Agent in New York, Banco Rio de la Plata S.A.,
as Security Registrar, Argentine Paying Agent and Transfer Agent in Argentina
and JPMorgan Chase Bank, as Administrative Agent and Calculation Agent.

                  "Specified Amount" means, at any date of determination, an
amount equal to the greater of (A) U.S.$15,000,000 (or its equivalent in other
currencies) and (B) 1% of the Company's Consolidated stockholders' equity as
reflected in the Financial Statements of the Company most recently required to
be filed by the Company with the CNV.

                  "Subordinated Debt" means all future Debt of the Company,
subordinated in right of payment to the New Notes and Letter of Credit Advances
pursuant to a subordination agreement substantially in the form of Exhibit A to
this Annex A, which shall have no covenants or event of default or similar
provisions with the exception of a cross acceleration provision relating to the
New Notes and the Letter of Credit Advances.

                  "Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued

                                       32

<PAGE>

and outstanding capital stock having ordinary voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency), (b) the
interest in the capital or profits of such limited liability company,
partnership or joint venture or (c) the beneficial interest in such trust or
estate is at the time directly or indirectly owned or controlled by such Person,
by such Person and one or more of its other Subsidiaries or by one or more of
such Person's other Subsidiaries.

                  "Sucursal Shares" means shares of capital stock of Perez
Companc Ecuador Sucursal Ecuador, a corporation organized and existing under the
laws of the Cayman Islands and duly authorized for the development of commercial
activities in the Republic of Ecuador.

                  "Supplemental Indentures" means the Long Term Trade Series
Supplemental Indenture, the Long Term Working Capital Series Supplemental
Indenture, the Short Term Trade Series Supplemental Indenture and the Short Term
Working Capital Series Supplemental Indenture and any supplemental indenture
pursuant to which MT Notes are issued.

                  "Takedown" means, with respect to each of the Trade Series
Notes and the Working Capital Series Notes, the initial issuance, purchase and
sale of the Trade Series Notes and the Working Capital Series Notes,
respectively which shall take place on the Effective Date.

                  "Taxes" means any present or future taxes, duties, levies,
imposts, deductions, withholdings or other governmental charges of whatever
nature and all liabilities with respect thereto.

                  "Trade Series Holder" means, as to any outstanding Trade
Series Note, a Holder of such Trade Series Note.

                  "Trade Series Notes" means the Long Term Trade Series Notes
and the Short Term Trade Series Notes.

                  "Tranche" has the meaning specified in the definition of
Letter of Credit Advances in this Annex A.

                  "Transaction Documents" means the Loan Documents with respect
to all Letter of Credit Advances under all Letter of Credit Facilities and the
Note Documents with respect to all New Notes.

                  "Trust Indenture Act" means the United States Trust Indenture
Act of 1939, as amended.

                  "Trustee" means Bank of New York, as trustee under the
Supplemental Indentures.

                  "Type" refers to the distinction between Letter of Credit
Advances bearing interest at the Base Rate and Letter of Credit Advances bearing
interest at LIBOR.

                                       33

<PAGE>

                  "Unconsolidated Person" means any Person (A) whose primary
business is related to a core business of the Company and its Subsidiaries as of
the date hereof, (B) that is not a Subsidiary of the Company, (C) over which the
Company or any of its Subsidiaries, by contract, ownership of equity, membership
on the board of directors (or similar governing body) or otherwise, has input or
influence in the management, business or operations (whether or not such input
or influence is shared with other Persons or other Persons have a greater role
or deciding voice with respect to such Unconsolidated Person's management,
business or operations).

                  "United States" or "U.S." means the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.

                  "U.S. Dollars", "U.S.$" and "$" means the lawful currency of
the United States.

                  "U.S. GAAP", means generally accepted accounting principles,
as in effect from time to time in the United States of America.

                  "Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even if the right so
to vote has been suspended by the happening of such a contingency.

                  "Working Capital Series Holder" means, as to any outstanding
Working Capital Series Note, a Holder of such Working Capital Series Note.

                  "Working Capital Series Notes" means the Long Term Working
Capital Series Notes and the Short Term Working Capital Series Notes.

                                       34
<PAGE>

                                                                  EXECUTION COPY

                                                                         Annex B

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants as follows:

                  (a)      Good Standing and Power. (i) The Company has been
         duly incorporated and is validly existing as a sociedad anonima duly
         established under the laws of Argentina, with power and authority
         (corporate and other) to own its properties and conduct its business as
         now being conducted, and has been duly qualified as a foreign
         corporation for the transaction of business and is in good standing
         under the laws of each other jurisdiction in which it owns or leases
         properties, or conducts any business, so as to require such
         qualification, except to the extent that the failure to be so qualified
         or in good standing would not have a Material Adverse Effect.

                           (ii)     Each of the Company's Subsidiaries has been
                  duly incorporated and is validly existing as a corporation
                  under the laws of its jurisdiction of incorporation, with
                  power and authority (corporate and other) to own its
                  properties and conduct its business as now being conducted;
                  and each of the Company's Subsidiaries has been duly qualified
                  as a foreign corporation for the transaction of business and
                  is in good standing under the laws of each other jurisdiction
                  in which it owns or leases properties, or conducts any
                  business, so as to require such qualification, except to the
                  extent that the failure to be so qualified or in good standing
                  would not have a material adverse effect on the Company and
                  its Subsidiaries taken as a whole; and all the outstanding
                  shares of capital stock of each Subsidiary of the Company have
                  been duly authorized and validly issued, are fully-paid and
                  non-assessable, and (except for directors' qualifying shares
                  and except as set forth in the financial statements contained
                  in the Offering Memorandum) are owned by the Company, directly
                  or indirectly, free and clear of all liens, encumbrances,
                  security interests or claims.

                  (b)      Corporate Authority. (i) The execution, delivery and
         performance by the Company and each Subsidiary of each Applicable
         Transaction Document with respect to the Applicable Debt to which it is
         a party are within the Company's and such Subsidiary's corporate powers
         and have been duly authorized by all necessary corporate action. No
         consent or approval of stockholders or any Governmental Authority is
         required as a condition to the validity or performance of such
         Applicable Transaction Documents, except that the Company must obtain
         approval from the Central Bank of Argentina prior to transferring
         foreign exchange from Argentina to effect any payments of principal or
         interest with respect to the Applicable Debt.

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<PAGE>

                           (ii)     Each Applicable Transaction Document with
                  respect to the Applicable Debt, when delivered, will have been
                  duly authorized, executed and delivered by the Company and
                  each Subsidiary party thereto and will be the legal, valid and
                  binding obligation of the Company and such Subsidiary
                  enforceable against the Company and such Subsidiary in
                  accordance with its terms, subject to bankruptcy, insolvency,
                  fraudulent transfer, reorganization, moratorium and similar
                  laws of general applicability relating to or affecting
                  creditors' rights and to general principles of equity, and
                  such Applicable Transaction Document does not contain any
                  provision contrary to Argentine law, regulations or public
                  policy.

                  (c)      Authorizations. All authorizations, consents,
         approvals, registrations, orders, filings, qualifications, exemptions
         and licenses with or from Governmental Authorities which are necessary
         for the execution and delivery of, and the consummation of the
         transactions contemplated by the Applicable Transaction Documents with
         respect to the Applicable Debt and the performance by each of the
         Company and its Subsidiaries of its obligations thereunder have been
         effected or obtained and are in full force and effect, except that the
         Company must obtain approval from the Central Bank of Argentina prior
         to transferring foreign exchange from Argentina to effect any payments
         of principal or interest with respect to the Applicable Debt.

                  (d)      Litigation. Except as disclosed in the Offering
         Memorandum, there are no legal or governmental investigations, actions,
         arbitrations, suits or proceedings pending or, to the knowledge of the
         Company, threatened against or affecting the Company or any of its
         Material Subsidiaries or any of their respective material properties
         which, if determined adversely to the Company or any of its Material
         Subsidiaries, could individually or in the aggregate have, or
         reasonably be expected to have, a Material Adverse Effect including
         upon the results of operations or shareholders' equity of the Company
         and its Subsidiaries taken as a whole.

                  (e)      No Conflicts, Compliance with Law. Neither the
         Company nor any of its Subsidiaries is, or with the giving of notice or
         lapse of time or both would be, in violation of or in default under,
         its governing ordinance, memorandum or certificate of incorporation (or
         other equivalent instrument) or its by laws (or other equivalent
         instrument) or any indenture, mortgage, deed of trust, loan agreement
         or other agreement or instrument to which the Company or any of its
         Subsidiaries is a party or by which it or any of them or any of their
         respective properties is bound, except for violations and defaults
         which individually or in the aggregate are not material to the Company
         and its Subsidiaries taken as a whole or to the Applicable Transaction
         Parties with respect to the Applicable Debt. The performance by the
         Company or any of its Subsidiaries of all of its obligations under the
         Applicable Transaction Documents with respect to the Applicable Debt to
         which it is a party, and the consummation of the transactions therein
         contemplated, will not conflict with or result in a breach of any of
         the terms or provisions of, or constitute a default under, any
         indenture, mortgage, deed of trust, loan agreement or other agreement
         or instrument to which the Company or any of its Subsidiaries is a
         party, by which the Company or any of its Subsidiaries is bound or to
         which any of the Property or assets of the Company or any of its
         Subsidiaries is subject, except for violations or defaults that
         individually or in the aggregate are not material to the

                                       2

<PAGE>

         Company and its Subsidiaries taken as a whole or the Applicable
         Transaction Parties with respect to the Applicable Debt; nor will such
         action (i) result in any violation of the provisions of the governing
         ordinance, memorandum or certificate of incorporation (or other
         equivalent instrument) or by-laws (or other equivalent instrument) of
         the Company or any applicable law or statute or any order, rule,
         judgment or regulation of any court or governmental agency or body
         having jurisdiction over the Company (including, without limitation,
         any foreign exchange controls), any of its Subsidiaries or any of their
         respective properties, provided however, that the authorization of the
         Central Bank of Argentina may be required to the extent that any
         payment of principal or interest is made from Argentina, or (ii) result
         in or require the creation or imposition of any Lien upon or with
         respect to any of the properties of the Company or any of its
         Subsidiaries; except that the Company must obtain approval from the
         Central Bank of Argentina prior to transferring foreign exchange from
         Argentina to effect any payments of principal or interest with respect
         to the Applicable Debt. The Company and its Subsidiaries are in
         compliance with all Governmental Rules except for any non-compliance
         which could not be expected to result in a Material Adverse Effect.

                  (f)      Offering Memorandum. The Offering Memorandum does not
         contain any untrue statement of a material fact or omit to state any
         material fact required to be stated therein or necessary to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading.

                  (g)      Financial Condition. The annual consolidated balance
         sheet of the Company and its Subsidiaries as of December 31, 2001,
         together with consolidated statements of income and expense, retained
         earnings, paid-in capital and surplus and changes in financial position
         for the fiscal year then ended, audited by Pistrelli, Diaz y Asociados,
         and the consolidated balance sheet of the Company and its Subsidiaries
         as of June 30, 2002, together with consolidated statements of income
         and expense and changes in financial position for the six months then
         ended, certified by the chief financial officer of the Company,
         heretofore delivered to the Applicable Transaction Parties with respect
         to the Applicable Debt, fairly present the financial condition of the
         Company and its Subsidiaries and the results of their operations and
         transactions in their surplus accounts as of the dates and for the
         periods referred to and have been prepared in accordance with Argentine
         GAAP applied on a consistent basis by the Company and its Subsidiaries
         throughout the periods involved. There are no liabilities, direct or
         indirect, fixed or contingent, of the Company or any of its
         Subsidiaries as of the dates of such balance sheets which are not
         reflected therein or in the notes thereto. Furthermore, there has not
         been any change in the capital stock or long-term debt of the Company
         and its Subsidiaries since the date of the latest audited financial
         statements except as set forth on Schedule I hereto.

                  (h)      Taxes. The Company and its Subsidiaries have filed in
         all jurisdictions all tax returns which they are required to file and
         have paid all taxes shown thereon and all assessments received by any
         of them to the extent that such taxes and assessments have become due
         and are not being contested in good faith, except where the failure to
         make such filings or pay such taxes or assessments would not have a
         Material Adverse Effect; and except as disclosed in the Offering
         Memorandum, there is no material tax deficiency

                                       3

<PAGE>

         which has been or might reasonably be expected to be asserted or
         threatened against the Company or any Subsidiary.

                  (i)      Tax Liability. There is no income, stamp or other
         tax, duty, impost, levy, deduction or other charge imposed (whether by
         withholding or otherwise) by Argentina (including any political
         subdivision thereof) or any Argentine governmental agency or other
         Argentine governmental or taxing authority or agency either (i) on or
         by virtue of the execution, delivery or performance by the Company of
         any Applicable Transaction Document with respect to the Applicable Debt
         or (ii) if the Applicable Debt consists of New Notes, on any payment to
         be made in respect of such Applicable Debt to the extent the New Notes
         were placed in a manner that satisfies the requirements of Article 36
         of Argentine Negotiable Obligations LAW. If the Applicable Debt
         consists of Debt under the Letter of Credit Issuance and Reimbursement
         Agreement, payments to be made in respect of such Applicable Debt will
         be subject to Argentine withholding tax and will entitle the recipients
         of such payments to the benefits of Section 2.12 of the Letter of
         Credit Issuance and Reimbursement Agreement, subject to the limitations
         set forth therein.

                  (j)      No Material Misstatements. No information, report,
         financial statement, exhibit or schedule furnished by or on behalf of
         the Company to the Applicable Transaction Parties with respect to the
         Applicable Debt in connection with the negotiation of the Applicable
         Transaction Documents with respect to the Applicable Debt or included
         therein or delivered pursuant thereto contained or contains any
         material misstatement of fact or omitted or omits to state any material
         fact necessary to make the statements therein not misleading; provided
         that, in each case, to the extent any such information, report or
         financial statement, exhibit or schedule was based upon or constitutes
         a forecast or projection, the Company represents only that it has acted
         in good faith and utilized reasonable assumptions and due care in the
         preparation of such information, report, financial statement or
         schedule, it being recognized that actual financial performance may
         differ from such forecast or projection.

                  (k)      Title to Properties; Possession Under Leases. Each of
         the Company and each of its Subsidiaries has (i) good and marketable
         title in fee simple to all items of real property owned by it; (ii)
         good and marketable title to all personal property owned by it and
         (iii) a good and valid leasehold, easement or other applicable interest
         in all tangible property (including real property) it leases or
         otherwise possesses, except, in each case, where failure to have, as
         applicable, good and marketable title or a good and valid leasehold,
         easement or other applicable interest would not have a Material Adverse
         Effect. To the extent that each of the Company and each of its
         Subsidiaries has, as applicable, good and marketable title to or a good
         and valid leasehold, easement or other applicable interest in the
         Property described in the foregoing sentence, each of the Company and
         each such Subsidiary owns, leases, or possesses, as applicable, such
         Property free and clear of all Liens and defects except such as are
         described in Schedule II hereto or such as would not, individually or
         in the aggregate, have a Material Adverse Effect. Neither the Company
         nor any of its Subsidiaries has any Obligation to create or incur
         Liens, except such as are described in Schedule III hereto.

                                       4

<PAGE>

                  (l)      Ownership of Property; Liens. Each of the Company and
         its Subsidiaries owns, possesses or has obtained all licenses, permits,
         certificates, consents, orders, approvals and other authorizations
         from, and has made all declarations and filings with, all federal,
         state, local and other Governmental Authorities, all self-regulatory
         organizations and all courts and other tribunals, domestic or foreign,
         necessary to own or lease, as the case may be, and to operate its
         properties and to carry on its business as conducted as of the date
         hereof except where the failure to own, possess or obtain such
         licenses, permits, certificates, consents, orders, approvals or
         authorizations, or to make such declarations or filings, would not,
         individually or in the aggregate, have a material adverse effect on the
         Company and its Subsidiaries taken as a whole; and neither the Company
         nor any such Subsidiary has received any notice of any proceeding
         relating to revocation or modification of any such license, permit,
         certificate, consent, order, approval or other authorization; and each
         of the Company and its Subsidiaries has all licenses, franchises,
         concessions, permits, authorizations, approvals and orders of and from
         all governmental and regulatory officials and bodies that are necessary
         to effect oil and gas exploration, production, refining, transportation
         and distribution activities as they are currently conducted thereby,
         except where the failure to have such licenses, franchises,
         concessions, permits, authorizations, approvals and orders is not
         material to the conduct of the business of the Company and its
         Subsidiaries taken as a whole; and each of the Company and its
         Subsidiaries is in material compliance with all laws and regulations
         relating to the conduct of its business as conducted as of the date
         hereof.

                  (m)      Not an Investment Company. Neither the Company nor
         any of its Subsidiaries that is a party to any Transaction Document is,
         or after giving effect to the issuance of the notes evidencing the
         Applicable Debt, will be an "investment company" or a company
         "controlled" by an "investment company" within the meaning of the
         Investment Company Act of 1940, as amended.

                  (n)      Margin Stock. Neither the Company nor any of its
         Subsidiaries will, directly or indirectly, use any of the proceeds of
         the Applicable Debt for any purpose, whether immediate, incidental or
         ultimate, of buying "margin stock" or of maintaining, reducing or
         retiring any Debt originally incurred to purchase stock that is
         currently a "margin stock", and the issuance of the Applicable Debt
         will not constitute an extension of "purpose credit" that is directly
         or indirectly secured by "margin stock" in each case within the meaning
         of Regulation U of the Board of Governors of the Federal Reserve System
         (the "Federal Reserve") and will not violate or result in a violation
         of such Regulation U or of Regulation T or Regulation X or any other
         regulation of the Federal Reserve.

                  (o)      Environmental Protection. Each of the Company and its
         Subsidiaries (i) is in material compliance with any and all
         Environmental Laws, (ii) has received all permits, licenses or other
         approvals required of them under applicable Environmental Laws to
         conduct its business as currently conducted and (iii) is in material
         compliance with all terms and conditions of any such permit, license or
         approval, except where such noncompliance with Environmental Laws,
         failure to receive such required permits, licenses or other approvals
         or failure to comply with the terms and conditions of such

                                       5

<PAGE>

         permits, licenses or approvals would not, individually or in the
         aggregate, have a Material Adverse Effect.

                  (p)      Adequate Licenses. Each of the Company and its
         Subsidiaries possesses adequate licenses (including without limitation
         concessions and permits) or other rights to use all know-how necessary,
         to conduct the business now operated by them, the loss of which would
         have a Material Adverse Effect, and neither the Company nor its
         Subsidiaries has received any notice of and does not know of any
         infringement of asserted rights of others with respect to any such
         know-how which, if such assertion of infringement were sustained, would
         have a Material Adverse Effect.

                  (q)      Labor Relations. There are no existing or, to the
         best knowledge of the Company, threatened labor disputes with the
         employees of the Company or any of its Subsidiaries which are likely to
         have a material adverse effect on the Company and its Subsidiaries
         taken as a whole, nor is the Company aware of any existing, threatened
         or imminent labor disturbance by the employees of its principal
         suppliers, contractors or customers that could reasonably be expected
         to result in any Material Adverse Effect including upon the results of
         operations or shareholders' equity of the Company and its Subsidiaries
         taken as a whole.

                  (r)      Absence of Filing Requirements. It is not necessary,
         in order to establish or maintain the legality, validity or
         enforceability of any Applicable Transaction Document with respect to
         the Applicable Debt under the laws of Argentina, Ecuador, Bolivia, or
         the Cayman Islands or to establish the admissibility into evidence of
         any such Applicable Transaction Document in any court in Argentina,
         Ecuador, Bolivia or the Cayman Islands that such Applicable Transaction
         Document be submitted to, filed or recorded with any court or other
         authority in Argentina, Ecuador, Bolivia or the Cayman Islands or that
         any tax, imposition or charge be paid in Argentina, Ecuador, Bolivia or
         the Cayman Islands on or in respect of such Applicable Transaction
         Document, other than a court tax of 3% of the amount in controversy so
         claimed with respect to the institution of any judicial proceeding to
         enforce such Applicable Transaction Document in the Federal District of
         Argentina; all documentation to be presented before the courts of
         Argentina will be required (i) to be officially translated into Spanish
         and (ii) in many cases, to carry legalizations.

                  (s)      No Qualification Necessary. It is not necessary under
         the laws of Argentina, Ecuador, Bolivia or the Cayman Islands that any
         of the Applicable Transaction Parties with respect to the Applicable
         Debt or any Applicable Agent Party with respect to the Applicable Debt
         be licensed, qualified or entitled to carry on business in Argentina,
         Ecuador, Bolivia or the Cayman Islands by reason of the execution,
         delivery, performance or enforcement of any Applicable Transaction
         Document with respect to the Applicable Debt.

                  (t)      No Filing Needed. It is not necessary, in order to
         establish or maintain the legality, validity, enforceability or
         priority of (i) any of the Applicable Transaction Documents with
         respect to the Applicable Debt under the laws of Argentina, Ecuador,
         Bolivia or the Cayman Islands or to establish the admissibility into
         evidence of any of the

                                       6

<PAGE>

         Applicable Transaction Documents with respect to the Applicable Debt in
         any court in Argentina, Ecuador, Bolivia or the Cayman Islands, that
         such Applicable Transaction Documents be submitted to, filed or
         recorded with any court or other authority in Argentina, Ecuador,
         Bolivia or the Cayman Islands.

                  (u)      Ranking. The Applicable Debt will be unsecured and
         unsubordinated obligations of the Company and will rank pari passu with
         no preference among themselves, and the obligations of the Company with
         respect to the Applicable Debt, except (i) as is or may be provided
         under Argentine law, will rank at least pari passu in right of payment
         with all other present or future unsecured and unsubordinated
         obligations of the Company from time to time outstanding and (ii) for
         any preference or security in the L/C Collateral Accounts pursuant to
         the L/C Collateral Accounts Security Agreement.

                  (v)      Jurisdiction. The submission of the Company and the
         Co-Obligors to the non-exclusive jurisdiction of the Federal and state
         courts in the borough of Manhattan in the City of New York pursuant to
         the Applicable Transaction Documents with respect to the Applicable
         Debt is legal, valid and binding under the laws of Argentina, Ecuador,
         Bolivia and the Cayman Islands, as applicable; and the appointment of
         CT Corporation System as its Process Agent for the purposes described
         in each Applicable Transaction Document with respect to the Applicable
         Debt is legal, valid and binding under the laws of Argentina, Ecuador,
         Bolivia and the Cayman Islands, as applicable.

                  (w)      Ecuadorian Assets. The Ecuadorian Assets relating to
         the OCP Shares, Block 18 and Block 31 comprise all of the Property of
         the Company and its Subsidiaries in Ecuador, other than any Properties,
         the value of which, taken as a whole, does not represent a material
         portion of the aggregate value of the Ecuadorian Assets; and no Lien
         exists on the Ecuadorian Assets.

                  (x)      Foreign Exchange Regulations. (i) The Company has
         complied, and is currently in compliance, in all material respects,
         with any and all foreign exchange and transfer restriction regulations.

                           (ii)     Under the laws and regulations of Argentina
                  and any political subdivision thereof in force as of the date
                  hereof (including the regulations of the Central Bank and
                  Section 5 of Decree 1589/89), the Company may freely sell and
                  dispose of the hydrocarbons produced by it in Argentina, and
                  has the right to freely dispose (without being obliged to
                  repatriate) up to 70% of the proceeds from exports of its
                  hydrocarbon (crude oil and crude oil derivatives).

                           (iii)    There are no investigations, actions, suits
                  or proceedings by any Argentine Governmental Authority pending
                  or, to the knowledge of the Company, threatened against or
                  affecting the Company, for breach of Argentine foreign
                  exchange control or transfer restrictions laws and
                  regulations, which, if determined adversely to the Company,
                  could have, or be reasonably expected to have, a Material
                  Adverse Effect.

                                       7

<PAGE>

                           (iv)     Under the laws and regulations of Argentina
                  and any political subdivision thereof in force as of the date
                  hereof, all interest, principal, premium, if any, and any
                  other payments due or made on the Applicable Debt may be paid
                  by the Company to a holder thereof in Dollars outside of
                  Argentina (a) by applying (without being obliged to
                  repatriate) the percentage of export proceeds mentioned in
                  (ii) above, without any kind of prior or subsequent
                  authorization from the Central Bank of Argentina or any other
                  Governmental Authority; and/or (b) by means of the transfer to
                  a destination outside of Argentina of Dollars acquired by the
                  Company in Argentina in the local currency market, subject in
                  this case (b) to the prior authorization from the Central Bank
                  of Argentina for such transfer of Dollars.

                  (y)      Use of Proceeds of Eligible Trade Transactions. The
         Company intends to apply the proceeds generated by Eligible Trade
         Transactions to the payment of amounts due under the New Notes and the
         Letter of Credit Advances.

                                       8
<PAGE>

                                                                  EXECUTION COPY

                                                                         Annex C

                            COVENANTS OF THE COMPANY

                  Affirmative Covenants. So long as any amount of the Applicable
Debt shall remain unpaid or outstanding, the Company shall:

                  (a)      Compliance with Laws, Etc. Comply, and cause each of
         its Material Subsidiaries to comply, in all material respects, with all
         Governmental Rules (including without limitation, environmental laws,
         social security laws, retirement and pension fund laws and the rules
         and regulations thereunder) except where the necessity of compliance
         therewith is being contested in good faith by appropriate proceedings
         or where noncompliance therewith could not, in the aggregate,
         reasonably be expected to have a Material Adverse Effect.

                  (b)      Payment of Taxes, Etc. Pay and discharge, and cause
         each of its Subsidiaries to pay and discharge, before the same shall
         become delinquent, (i) all their material obligations and liabilities,
         including all taxes, assessments and governmental charges or levies
         imposed upon it or upon its property and (ii) all lawful claims that,
         if unpaid, might by law become a Lien upon its property; provided that
         neither the Company nor any of its Subsidiaries shall be required to
         pay or discharge any such obligation, liability, tax, assessment,
         charge or claim that (A) is being contested in good faith and by proper
         proceedings and as to which appropriate reserves are being maintained
         in accordance with Argentine GAAP, or (B) where non-compliance
         therewith could not, in the aggregate, reasonably be expected to have a
         Material Adverse Effect.

                  (c)      Maintenance of Insurance. Keep, and cause each of its
         Material Subsidiaries to keep, at all times all of its properties which
         are of an insurable nature insured against loss or damage with insurers
         believed by the Company or such Material Subsidiary, as the case may
         be, to be responsible to the extent that property of similar
         characteristics is usually so insured by similar companies (within
         Argentina or the relevant jurisdiction in which the properties are
         located) and in accordance with rules and regulations applicable to
         such companies in Argentina or the relevant jurisdiction in which the
         properties are located; provided that the management of the Company or
         such Material Subsidiary may in any event increase the amount of any
         deductible or other retention of risk by the Company or such Material
         Subsidiary or reduce the level of insurance cover if it shall determine
         in good faith that such actions are in the best interests of the
         Company or such Material Subsidiary and not materially adverse to the
         interests of the Applicable Transaction Parties with respect to such
         Applicable Debt. Upon request of the Applicable Agent Party with
         respect to such Applicable Debt, the Company will furnish to such
         Applicable Agent Party, for distribution to the Applicable Transaction
         Parties with respect to such Applicable Debt, copies of the information
         provided annually by it or its Material Subsidiaries to Argentine or
         other regulatory agencies as to the insurance so carried.

<PAGE>

                  (d)      Preservation of Corporate Existence, Etc. Preserve
         and maintain, and cause to be done all things necessary to, preserve
         and keep in full force and effect its corporate existence and will use
         its best efforts to do or cause to be done all things necessary to
         preserve and keep in full force and effect its rights (charter and
         statutory) and franchises and such rights and franchises of its
         Subsidiaries; provided that (i) the Company shall not be required to
         preserve or to cause its Subsidiaries to preserve any such right or
         franchise or preserve its Subsidiaries' existence if the Board of
         Directors shall determine that the preservation thereof is no longer
         desirable in the conduct of the business of the Company and its
         Subsidiaries taken as a whole and that the loss of such right,
         franchise or existence is not disadvantageous in any material respect
         to the Applicable Transaction Parties with respect to such Applicable
         Debt and (ii) the Company may consummate any merger or consolidation
         permitted under clause (c) of the Negative Covenants set forth in this
         Annex C.

                  (e)      Inspection of Property, Books and Records. Keep, and
         cause each Material Subsidiary to keep, proper books of records and
         accounts in which full, true and correct entries shall be made of all
         dealings and transactions in relation to its business and activities in
         accordance with standard accounting practices in the relevant
         jurisdictions; and permit, and cause each Material Subsidiary to
         permit, after at least five days' notice (except no such notice shall
         be required at any time after an Event of Default with respect to the
         Applicable Debt shall have occurred and be continuing) and during
         regular business hours, any Applicable Transaction Party with respect
         to such Applicable Debt or its representative, at such Applicable
         Transaction Party's expense, to visit and inspect any of the Company's
         and its Material Subsidiaries' respective properties, to examine any of
         their respective books and records, including documents relating to
         Eligible Trade Transactions, and to discuss their respective affairs,
         finances and accounts with their respective officers, employees and
         independent public accountants, all at such reasonable times and as
         often as may reasonably be desired; except that the Company shall not
         be required to provide such access to any information that it may
         reasonably deem confidential.

                  (f)      Maintenance of Properties, Etc. (i) Maintain and
         preserve, and cause each of its Subsidiaries to maintain and preserve,
         all of its tangible properties that are used or useful in the conduct
         of business in good condition, repair and working order and supplied
         with all necessary equipment and cause to be made all necessary
         renewals, replacements and improvements thereof, all as in the judgment
         of the Company or such Subsidiary may be necessary that the business
         carried on in connection therewith may be properly and advantageously
         conducted at all times, provided that this covenant shall not in any
         way prevent the Company or such Subsidiary from discontinuing the
         operation or maintenance of any of its properties if such
         discontinuance is, as determined by the Board of Directors or
         responsible officers of the Company or such Subsidiary in good faith,
         desirable in the conduct of the business of the Company and its
         Subsidiaries taken as a whole and could not reasonably be expected to
         have a Material Adverse Effect.

                  (g)      Transactions with Affiliates. Conduct, and cause each
         of its Subsidiaries to conduct, any transaction otherwise permitted
         under the Applicable Transaction Documents with respect to such
         Applicable Debt with any stockholder of the Company

                                       2

<PAGE>

         or any Affiliate of such stockholder which is not the Company or one of
         its Subsidiaries on terms that are no less favorable to the Company or
         such Subsidiary than it would obtain in a comparable arm's-length
         transaction with a Person not such a stockholder or Affiliate.

                  (h)      Reporting Requirements. Furnish to the Applicable
         Agent Party with respect to such Applicable Debt:

                           (i)      in sufficient copies for distribution to
                  each Applicable Transaction Party with respect to such
                  Applicable Debt (and such Applicable Agent Party shall in turn
                  deliver to such Applicable Transaction Party):

                                    (A)      within 120 days after the end of
                           each fiscal year or 45 days after such reports are
                           made public, annual reports in English, which will
                           include a report of the Board of Directors and annual
                           audited consolidated and unconsolidated financial
                           statements of the Company prepared in conformity with
                           Argentine GAAP, together with, in the case of annual
                           audited consolidated financial statements, a
                           reconciliation thereof to U.S. GAAP and

                                    (B)      within 45 days after the end of
                           each of the first three fiscal quarters of each
                           fiscal year of the Company, quarterly reports in
                           English which will include unaudited consolidated and
                           unconsolidated interim financial statements prepared
                           in conformity with Argentine GAAP, accompanied by a
                           limited review report prepared by an internationally
                           recognized independent public accountant,

                  in each case together with a certificate from each of an
                  internationally recognized independent public accountant and
                  the chief financial officer of the Company certifying:

                                    (I)      the adjustments to such financial
                           statements that would be required to reflect
                           financial statements prepared on the basis of
                           Adjusted Argentine GAAP, and

                                    (II)     the Company's compliance with the
                           Financial Covenants and with the Dividends, Capital
                           Expenditures and Incurrence of Debt covenants
                           contained in this Annex C as of the last day of such
                           fiscal year or fiscal quarter, as applicable,
                           accompanied by a schedule setting forth in reasonable
                           detail the computations used by such accountant or
                           the chief financial officer, as applicable, in
                           certifying such compliance; and in the case of annual
                           reports, together with a certificate of such
                           accountant certifying the amount of Excess Cash for
                           the fiscal year covered by such annual report;

                           (ii)     as soon as possible and in any event within
                  five days after a senior executive officer of the Company
                  acquires knowledge of the occurrence of any Default with
                  respect to such Applicable Debt continuing on the date of such

                                       3

<PAGE>

                  statement, a statement of the chief financial officer of the
                  Company setting forth details of such Default and the action
                  that the Company has taken and proposes to take with respect
                  thereto;

                           (iii)    as soon as reasonably practicable after a
                  senior executive officer of the Company obtains knowledge of
                  the commencement of, or of a threat of the commencement of, an
                  action suit or proceeding against the Company or any of its
                  Material Subsidiaries before any court or arbitrator or
                  Governmental Authority in which there is a significant
                  likelihood of an adverse decision which would have a Material
                  Adverse Effect or which in any manner questions the validity
                  of any Applicable Transaction Document with respect to such
                  Applicable Debt, a certificate of a senior financial officer
                  of the Company setting forth the nature of such pending or
                  threatened action, suit or proceeding and such additional
                  information with respect thereto as may be reasonably
                  requested by any Applicable Transaction Party with respect to
                  such Applicable Debt;

                           (iv)     as soon as reasonably practicable after a
                  senior executive officer of the Company obtains knowledge
                  thereof, notice of any event or conditions which has had or
                  could reasonably be expected to have a Material Adverse Effect
                  and the nature of such Material Adverse Effect or event or
                  condition;

                           (v)      within 15 days after the end of each of the
                  Company's fiscal quarters in each fiscal year, a certificate
                  of the chief financial officer of the Company certifying (A)
                  in the case of any Letter of Credit issued under the Short
                  Term L/C Series C Facility or the Long Term L/C Series C
                  Facility, whether any event has occurred whereby the full then
                  outstanding Available Amount of such Letter of Credit is no
                  longer needed under any agreement or instrument relating to
                  such Letter of Credit, and (B) with respect to each Letter of
                  Credit issued under each other Letter of Credit Facility,
                  whether any event has occurred that would permit a reduction
                  in the Available Amount of such Letter of Credit and, where
                  such reduction has not been effected, setting forth the
                  reasons why such reduction has not been effected; and

                           (vi)     within 15 days after the end of each fiscal
                  quarter of the Company, for delivery only to the Lenders under
                  the Short Term L/C Series C Facility, the Long Term L/C Series
                  C Facility and the Long Term L/C Series D Facility, a
                  certificate of the chief financial officer of the Company
                  certifying, with respect to the commodity hedging transactions
                  set forth on Schedule 2.01(a) of the Letter of Credit Issuance
                  and Reimbursement Agreement, (A) the fair value as of the end
                  of such fiscal quarter of each such commodity hedging
                  transaction and the fair value as of the end of such quarter
                  of the entire portfolio of such commodity hedging
                  transactions; (B) the total collateral posted as of the end of
                  such fiscal quarter in the form of stand-by letters of credit,
                  cash or other eligible assets securing such commodity hedging
                  transactions; (C) information, as of the end of such fiscal
                  quarter, relating to the terms of such commodity hedging
                  transactions with respect to (I) the types of instruments
                  used, (II) quantity (bbls/day), (III) periods, (IV) settlement
                  frequency, (V) contractual swap rate or strike price (US$/bbl)
                  and (VI)

                                       4

<PAGE>

                  market price (US$/bbl) and (D) that the transactions described
                  in such certificate are the only transactions as to which the
                  Letters of Credit under the relevant Letter of Credit Facility
                  are serving as collateral.

                  (i)      Payment of Obligations. Pay and discharge, and cause
         each of its Subsidiaries to pay and discharge, at or before maturity,
         all their respective material obligations and liabilities, including
         without limitation tax liabilities, except (i) where the same may be
         contested in good faith by appropriate proceedings and appropriate
         reserves shall have been established for the accrual of any of the same
         or (ii) if the failure to pay and discharge or to cause any Subsidiary
         to pay or discharge such obligations and liabilities could not,
         individually or in the aggregate, reasonably be expected to have a
         Material Adverse Effect.

                  (j)      Maintenance of Governmental Approvals. Maintain, and
         cause its Subsidiaries to maintain, in full force and effect all
         Governmental Approvals, and comply with all on-going notification and
         reporting requirements in Argentina, in each case, as are required or
         material for the operation of the business of the Company and its
         Subsidiaries taken as a whole and for the compliance by the Company
         with its Obligations under the Applicable Transaction Documents with
         respect to such Applicable Debt.

                  Negative Covenants. So long as any amount of the Applicable
Debt shall remain unpaid or outstanding, the Company shall not:

                  (a)      Liens, Etc. Create or permit to subsist, or permit
         any Material Subsidiary to create or permit to subsist, any Lien upon
         the whole or any part of its Property, unless, at the same time or
         prior thereto, the Company's obligations under the Transaction
         Documents are secured equally and ratably therewith, except that the
         foregoing restriction shall not apply to any of the following:

                           (i)      Liens securing Debt incurred or assumed, in
                  each case after the date hereof, solely for the purpose of
                  financing all or any part of the cost of acquiring,
                  constructing, developing, improving or repairing any Property
                  (including, without limitation, an oil and/or gas concession,
                  an oil and/or gas exploration, production or development
                  contract or any interest therein), which Lien attaches solely
                  to:

                                    (A)      such Property (but not any Property
                           theretofore owned by the Company or a Subsidiary,
                           other than (I) unimproved real property and oil and
                           gas concessions and rights and (II) Existing Property
                           that is the subject of any Project Financing), but
                           only if such Lien attaches concurrently with or
                           within 180 days after the acquisition of, or the
                           commencement of construction, development,
                           improvement or repair of all or any part of, such
                           Property, and/or

                                       5

<PAGE>

                                    (B)      Capital Stock of a special-purpose
                           entity that incurs such Debt and acquires,
                           constructs, develops or repairs such Property, but
                           only if such entity:

                                             (I)      is engaged only in the
                                    business of acquiring, constructing,
                                    developing, improving, repairing,
                                    maintaining or operating such Property and
                                    ancillary activities and

                                             (II)     has no assets other than
                                    such Property and Property ancillary
                                    thereto;

                  provided that:

                                    (1)      no Debt shall be permitted to be
                           secured with a Lien on Existing Property hereunder if
                           after giving effect to the incurrence of such Debt
                           the aggregate principal amount of Debt secured by
                           Liens on Existing Property permitted under this
                           clause (i) shall exceed 15% of the Company's
                           Consolidated Assets as of the end of the most
                           recently completed fiscal quarter for which Financial
                           Statements are required to be delivered to the CNV
                           prior to the date on which such Debt is incurred or
                           assumed; and

                                    (2)      for the avoidance of doubt, Long
                           Term Debt of Perez Companc de Venezuela S.A. under a
                           credit facility including International Finance
                           Corporation as a lender shall be deemed to be Debt
                           permitted to be secured by a Lien permitted under
                           this clause (i), but only so long as:

                                             (x)      the aggregate principal
                                    amount of such Debt does not exceed
                                    $400,000,000 (or its equivalent in other
                                    currencies) and

                                             (y)      such Debt is incurred for
                                    acquisitions, construction, development,
                                    improvements and/or repairs for such
                                    Person's hydro-carbon business in Venezuela
                                    and ancillary purposes;

                           (ii)     Liens on any Property or assets of any
                  Person existing at the time such Person becomes a Subsidiary
                  of the Company and not created in contemplation of such
                  acquisition;

                           (iii)    Liens on any Property existing at the time
                  of the acquisition of such Property and not created in
                  contemplation of such acquisition;

                           (iv)     Liens solely in favor of the Company or any
                  Subsidiary;

                           (v)      Liens arising by operation of law;

                           (vi)     Liens created as a result of regulations or
                  requirements of a Governmental Authority;

                                       6

<PAGE>

                           (vii)    Liens on any Property in connection with any
                  regulated program for the industrial development related to
                  the activities performed by the Company imposed or entered
                  into as a result of regulations or requirements of a
                  Governmental Authority;

                           (viii)   Liens securing current taxes, assessments or
                  other governmental charges the validity of which is being
                  contested by the Company in good faith by appropriate
                  proceedings; Liens created pursuant to any order of attachment
                  or similar legal process arising in connection with court
                  proceedings which are being contested by the Company in good
                  faith by appropriate proceedings; any Lien securing claims
                  provided for by mandatory provisions of Argentine law which
                  are being contested by the Company in good faith by
                  appropriate proceedings;

                           (ix)     Liens on assets securing Debt the aggregate
                  principal amount of which (excluding Debt secured solely by
                  Liens otherwise permitted under the Applicable Transaction
                  Documents with respect to the Applicable Debt) is not more
                  than U.S.$25,000,000 (or its equivalent in other currencies);

                           (x)      Liens on cash and financial assets, deposit
                  or securities accounts, time deposits, certificates of deposit
                  or other similar assets securing Obligations of the Company or
                  a Material Subsidiary under commodity hedging transactions
                  existing on the date hereof, including Liens required to be
                  created after the date hereof under such hedging transactions;

                           (xi)     Liens on cash and financial assets, deposit
                  or securities accounts, time deposits, certificates of deposit
                  or other similar assets securing Obligations of the Company or
                  a Material Subsidiary under commodity hedging transactions
                  entered into on or after the date hereof in the ordinary
                  course of business, the aggregate value of which, at the time
                  when any such assets become subject to such Lien (excluding
                  any amounts secured solely by Liens otherwise permitted under
                  clause (x) above) is not more than U.S.$50,000,000 (or its
                  equivalent in other currencies); provided that the sum of (A)
                  the aggregate principal amount of Debt permitted to be secured
                  under clause (ix) of this subsection (a) and (B) the aggregate
                  value of assets subject to a Lien permitted under this clause
                  (xi) at the time when such assets become subject to such Lien
                  shall not at any time exceed in the aggregate U.S.$50,000,000
                  (or its equivalent in other currencies);

                           (xii)    Liens or obligations to create Liens
                  existing on the Effective Date and listed on Schedules II and
                  III to Annex B of the Transaction Document to which this Annex
                  C is attached;

                           (xiii)   Liens created under the L/C Collateral
                  Accounts Security Agreement;

                           (xiv)    Liens on cash and financial assets pledged
                  in favor of any beneficiary of a Letter of Credit so long as
                  the Available Amount of such Letter of Credit is reduced by an
                  amount equal to the value of the cash and financial

                                       7

<PAGE>

                  assets so pledged and concurrently with the incurrence of such
                  Lien the Company satisfies its obligations under Section
                  2.04(h) of the Letter of Credit Issuance and Reimbursement
                  Agreement;

                           (xv)     Liens securing an extension, renewal,
                  replacement and/or exchange of any Debt or Obligations secured
                  in accordance with clause (i), (ii), (iii), (iv), (ix) and (x)
                  above, provided that (A) such Liens do not extend to, or cover
                  any Property other than the Property securing the Debt being
                  refinanced, (B) the principal amount of such Debt is not
                  increased and (C) the Debt so extended, renewed or replaced
                  would be permitted to be incurred under the Applicable
                  Transaction Documents with respect to such Applicable Debt if
                  incurred at the time of such extension, renewal, replacement
                  or exchange; and

                           (xvi)    Liens on cash and financial assets pledged
                  to secure reimbursement obligations arising (A) under any
                  letter of credit (other than any Letter of Credit) issued in
                  connection with obligations under any one or more OCP
                  Agreements provided, for purposes of this clause (A), that the
                  aggregate value of such cash and financial assets securing
                  such obligations shall not at any time exceed $55,000,000 (or
                  its equivalent in other currencies); and (B) under any letter
                  of credit (other than any Letter of Credit) issued in
                  connection with the financing of an import, which letter of
                  credit expires no later than 180 days from the date of
                  issuance.

                  (b)      Change in Nature of Business. Make, or permit any of
         its Material Subsidiaries to make, any material change in the nature of
         its business as carried on at the date hereof.

                  (c)      Consolidation, Mergers and Sales of Assets.
         Consolidate or merge with or into any other Person or sell, lease, or
         otherwise transfer, directly or indirectly, all or substantially all of
         its assets to any other Person; provided that the Company may merge or
         consolidate with another Person if:

                           (i)      no Default with respect to such Applicable
                  Debt shall occur as a direct result of such merger or
                  consolidation;

                           (ii)     the surviving entity has a consolidated net
                  worth the same or better than the Company immediately prior to
                  such merger or consolidation; and

                           (iii)    the surviving entity shall assume all
                  Obligations of the Company under the Applicable Transaction
                  Documents with respect to such Applicable Debt.

                  (d)      Dividends, Etc. Purchase or redeem any of its issued
         shares or reduce its share capital, make a distribution of assets or
         other capital distribution to its shareholders, declare or pay any
         dividend or make any other distribution (including payment of
         management or other similar fees) to its shareholders or any of their
         Subsidiaries or repay any shareholders' loans or Subordinated Debt
         except that (i) the Company may at any time declare or pay any
         dividends payable in equity interests of the Company and (ii) the

                                       8

<PAGE>

         Company may purchase or redeem any of its issued shares or reduce its
         share capital, make a distribution of assets or other capital
         distribution (including payment of management or other similar fees) to
         its shareholders or any of their Subsidiaries, declare or pay any
         dividend or make any other distribution to its shareholders or repay
         any shareholders' loans or Subordinated Debt at any time after December
         31, 2004 so long as (A) the aggregate amount of such purchases,
         redemptions, reductions of share capital, distributions, declarations
         or payments of dividends, fees or repayments of shareholders' loans or
         Subordinated Debt in any fiscal year does not exceed 50% of the Excess
         Cash for the Company's prior fiscal year and (B) no Default with
         respect to such Applicable Debt has occurred and is continuing.

                  (e)      Capital Expenditures. Make, or permit any of its
         Subsidiaries to make, any Capital Expenditure at any time, except that
         the Company and its Subsidiaries may make such Capital Expenditure:

                           (i)      to the extent that such Capital Expenditure
                  is paid with assets that constitute property, plant or
                  equipment of the Company and its Subsidiaries or equity
                  capital of a Subsidiary holding solely such property, plant or
                  equipment;

                           (ii)     to the extent of the aggregate amount of
                  Available Asset Sale Proceeds as of the date of such Capital
                  Expenditure (applied against Available Asset Sale Proceeds
                  with respect to each Asset Sale in the order of occurrence of
                  such Asset Sales); and

                           (iii)    if, after giving effect to such Capital
                  Expenditure, the aggregate amount of all Capital Expenditures
                  of the Company and its Subsidiaries in such fiscal year
                  (excluding the amount of all Capital Expenditures permitted
                  under clauses (i) and (ii) above) would not exceed:

                                    (A)      the amount shown in the table below
                           opposite such fiscal year:

<TABLE>
<CAPTION>
--------------------------------------------------
Fiscal Year Ending In                    Amount
--------------------------------------------------
<S>                                   <C>
        2002                          $165,000,000
--------------------------------------------------
        2003                          $425,000,000
--------------------------------------------------
        2004                          $450,000,000
--------------------------------------------------
        2005                          $425,000,000
--------------------------------------------------
        2006                          $475,000,000
--------------------------------------------------
        2007                          $475,000,000
--------------------------------------------------
</TABLE>

                           plus

                                    (B)      50% of Excess Cash for the
                           immediately preceding fiscal year; plus

                                    (C)      the sum of:

                                       9

<PAGE>

                                             (I)      the aggregate Net Cash
                                    Proceeds (to the extent not included under
                                    clause (a) of the definition of Excess Cash)
                                    received by the Company or any of its
                                    Subsidiaries during such fiscal year and
                                    prior to the date of such Capital
                                    Expenditure from::

                                                      (1)      any equity,
                                             Subordinated Debt or Project
                                             Finance Debt issued or incurred by
                                             the Company or any of its
                                             Subsidiaries; and

                                                      (2)      the aggregate
                                             principal amount of any prior
                                             Capital Expenditures in the form of
                                             Short Term Debt loaned to an
                                             Unconsolidated Person that was
                                             repaid prior to the date of the
                                             Capital Expenditure being
                                             considered and within one year
                                             after the date on which such loan
                                             was initially made, and

                                             (II)     the sum of 50% of the
                                    aggregate New Debt Amount for the last
                                    fiscal quarter of the prior fiscal year and
                                    for each of the first three fiscal quarters
                                    of the Company occurring in such fiscal year
                                    and completed on or prior to the date of
                                    such Capital Expenditure; minus

                                    (D)      the aggregate amount of any
                           purchases, redemptions, reductions, asset or capital
                           distributions, dividends or other distributions
                           (including payments of management or similar fees) or
                           repayments of loans and Subordinated Debt, in each
                           case that are described in subsection (d) above and
                           have been made during such fiscal year prior to the
                           date of such Capital Expenditure.

                  (f)      Incurrence of Debt. Incur, or permit any Subsidiary
         to incur, any Debt on any date, other than:

                           (i)      Project Finance Debt,

                           (ii)     Debt under the Transaction Documents,

                           (iii)    Subordinated Debt,

                           (iv)     Debt in respect of reimbursement obligations
                  arising under letters of credit issued in connection with
                  import financings which letters of credit expire no later than
                  180 days from the date of issuance but only to the extent of
                  the value of cash and financial assets securing such Debt, and

                           (v)      Debt in respect of reimbursement obligations
                  arising under letters of credit (other than any Letter of
                  Credit) issued in connection with obligations under any one or
                  more OCP Agreements but only to the extent of the lesser of

                                       10

<PAGE>

                  $55,000,000 and the value of cash and financial assets
                  securing such reimbursement obligations,

         if:

                                    (A)      the amount that is equal to:

                                             (I)      the aggregate principal
                                    amount of Consolidated Debt of the Company
                                    outstanding immediately prior to such
                                    incurrence, minus

                                             (II)     the value of the cash and
                                    investments thereof on such date credited to
                                    the L/C Collateral Accounts,

                  is less than the amount that is equal to:

                                             (1)      the amount calculated
                                    under sub-clauses (I) and (II) of this
                                    clause (A), plus

                                             (2)      the aggregate principal
                                    amount of the Debt proposed to be incurred,
                                    minus

                                             (3)      the portion of the
                                    proceeds of the incurrence of such Debt that
                                    is:

                                                       (x)      applied to the
                                             prepayment or repayment of
                                             Consolidated Debt, or

                                                       (y)      deposited into
                                             any L/C Collateral Account,

                                    at the time of such incurrence or that is
                                    required so to be and is applied or
                                    deposited by the earlier of (aa) the 30th
                                    day after the incurrence thereof and (bb)
                                    the end of the fiscal quarter of the Company
                                    in which such incurrence occurs, and

                                    (B)      after giving effect to such
                           incurrence and the application of the proceeds
                           thereof, the ratio of:

                                             (I)      (A) the aggregate
                                    outstanding principal amount of Consolidated
                                    Debt of the Company (other than Subordinated
                                    Debt) as of such date (if not denominated in
                                    Dollars, converted into Dollars at the
                                    Exchange Rate applicable on such date),
                                    minus

                                             (B)      the value of the cash and
                                    investments thereof on such date credited to
                                    the L/C Collateral Accounts, to

                                             (II)     Adjusted EBITDA
                                    (calculated on a Quarterly Basis) for the
                                    four most recently completed fiscal quarters
                                    of the

                                       11

<PAGE>

                                    Company for which Financial Statements are
                                    required to be filed by the Company with the
                                    CNV,

                                    would be greater than 3.50:1.00;

provided that the proceeds of any Debt permitted to be incurred hereunder shall
not be applied to purchase or redeem any of its issued shares or reduce its
share capital, make a distribution of assets or other capital distribution to
its shareholders, declare or pay any dividend or make any other distribution
(including payment of management or other similar fees) to its shareholders or
any of their Subsidiaries or repay any shareholders' loans or Subordinated Debt.

                  (g)      Preservation of Collateral Capacity. At any time
         effect, incur or enter into or permit any Subsidiary to effect, incur
         or enter into, any transaction that restricts, or create or otherwise
         cause or permit to exist, or permit any Subsidiary to create or
         otherwise cause or permit to exist, any encumbrance or restriction on,
         the ability of the Company to comply in full with its obligations to
         make deposits into the L/C Collateral Accounts under Section 2.04 of
         the Letter of Credit Issuance and Reimbursement Agreement, except that
         the Company and its Subsidiaries may agree to a restriction or
         encumbrance on such ability so long as such restriction or encumbrance
         is subject to a basket that is sufficient to allow the Company at any
         time to comply with its obligations under such Section 2.04, assuming
         that an amount equal to 100% of the Available Amount of all Letters of
         Credit outstanding at such time were required to be deposited into the
         applicable L/C Collateral Accounts, and so long as the Company at all
         times maintains sufficient availability under such basket to fund all
         amounts that may in the future be required to be deposited under such
         Section 2.04.

                  (h)      Limitation on Dividend and Other Payment Restrictions
         Affecting Material Subsidiaries.

                           (i)      Except as provided in clause (ii) below, the
                  Company will not, and will not cause or permit any of its
                  Material Subsidiaries (other than any Subsidiary in respect of
                  or as a result of the incurrence of Project Finance Debt) to,
                  directly or indirectly, create or otherwise cause or permit to
                  exist or become effective any encumbrance or restriction on
                  the ability of any Material Subsidiary (other than any
                  Subsidiary in respect of or as a result of the incurrence of
                  Project Finance Debt) to:

                           (A)      pay dividends or make any other
                           distributions on or in respect of its Capital Stock
                           to the Company or any other Material Subsidiary or
                           pay any Debt owed to the Company or any other
                           Material Subsidiary; or

                           (B)      make loans or advances to, or guarantee any
                           Debt or other obligations of, or make any Investment
                           in, the Company or any Material Subsidiary.

                           (ii)     Clause (i) above will not apply to
                  encumbrances or restrictions existing under or by reason of:

                                       12

<PAGE>

                           (A)      applicable law;

                           (B)      any Transaction Documents;

                           (C)      the restrictions in effect on the Effective
                           Date and as set forth on Schedule I to this Annex C;
                           and any amendments, restatements, renewals,
                           replacements or refinancings thereof; provided, that
                           any amendment, restatement, renewal, replacement or
                           refinancing is not materially more restrictive with
                           respect to such encumbrances or restrictions than
                           those in existence on the Effective Date;

                           (D)      customary non-assignment provisions of any
                           contract and customary provisions restricting
                           assignment or subletting in any lease governing a
                           leasehold interest of any Material Subsidiary, or any
                           customary restriction on the ability of a Material
                           Subsidiary to dividend, distribute or otherwise
                           transfer any asset which secures Debt secured by a
                           Lien, in each case permitted to be incurred under the
                           Transaction Documents;

                           (E)      any instrument governing Acquired Debt not
                           incurred in connection with or in anticipation or
                           contemplation of, the relevant acquisition, merger or
                           consolidation, which encumbrance or restriction is
                           not applicable to any Person, or the properties or
                           assets of any Person, other than the Person or the
                           properties or assets of the Person so acquired;

                           (F)      restrictions with respect to a Material
                           Subsidiary of the Company imposed pursuant to a
                           binding agreement which has been entered into for the
                           sale or disposition of Capital Stock or assets of
                           such Material Subsidiary; provided, that such
                           restrictions apply solely to the Capital Stock or
                           assets of such Material Subsidiary being sold;

                           (G)      customary restrictions imposed on the
                           transfer of copyrighted or patented materials; or

                           (H)      an agreement governing Debt incurred to
                           refinance the Debt issued, assumed or incurred
                           pursuant to an agreement referred to in clause (C) or
                           (E) of this clause (ii); provided, that such
                           refinancing agreement is not materially more
                           restrictive with respect to such encumbrances or
                           restrictions than those contained in the agreement
                           referred to in such clause (C) or (E).

                  Covenants Applicable to Applicable Debt Under Short Term L/C
Series A Facility, Long Term L/C Series A Facility, Short Term L/C Series B
Facility and Long Term L/C Series B Facility and Converted A/B Notes. With
respect to any Applicable Debt under the Short Term L/C Series A Facility, Long
Term L/C Series A Facility, Short Term L/C Series B Facility or Long Term L/C
Series B Facility and any Applicable Debt consisting of Converted

                                       13

<PAGE>

A/B Notes, so long as any amount of such Applicable Debt shall remain unpaid or
outstanding, the Company shall not:

                  (a)      Liens on Ecuadorian Assets. The provisions of
         subsection (a) of the Negative Covenants set forth in this Annex C
         notwithstanding, create or permit to subsist any Lien, permit any
         Subsidiary to create, or permit to subsist, any Lien on the Ecuadorian
         Assets, except for any Lien created on the Ecuadorian Assets to secure
         any Project Finance Debt and any Lien arising by operation of law;
         provided that in such event the Ecuadorian Assets shall at all times
         equally and ratably secure the obligations of the Company and the
         Co-Obligors (other than Pecom Energia S.A., Sucursal Bolivia) to the
         Lenders under the Short Term L/C Series A Facility, the Long Term L/C
         Series A Facility, the Short Term L/C Series B Facility and the Long
         Term L/C Series B Facility and the Converted A/B Notes; and provided
         further, that solely with respect to that portion of such obligations
         referred to in the immediately preceding proviso as are in respect of
         reimbursement obligations in respect of Available Amounts of Letters of
         Credit (and not to obligations in respect of outstanding Letter of
         Credit Advances and any other amounts then owing to such Lenders),

                           (i)      if the Ecuadorian Assets securing any such
                  Project Finance Debt are comprised entirely of Ecuadorian
                  Assets relating to Block 18, such Ecuadorian Assets need so
                  secure only 25% of such reimbursement obligations (without
                  giving effect to any reductions to such reimbursement
                  obligations upon the reduction of Available Amounts pursuant
                  to Section 2.04(j) of the Letter of Credit Issuance and
                  Reimbursement Agreement or deduction from such reimbursement
                  obligations of any such amounts secured by the assets
                  consisting of Block 31 pursuant to this clause (a)) or such
                  other reasonable percentage proposed by the Company and
                  acceptable to the Designated Lenders with respect to each of
                  the Short Term L/C Series A Facility, the Short Term L/C
                  Series B Facility, the Long Term L/C Series A Facility and the
                  Long Term L/C Series B Facility, and

                           (ii)     if the Ecuadorian Assets securing any such
                  Project Finance Debt are entirely comprised of Ecuadorian
                  Assets relating to Block 31, such Ecuadorian Assets need so
                  secure only 75% of such reimbursement obligations (without
                  giving effect to any reductions to such reimbursement
                  obligations upon the reduction of Available Amounts pursuant
                  to Section 2.04(j) of the Letter of Credit Issuance and
                  Reimbursement Agreement or deduction from such reimbursement
                  obligations of any such amounts secured by the assets
                  consisting of Block 18 pursuant to this clause (a)) or such
                  other reasonable percentage proposed by the Company and
                  acceptable to the Designated Lenders with respect to each of
                  the Short Term L/C Series A Facility, the Short Term L/C
                  Series B Facility, the Long Term L/C Series A Facility and the
                  Long Term L/C Series B Facility.

                  (b)      Sale of Ecuadorian Assets. Sell, lease, transfer or
         otherwise dispose of, or permit any other Person to sell, lease,
         transfer or otherwise dispose of any portion of the Ecuadorian Assets,
         or grant any option or other right to purchase, lease or otherwise

                                       14

<PAGE>

         acquire any portion of the Ecuadorian Assets, in each case other than
         Ecuadorian Assets relating to Block 18 (such sale, lease, transfer or
         disposition or such grant of option or other right, a "Sale of
         Ecuadorian Assets"), unless it shall comply with the provisions of
         Section 2.04(j) of the Letter of Credit Issuance and Reimbursement
         Agreement.

         The covenants set forth above in subsections (a) and (b) above shall
         inure to the benefit of only the Lenders under the Short Term L/C
         Series A Facility, the Long Term L/C Series A Facility, the Short Term
         L/C Series B Facility and the Long Term L/C Series B Facility and the
         Holders of Converted A/B Notes, and (without prejudice to any rights
         arising under clause (g) of Annex D with respect to all Applicable
         Debt) no other Person shall have any right to enforce any such
         covenant; to any remedies or damages for the failure of the Company to
         comply with any such covenant; to amend any such covenant or waive
         compliance by the Company with respect to any such covenant; or any
         right to accelerate the payment of Obligations under any Transaction
         Document upon the breach of any such covenant by the Company. The
         failure of the Company to comply with any such covenant shall give rise
         to an Event of Default described in clause (f) of Annex C with respect
         to only the Applicable Debt under the Short Term L/C Series A Facility,
         Long Term L/C Series A Facility, Short Term L/C Series B Facility and
         Long Term L/C Series B Facility and Applicable Debt consisting of any
         Converted A/B Notes.

                  Financial Covenants. So long as any amount of the Applicable
Debt shall remain unpaid or outstanding, the Company shall:

                  (a)      Leverage Test. Maintain on any date a Leverage Index
         not greater than the Applicable Leverage Ratio as of such date.

                  (b)      Interest Coverage Test. As of the last day of each
         fiscal quarter of the Company, beginning with the fiscal quarter ending
         December 31, 2002, maintain a ratio of (i) Consolidated Adjusted EBITDA
         (calculated on a Quarterly Basis) for the four most recent fiscal
         quarters ending on such last day to (ii) Consolidated Interest Expense
         of the Company (calculated on a Quarterly Basis) for the four most
         recent fiscal quarters ending on such last day, equal to or greater
         than the Applicable Interest Coverage Ratio for such four fiscal
         quarter period.

                  (c)      Limitation on Short Term Debt. Not permit, on any
         date on or after the date hereof, (i) the aggregate principal amount of
         Short Term Debt of the Company as of such date (converted to U.S.
         Dollars at the Exchange Rate on such date) less (ii) the aggregate
         amount of cash and investments thereof credited to the L/C Collateral
         Accounts as of such date, to exceed U.S.$650,000,000.

                                       15

<PAGE>

                                                                  EXECUTION COPY

                                                                         ANNEX D

                                EVENTS OF DEFAULT

                  Events of Default. Each of the following events, conditions or
circumstances shall constitute an Event of Default with respect to any
Applicable Debt:

                  (a)      If the Applicable Debt consists of any New Notes, the
         Company shall fail (i) to pay any principal of such Applicable Debt
         when the same becomes due and payable; or (ii) to pay any interest on
         such Applicable Debt or make any other payment of fees or other amounts
         payable with respect to such Applicable Debt under any Applicable
         Transaction Document with respect to such Applicable Debt, in each case
         under this clause (ii) within three Business Days after the same
         becomes due and payable.

                  (b)      If the Applicable Debt consists of Obligations with
         respect to any Letter of Credit Facility, the Company shall fail (i) to
         pay any principal of such Applicable Debt when the same becomes due and
         payable or (ii) to pay any interest on such Applicable Debt or make any
         other payment of fees or other amounts payable with respect to such
         Applicable Debt under any Applicable Transaction Document with respect
         to such Applicable Debt, in each case under this clause (ii) within
         three Business Days after the same becomes due and payable; provided
         that, in each case, any failure to pay any amount in respect of such
         Applicable Debt shall be an Event of Default for purposes of this
         subsection (b) with respect to only the Tranche of Applicable Debt
         amounts in respect of which are unpaid under the conditions described
         in this subsection (b).

                  (c)      If the Applicable Debt consists of Obligations with
         respect to any Letter of Credit Facility, the Company shall fail (i) to
         reduce, when required in accordance with Section 2.04(d), (e), (f),
         (g), (h), (i) or (j) of the Letter of Credit Issuance and Reimbursement
         Agreement, any Available Amount of any Letter of Credit issued under a
         Letter of Credit Facility or (ii) to deposit, when required in
         accordance with Section 2.04(d), (e), (f), (g), (h), (i) or (j) of the
         Letter of Credit Issuance and Reimbursement Agreement, any cash amounts
         in any L/C Collateral Account; provided that, in each case, any failure
         of the Company to take any such actions shall be an Event of Default
         for purposes of this subsection (c) with respect to only the Tranche of
         Applicable Debt made under such Letter of Credit Facility or for whose
         benefit such L/C Collateral Account was established.

                  (d)      If the Applicable Debt consists of any New Notes, any
         representation or warranty made or deemed made, by or on behalf of the
         Company under any Applicable Transaction Document with respect to such
         Applicable Debt or by or on behalf of the Company in connection with
         any such Applicable Transaction Document shall prove to have been
         incorrect in any material respect when made or deemed made.

                  (e)      If the Applicable Debt consists of Obligations with
         respect to any Letter of Credit Facility, any representation or
         warranty made or deemed made, by or on behalf of the Company under any
         Applicable Transaction Document with respect to such

<PAGE>

         Applicable Debt or by or on behalf of the Company in connection with
         any such Applicable Transaction Document shall prove to have been
         incorrect in any material respect when made or deemed made; provided
         that the events, conditions and circumstances set forth in this
         subsection (e) shall be an Event of Default for purposes of this
         subsection (e) with respect to only the Tranche of Applicable Debt
         representations in respect of which or in respect of the Applicable
         Transaction Documents, the Applicable Transaction Parties or the
         Applicable Agent Party relating to such Tranche of Applicable Debt are
         proven to be incorrect in any material respect when made.

                  (f)      The Company or, where applicable, any Co-Obligor,
         shall fail to perform or observe (i) any term, covenant or agreement
         contained in (A) subsection (d) or (g) of the Affirmative Covenants set
         forth in Annex C; (B) the Negative Covenants set forth in Annex C; or
         (C) the Negative Covenants Applicable to Applicable Debt Under Short
         Term L/C Series A Facility, Long Term L/C Series A Facility, Short Term
         L/C Series B Facility and Long Term L/C Series B Facility and Converted
         A/B Notes set forth in Annex C; provided that with respect to this
         clause (C) the failure of the Company or any Co-Obligor (other than
         Pecom Energia S.A., Sucursal Bolivia) to perform or observe any such
         covenants shall be an Event of Default for purposes of this subsection
         (f) with respect to such Applicable Debt only if such Applicable Debt
         consists of Debt under the Short Term L/C Series A Facility, Long Term
         L/C Series A Facility, Short Term L/C Series B Facility or Long Term
         L/C Series B Facility or Converted A/B Notes; or (D) the Financial
         Covenants set forth in Annex C; or (ii) in any material respect, any
         other term, covenant or agreement contained in any Applicable
         Transaction Document with respect to such Applicable Debt on its part
         to be performed or observed if such failure shall remain unremedied for
         30 days after an executive officer of the Company or the Co-Obligor
         party to the Transaction Documents for such Applicable Debt has
         knowledge thereof.

                  (g)      (i) A default occurs in payment of principal,
         interest or other amounts when due and payable in respect of any
         outstanding Debt of the Company or any of its Material Subsidiaries
         (but excluding such Applicable Debt) having an aggregate principal
         amount equal to or exceeding the Specified Amount at the time of such
         default, or under any mortgage, indenture or instrument under which
         there may be issued or by which there may be secured or evidenced any
         outstanding Debt of the Company having an aggregate principal amount
         equal to or exceeding the Specified Amount at the time of such default
         (but excluding such Applicable Debt), whether such Debt now exists or
         shall hereafter be created and such failure shall continue after the
         applicable grace period, if any, specified in the agreement or
         instrument relating to such Debt; (ii) a default, other than a payment
         default described in the preceding subparagraph (but only when such
         default permits acceleration of the relevant Debt), occurs under any
         mortgage, indenture or instrument under which there may be issued or by
         which there may be secured or evidenced any Debt of the Company or a
         Subsidiary that is outstanding in an aggregate principal amount equal
         to or exceeding the Specified Amount at the time of such default (but
         excluding such Applicable Debt), whether such Debt now exists or shall
         hereafter be created; or (iii) the Company shall default under any
         agreement between the Company and the beneficiary of any Short Term
         Series C Letter of Credit, Long Term Series C Letter of Credit or Long
         Term Series D Letter of Credit relating to any commodity

                                       2

<PAGE>

         hedging transaction supported by such Letter of Credit, involving
         Obligations of the Company equal to or exceeding, in the aggregate, the
         Specified Amount at the time of such default, and such default shall
         continue after the applicable grace period (without giving effect to
         any cure resulting from a draw under the above referenced Letters of
         Credit), if any, specified in such agreement; provided that any default
         under such agreement caused solely as a result of an Issuing Bank's
         failure to honor a request for a draw under any of the Long Term Series
         C Letter of Credit, the Short Term Series C Letter of Credit and the
         Long Term Series D Letter of Credit, in each case made in accordance
         with the terms of such Letter of Credit, shall not constitute an Event
         of Default under this subsection (g).

                  (h)      A distress, attachment, execution, seizure before
         judgment or other legal process is levied, enforced or sued out on or
         against any part of the Property of the Company or any of its Material
         Subsidiaries in an amount that equals or exceeds the Specified Amount
         at the time of such event and (i) such distress, attachment, execution,
         seizure before judgment or other legal process is not discharged or
         stayed within 60 days after having been notified to the Company or any
         of its Material Subsidiaries, as the case may be; or (ii) if such
         distress, attachment, execution, seizure before judgment or other legal
         process shall not have been discharged within such period, the Company
         or any of its Material Subsidiaries, as the case may be, shall have
         within such 60 day period contested in good faith by appropriate
         proceedings upon stay of execution of the enforcement thereof or upon
         posting a bond in connection therewith; provided that in no event shall
         the grace period provided by clause (ii) of this subsection (h) extend
         beyond the 360th day after the notification to the Company or any of
         its Material Subsidiaries, as the case may be, of such proceedings.

                  (i)      A court having jurisdiction enters a decree for (A)
         relief in respect of the Company or any Material Subsidiary in an
         involuntary case under Argentine Law No. 24,522 or any applicable
         bankruptcy, insolvency or other similar law now or hereafter in effect
         in any applicable jurisdiction, or (B) appointment of an administrator,
         receiver, trustee or intervenor for the Company or any Material
         Subsidiary for all or substantially all of the property or assets of
         the Company or any of its Material Subsidiaries and, in each case, such
         decree or order shall remain unstayed and in effect for a period of 60
         days.

                  (j)      If the Applicable Debt consists of Obligations with
         respect to the Short Term Series A Letter of Credit Facility, the Long
         Term Series A Letter of Credit Facility, the Short Term Series B Letter
         of Credit Facility or the Long Term Series B Letter of Credit Facility,
         a court having jurisdiction enters a decree for (A) relief in respect
         of any Co-Obligor (other than Pecom Energia S.A., Sucursal Bolivia) in
         an involuntary case under Argentine Law No. 24,5222 or any applicable
         bankruptcy, insolvency or other similar law now or hereafter in effect
         in any applicable jurisdiction or (B) appointment of an administrator,
         receiver, trustee or intervenor for any Co-Obligor (other than Pecom
         Energia S.A., Sucursal Bolivia) for all or substantially all of the
         property or assets of such Co-Obligor, and in each case, such decree or
         order shall remain unstayed and in effect for a period of 60 days.

                                       3

<PAGE>

                  (k)      The Company or a Material Subsidiary consents to the
         institution of bankruptcy or insolvency proceedings against it, or the
         filing by it of a petition or answer or consent seeking reorganization
         or relief under any Bankruptcy Law, or the consent by it to the filing
         of any such petition or the appointment of a custodian, receiver,
         liquidator, assignee, trustee, sequestrator (or other similar official
         under any Bankruptcy Law, including a "sindico") of the Company or any
         Material Subsidiary or of any substantial part of its property, or the
         making by it of an assignment for the benefit of creditors pursuant to
         the Bankruptcy Law, or the admission by it in writing of its inability
         to pay its debts generally as they become due, or the taking of
         corporate action by the Company or any Material Subsidiary in
         furtherance of any such action.

                  (l)      If the Applicable Debt consists of Obligations with
         respect to the Short Term Series A Letter of Credit Facility, the Long
         Term Series A Letter of Credit Facility, the Short Term Series B Letter
         of Credit Facility or the Long Term Series B Letter of Credit Facility,
         any Co-Obligor (other than Pecom Energia S.A., Sucursal Bolivia)
         consents to the institution of bankruptcy or insolvency proceedings
         against it, or the filing by it of a petition or answer or consent
         seeking reorganization or relief under any Bankruptcy Law, or the
         consent by it to the filing of any such petition or the appointment of
         a custodian, receiver, liquidator, assignee, trustee, sequestrator (or
         other similar official under any Bankruptcy Law, including a "sindico")
         of such Co-Obligor or of any substantial part of its property, or the
         making by it of an assignment for the benefit of creditors pursuant to
         the Bankruptcy Law, or the admission by it in writing of its inability
         to pay its debts generally as they become due, or the taking of
         corporate action by such Co-Obligor in furtherance of any such action.

                  (m)      An order is made or an effective resolution is passed
         for the winding up or dissolution or administration under judicial
         supervision of the Company or any of its Material Subsidiaries and is
         not discharged or stayed within 30 days of having been notified to the
         Company or any of its Material Subsidiaries, as the case may be, or the
         Company ceases or threatens to cease to carry on all or a material part
         of its business or operations, except for the purpose of and followed
         by a reconstruction, amalgamation, reorganization, merger, demerger or
         consolidation (i) on terms approved by the Designated Lenders in the
         case of Applicable Debt under any Letter of Credit Facility and by the
         Required Holders with respect to the Applicable Debt in the case of
         Applicable Debt consisting of any New Notes or (ii) completed as
         otherwise permitted under the Applicable Transaction Documents with
         respect to such Applicable Debt.

                  (n)      If the Applicable Debt consists of Obligations with
         respect to the Short Term Series A Letter of Credit Facility, the Long
         Term Series A Letter of Credit Facility, the Short Term Series B Letter
         of Credit Facility or the Long Term Series B Letter of Credit Facility,
         an order is made or an effective resolution is passed for the winding
         up or dissolution or administration under judicial supervision of any
         Co-Obligor (other than Pecom Energia S.A., Sucursal Bolivia) not
         discharged or stayed within 30 days or such Co-Obligor ceases or
         threatens to cease to carry on all or a material part of its business
         or operations, except for the purpose of and followed by a
         reconstruction, amalgamation, reorganization, merger, demerger or
         consolidation (i) on terms approved by the Designated Lenders with
         respect to each of the Short Term L/C Series A Facility, the

                                       4

<PAGE>

         Short Term L/C Series B Facility, the Long Term L/C Series A Facility
         and the Long Term L/C Series B Facility or (ii) completed as otherwise
         permitted under the Applicable Transaction Documents with respect to
         such Applicable Debt.

                  (o)      The Obligations of the Company or any Subsidiary
         party thereto under any Applicable Transaction Document with respect to
         such Applicable Debt shall fail to rank at least pari passu with all
         other unsecured and unsubordinated Debt of the Company or any
         Subsidiary party thereto; provided that the pledge by the Company of
         the L/C Collateral Accounts pursuant to the L/C Collateral Accounts
         Security Agreement shall not be and shall not result in an Event of
         Default under this subsection (o).

                  (p)      If the Applicable Debt consists of any New Notes, any
         provision of any Applicable Transaction Document with respect to such
         Applicable Debt shall cease to be valid and binding on or enforceable
         against the Company or any Subsidiary party thereto, or the Company or
         any Subsidiary party thereto shall so assert or state in writing, or it
         becomes unlawful for the Company or any Subsidiary to perform or comply
         with any of its obligations under any such Applicable Transaction
         Document to which it is a party.

                  (q)      If the Applicable Debt consists of Obligations with
         respect to any Letter of Credit Facility, any provision of any
         Applicable Transaction Document with respect to such Applicable Debt
         shall cease to be valid and binding on or enforceable against the
         Company or any Subsidiary party thereto, or the Company or any
         Subsidiary party thereto shall so assert or state in writing, or it
         becomes unlawful for the Company or any Subsidiary to perform or comply
         with any of its obligations under any such Applicable Transaction
         Document to which it is a party; provided that that the events,
         conditions and circumstances set forth in this subsection (q) shall be
         an Event of Default for purposes of this subsection (q) with respect to
         only the Tranche of Applicable Debt whose rights under such Applicable
         Transaction Documents are impaired in any way due to such events,
         conditions and circumstances.

                  (r)      Any governmental or other consent, license, approval
         or authorization which is now or may in the future be necessary or
         appropriate under any applicable law or regulation for the execution,
         delivery or performance by the Company or any of its Subsidiaries of
         any Applicable Transaction Document or its obligations thereunder with
         respect to such Applicable Debt to which it is a party or to make such
         Applicable Transaction Document legal, valid, enforceable and
         admissible in evidence shall not be obtained or shall be withdrawn,
         revoked or modified or shall cease to be in full force and effect or
         shall be modified in any manner which would have a material adverse
         effect on the rights or remedies of the Applicable Transaction Parties
         with respect to such Applicable Debt.

                  (s)      The ratio of:

                  (i)      (A) the aggregate amount (without duplication) of
         receivables generated from Eligible Trade Transactions and cash
         received from spot sales made in connection with Eligible Trade
         Transactions during any of the following periods to (B) Debt Service in
         respect of the Trade Series Notes for such period shall be less than
         1.25:1.00:

                                       5

<PAGE>

                  (I)      the Company's fiscal quarter ending December 31,
         2002,

                  (II)     the Company's two fiscal quarters ending March 31,
         2003,

                  (III)    the Company's three fiscal quarters ending June 30,
         2003, and

                  (IV)     the Company's four fiscal quarters ending September
         30, 2003; or

                  (ii)     (A) the aggregate amount (without duplication) of
         receivables generated from Eligible Trade Transactions and cash
         received from spot sales made in connection with Eligible Trade
         Transactions during any fiscal quarter of the Company ending after
         September 30, 2003 to (B) Debt Service in respect of the Trade Series
         Notes for such fiscal quarter shall be less than 1.00:1.00; or

                  (iii)    (A) the aggregate amount (without duplication) of
         receivables generated from Eligible Trade Transactions and cash
         received from spot sales made in connection with Eligible Trade
         Transactions during any period of two consecutive fiscal quarters
         ending after September 30, 2003 to (B) the Debt Service in respect of
         the Trade Series Notes for such fiscal quarters shall be less than
         1.25:1.00,

                  (iv)     (A) the aggregate amount (without duplication) of
         collections of receivables arising from Eligible Trade Transactions and
         cash received from spot sales made in connection with Eligible Trade
         Transactions that the Company and its Subsidiaries deposit or cause to
         be deposited and may maintain as freely disposable Dollars in accounts
         with commercial banks in countries that are members of the Organization
         of Economic Cooperation and Development during any of the following
         periods to (B) Debt Service in respect of the Trade Series Notes for
         such period shall be less than 1.10:1.00:

                  (I)      any period specified in clause (i) above, and

                  (II)     any fiscal quarter ending after September 30, 2003;

except that the failure to satisfy a ratio in clause (i), (ii), (iii) or (iv)
above in this subsection (p) shall not give rise to an Event of Default for so
long as

                  (A)      any Governmental Rule is in effect or any
         governmental policy is being implemented through action or inaction by
         any Government Authority that materially impairs the ability of the
         Company or any of its Subsidiaries to export goods or services

                                       6

<PAGE>

         or to deposit and maintain in accounts in countries that are members of
         the Organization of Economic Cooperation and Development freely
         disposable Dollars received from collections of receivables arising
         from sales of such goods and services, and

                  (B)      such Governmental Rule or policy either:

                           (I)      relates to crude oil and/or oil derivatives,
                  or

                           (II)     is the sole cause of the Company's inability
                  to meet such ratio.

                  (t)      Any Change of Control shall occur.

                  (u)      Petroleo Brasileiro S.A. or its Subsidiaries shall
         fail to acquire beneficial ownership (within the meaning of Rule 13d-3
         under the Securities Exchange Act of 1934) of Capital Stock of the
         Company representing more than 51% of the combined voting power of all
         Voting Stock of the Company on or before February 28, 2003.

                                       7

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