EXECUTION VERSION

Exhibit 10.38

 

 

AGREEMENT

 

24, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT AGREEMENT

dated as of

January 24, 2014

among

ENDEAVOUR INTERNATIONAL HOLDING B.V.

and

END FINCO LLC

as Borrowers,

ENDEAVOUR INTERNATIONAL CORPORATION,

as Holdings,

THE LENDERS PARTY HERETO,

CREDIT SUISSE AG,

as Administrative Agent,

and

CREDIT SUISSE AG,

as Collateral Agent

_______________________________

CREDIT SUISSE SECURITIES (USA) LLC,

as

Lead Arranger

and

Sole Bookrunner

 

 

 

 

HN\1104235.21

--------------------------------------------------------------------------------

 

 

TABLE OF CONTENTS

 

 

 

 

 

Page

Article I Definitions

1 

 

 

SECTION 1.01

Defined Terms

1 

SECTION 1.02

Terms Generally

56 

SECTION 1.03

Pro Forma Calculations

57 

SECTION 1.04

Classification of Loans and Borrowings

57 

SECTION 1.05

Joint and Several Obligations

57 

 

 

 

Article II Term Loan Facility

57 

 

 

 

SECTION 2.01

Commitments

57 

SECTION 2.02

Loans

58 

SECTION 2.03

Borrowing Procedure

59 

SECTION 2.04

Evidence of Debt; Repayment of Loans

59 

SECTION 2.05

Fees

60 

SECTION 2.06

Interest on Loans

60 

SECTION 2.07

Default Interest

61 

SECTION 2.08

Alternate Rate of Interest

61 

SECTION 2.09

Termination of Commitments

61 

SECTION 2.10

Conversion and Continuation of Borrowings

61 

SECTION 2.11

Repayment of Loans

63 

SECTION 2.12

Voluntary Prepayment

63 

SECTION 2.13

Mandatory Prepayments

64 

SECTION 2.14

Reserve Requirements; Change in Circumstances

65 

SECTION 2.15

Change in Legality

66 

SECTION 2.16

Breakage

67 

SECTION 2.17

Pro Rata Treatment

67 

SECTION 2.18

Sharing of Setoffs

68 

SECTION 2.19

Payments

68 

SECTION 2.20

Tax Gross-Up and Indemnities

69 

SECTION 2.21

Assignment of Commitments Under Certain

 

 

Circumstances; Duty to Mitigate

72 

SECTION 2.22

Defaulting Lenders

73 

SECTION 2.23

Incremental Term Loans

74 

 

 

 

Article III Representations and Warranties

76 

 

 

 

SECTION 3.01

Company Status

76 

SECTION 3.02

Power and Authority

77 

SECTION 3.03

No Violation

77 

 

 

 

HN\1104235.21

--------------------------------------------------------------------------------

 

Table of Contents

 

 

 

 

 

 

Page

SECTION 3.04

Approvals

77 

SECTION 3.05

Financial Statements; Financial Condition; Undisclosed Liabilities

78 

SECTION 3.06

Litigation

79 

SECTION 3.07

True and Complete Disclosure

79 

SECTION 3.08

Use of Proceeds; Margin Regulations

79 

SECTION 3.09

Tax Returns and Payments; Tax Residency

79 

SECTION 3.10

Compliance with ERISA

80 

SECTION 3.11

Security Documents

81 

SECTION 3.12

Properties

82 

SECTION 3.13

[Reserved]

83 

SECTION 3.14

Subsidiaries

84 

SECTION 3.15

Compliance with Statutes, etc

84 

SECTION 3.16

Investment Company Act

84 

SECTION 3.17

Environmental Matters

84 

SECTION 3.18

Employment and Labor Relations

85 

SECTION 3.19

Intellectual Property, etc

86 

SECTION 3.20

Indebtedness

86 

SECTION 3.21

Insurance

86 

SECTION 3.22

Holding Company

87 

SECTION 3.23

Immaterial Subsidiaries

87 

SECTION 3.24

Liens

87 

SECTION 3.25

Stamp Taxes

87 

SECTION 3.26

Withholdings

87 

SECTION 3.27

No Works Council

87 

 

 

 

Article IV Conditions Precedent

87 

 

 

 

SECTION 4.01

Closing Date

87 

SECTION 4.02

All Borrowings

91 

 

 

 

Article V Affirmative Covenants

92 

 

 

 

SECTION 5.01

Financial Statements and Other Reports

92 

SECTION 5.02

Books, Records and Inspections; Annual Meetings

95 

SECTION 5.03

Maintenance of Property; Insurance

95 

SECTION 5.04

Existence; Franchises; Oil and Gas Properties

96 

SECTION 5.05

Compliance with Statutes, etc

97 

SECTION 5.06

Compliance with Environmental Laws

97 

SECTION 5.07

ERISA

98 

SECTION 5.08

End of Fiscal Years; Fiscal Quarters

100 

 

 

 

ii

HN\1104235.21

--------------------------------------------------------------------------------

 

Table of Contents

 

 

 

 

 

 

Page

SECTION 5.09

Performance of Obligations

100 

SECTION 5.10

Payment of Taxes, etc.

100 

SECTION 5.11

Use of Proceeds

100 

SECTION 5.12

Additional Security; Further Assurances; etc

100 

SECTION 5.13

Maintenance of Company Separateness

102 

SECTION 5.14

Oil and Gas Properties

102 

SECTION 5.15

Center of Main Interest

103 

SECTION 5.16

Post-Closing Obligations

103 

 

 

 

Article VI Negative Covenants

104 

 

 

 

SECTION 6.01

Restricted Payments

104 

SECTION 6.02

Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries

110 

SECTION 6.03

Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock

112 

SECTION 6.04

Limitation on Asset Sales

116 

SECTION 6.05

Limitation on Transactions with Affiliates

117 

SECTION 6.06

Limitation on Liens

119 

SECTION 6.07

Business Activities

119 

SECTION 6.08

Designation of Restricted and Unrestricted Subsidiaries

119 

SECTION 6.09

Merger, Consolidation, or Sale of Assets

120 

SECTION 6.10

Minimum Interest Coverage Ratio

122 

SECTION 6.11

Maximum Leverage Ratio

122 

SECTION 6.12

Minimum Asset Coverage Ratios

122 

SECTION 6.13

Elections

122 

SECTION 6.14

Amendments to Certain Documents

122 

 

 

 

Article VII Events of Default

123 

 

 

 

SECTION 7.01

Events of Default

123 

 

 

 

Article VIII The Administrative Agent and the Collateral Agent; Etc

127 

 

 

 

SECTION 8.01

Appointment and Authority

127 

SECTION 8.02

Rights as a Lender

127 

SECTION 8.03

Exculpatory Provisions

127 

SECTION 8.04

Reliance by Agent

128 

SECTION 8.05

Delegation of Duties

129 

SECTION 8.06

Resignation of Agent

129 

SECTION 8.07

Non-Reliance on Agent and Other Lenders

129 

SECTION 8.08

No Other Duties

130 

 

 

 

iii

HN\1104235.21

--------------------------------------------------------------------------------

 

Table of Contents

 

 

 

 

 

 

Page

Article IX Miscellaneous

130 

 

 

 

SECTION 9.01

Notices; Electronic Communications

130 

SECTION 9.02

Survival of Agreement

133 

SECTION 9.03

Binding Effect

133 

SECTION 9.04

Successors and Assigns

133 

SECTION 9.05

Expenses; Indemnity

137 

SECTION 9.06

Right of Setoff

139 

SECTION 9.07

Applicable Law

139 

SECTION 9.08

Waivers; Amendment

139 

SECTION 9.09

Interest Rate Limitation

140 

SECTION 9.10

Entire Agreement

140 

SECTION 9.11

WAIVER OF JURY TRIAL

141 

SECTION 9.12

Severability

141 

SECTION 9.13

Counterparts

141 

SECTION 9.14

Headings

141 

SECTION 9.15

Jurisdiction; Consent to Service of Process

141 

SECTION 9.16

Confidentiality

142 

SECTION 9.17

Lender Action

143 

SECTION 9.18

USA PATRIOT Act Notice

143 

SECTION 9.19

Process Agent

143 

SECTION 9.20

Judgment Currency

144 

SECTION 9.21

Representation of EIH

145 

 

 

 

iv

HN\1104235.21

--------------------------------------------------------------------------------

 

Table of Contents

 

 

 

 

 

 

 

SCHEDULES

 

 

Schedule 1.01(a)

-

Subsidiary Guarantors

Schedule 2.01

-

Lenders and Commitments

Schedule 3.10(a)

-

ERISA Plans

Schedule 3.12(a)

-

Real Property

Schedule 3.12(b)

-

Oil and Gas Property

Schedule 3.12(c)

-

Interests in Oil and Gas Properties

Schedule 3.14

-

Subsidiaries

Schedule 3.20

-

Existing Indebtedness and Preferred Stock

Schedule 3.21

-

Insurance

Schedule 3.24

-

Existing Liens

 

 

 

 

EXHIBITS

 

Exhibit A

Form of Assignment and Acceptance

Exhibit B

Form of Borrowing Request

Exhibit C

Form of Compliance Certificate

Exhibit D

Form of Note

Exhibit E

Form of Credit Party Guaranty

Exhibit F

Form of U.S. Security Agreement

Exhibit G

Form of English Debenture

Exhibit H

Form of English Charge Over Shares

Exhibit I

Form of Solvency Certificate

Exhibit J-1

Form of Opinion of Vinson & Elkins L.L.P.

Exhibit J-2

Form of Opinion of Vinson & Elkins R.L.L.P.

Exhibit J-3

Form of Opinion of Woodburn and Wedge

Exhibit J-4

Form of Opinion of Allen & Overy

 

 

 

 

v

HN\1104235.21

--------------------------------------------------------------------------------

 

 

This CREDIT AGREEMENT, dated as of January 24, 2014 (as amended, modified,
restated and/or supplemented from time to time, this “Agreement”), is by and
among ENDEAVOUR INTERNATIONAL HOLDING B.V., a  besloten vennootschap organized
under the laws of the Netherlands and registered with the chamber of commerce
under 34229293 (“EIH”), END FINCO LLC, a Delaware limited liability company and
a wholly-owned subsidiary of EIH (“DE Borrower”  and, together with EIH, the
“Borrowers”, and each, a “Borrower”), Endeavour International Corporation, a
Nevada corporation (“Holdings”), the Lenders party hereto from time to time,
CREDIT SUISSE AG, acting through one or more of its branches or affiliates
(“Credit Suisse”), as administrative agent (in such capacity, including any
successor thereto, the “Administrative Agent”) for the Lenders and as collateral
agent (in such capacity, including any successor thereto, the “Collateral
Agent”) for the Lenders.

W I T N E S S E T H:

WHEREAS, the Borrowers have requested the Lenders to extend credit to EIH on the
Closing Date in the form of Term Loans in an aggregate principal amount of
$125,000,000; and

WHEREAS, the Lenders are willing to extend such credit to EIH on the terms and
subject to the conditions set forth herein;

NOW, THEREFORE, IT IS AGREED:

Article I
Definitions

 

SECTION 1.01     Defined Terms.  As used in this Agreement, the following terms
shall have the meanings specified below:

 

“5.5% Convertible Notes” shall mean the 5.5% Convertible Senior Notes due 2016
issued by Holdings, including any related notes, guarantees, instruments and
agreements executed in connection therewith.

“11.5% Convertible Bonds” shall mean the 11.5% Guaranteed Convertible Bonds due
2014 (extended to 2016) issued by Endeavour Energy Luxembourg S.à.r.l. and
guaranteed by Holdings, including any related notes, guarantees, instruments and
agreements executed in connection therewith.

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

“Additional Assets” shall mean:

(1)     any properties or assets used or useful in the Oil and Gas Business,
other than Indebtedness or Capital Stock;

(2)     the Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by Holdings or any of its
Restricted Subsidiaries; or

(3)     Capital Stock constituting a Minority Interest in any Person that at
such time is a Restricted Subsidiary;

1

--------------------------------------------------------------------------------

 

 

provided, however, that any such Restricted Subsidiary described in clause (2)
or (3) is primarily engaged in the Oil and Gas Business.

“Additional Guarantor Requirement” shall have the meaning provided in
Section 5.12(c).

“Additional Security Documents” shall have the meaning provided in
Section 5.12(a).

“Additional Term Loans” shall have the meaning provided in Section 2.01(b).

“Adjusted Consolidated Net Tangible Assets” of a specified Person shall mean
(without duplication), as of the date of determination, the remainder of:

(1)     the sum of:

(a)     discounted future net revenue from proved crude oil and natural gas
reserves of such Person and its Restricted Subsidiaries calculated in accordance
with SEC guidelines before any state or federal or other income taxes, as
estimated by such Person in a reserve report prepared as of the end of the
fiscal year of such Person and audited by such Person’s independent petroleum
engineers, as increased by, as of the date of determination, the estimated
discounted future net revenue from:

(i)     estimated proved crude oil and natural gas reserves of such Person and
its Restricted Subsidiaries attributable to acquisitions consummated since the
date of such reserve report, which reserves were not reflected in such reserve
report, and

(ii)     estimated proved crude oil and natural gas reserves of such Person and
its Restricted Subsidiaries attributable to extensions, discoveries and other
additions and upward revisions of estimates of proved crude oil and natural gas
reserves (including previously estimated development costs incurred during the
period and the accretion of discount since the prior period end) due to
exploration, development or exploitation, production or other activities which
would, in accordance with standard industry practice, cause such revisions, 

and decreased by, as of the date of determination, the estimated discounted
future net revenue attributable to:

(iii)    estimated proved crude oil and natural gas reserves of such Person and
its Restricted Subsidiaries reflected in such reserve report produced or
disposed of since the date of such reserve report, and

(iv)    reductions in the estimated proved crude oil and natural gas reserves of
such Person and its Restricted Subsidiaries reflected in such reserve report
since the date of such reserve report due to changes in geological conditions or
other factors which would, in accordance with standard industry practice, cause
such revisions;

in the case of clauses (i) through (iv) calculated on a pre-tax basis in
accordance with SEC guidelines (utilizing the prices estimated by such Person in
a reserve report prepared as of the end of the fiscal year of such Person);
provided, however, that, in the case of each of the determinations made pursuant
to clauses (i), (ii), (iii) and (iv) above, such increases and

2

--------------------------------------------------------------------------------

 

 

decreases shall be estimated by Holdings’ petroleum engineers or any independent
petroleum engineers engaged by Holdings for that purpose;

 

(b)     the capitalized costs that are attributable to crude oil and natural gas
properties of such Person and its Restricted Subsidiaries to which no proved
crude oil and natural gas reserves are attributable, based on such Person’s
books and records as of a date no earlier than the date of such Person’s latest
available annual or quarterly financial statements;

(c)     the Net Working Capital of such Person as of a date no earlier than the
date of such Person’s latest available annual or quarterly financial statements;
and

(d)     the greater of:

(i)     the net book value of other tangible assets of such Person and its
Restricted Subsidiaries as of a date no earlier than the date of such Person’s
latest available annual or quarterly financial statements, and

(ii)     the appraised value, as estimated by independent appraisers, of other
tangible assets of such Person and its Restricted Subsidiaries as of a date no
earlier than the date of such Person’s latest available annual or quarterly
financial statements (provided that if no such appraisal has been performed,
such Person shall not be required to obtain such an appraisal of such assets
solely for the purpose of determining this value and only clause (1)(d)(i) of
this definition shall apply);

minus: 

(2)     the sum of:

(a)     Minority Interests;

(b)     to the extent not otherwise taken into account in determining Adjusted
Consolidated Net Tangible Assets, any net natural gas balancing liabilities of
such Person and its Restricted Subsidiaries reflected in such Person’s latest
audited financial statements;

(c)     to the extent included in clause (1)(a) above, the discounted future net
revenue, calculated in accordance with SEC guidelines (utilizing the prices
utilized in such Person’s year end reserve report), attributable to reserves
subject to participation interests, overriding royalty interests or other
interests of third parties, pursuant to participation, partnership, vendor
financing or other agreements then in effect, or which otherwise are required to
be delivered to third parties;

(d)     to the extent included in clause (1)(a) above, the discounted future net
revenue calculated in accordance with SEC guidelines (utilizing the prices
utilized in such Person’s year end reserve report), attributable to reserves
that are required to be delivered to third parties to fully satisfy the
obligations of such Person and its Restricted Subsidiaries with respect to
Volumetric Production Payments on the schedules specified with respect thereto;
and

(e)     the discounted future net revenue, calculated in accordance with SEC
guidelines, attributable to reserves subject to Dollar-Denominated Production
Payments

3

--------------------------------------------------------------------------------

 

 

that, based on the estimates of production and price assumptions included in
determining the discounted future net revenue specified in clause (1)(a) above
(utilizing the prices utilized in such Person’s year end reserve report), would
be necessary to satisfy fully the obligations of such Person and its Restricted
Subsidiaries with respect to Dollar-Denominated Production Payments on the
schedules specified with respect thereto.

If Holdings changes its method of accounting from the full cost method to the
successful efforts method or a similar method of accounting, “Adjusted
Consolidated Net Tangible Assets” of Holdings will continue to be calculated as
if Holdings were still using the full cost method of accounting.

“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum equal to the greater of
(a) 1.25% per annum and (b) the product of (i) the LIBO Rate in effect for such
Interest Period and (ii) Statutory Reserves.

“Administrative Agent” shall have the meaning provided in the preamble to this
Agreement, and shall include any successor to the Administrative Agent appointed
pursuant to Section 8.06.

“Administrative Questionnaire” shall mean an Administrative Questionnaire in
such form as may be supplied from time to time by the Administrative Agent.

“Affiliate” of any specified Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
“controlling,” “controlled by” and “under common control with” have correlative
meanings.

“Affiliate Transaction” shall have the meaning provided in Section 6.05.

“Agents” shall mean and include the Administrative Agent and the Collateral
Agent.

“Agreement” shall have the meaning provided in the preamble to this Agreement.

“Agreement Currency” shall have the meaning provided in Section 9.20.

“Agreement Value” shall mean, for each Hedging Agreement, on any date of
determination, the maximum aggregate amount (giving effect to any netting
agreements) that Holdings or any Borrower or Restricted Subsidiary is required
to pay in connection with a termination of such Hedging Agreement on such date,
as determined by counterparties to such Hedging Agreement.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% and (c) the one-month
Adjusted LIBO Rate plus 1.0%; provided that for the purpose of clause (c), the
Adjusted LIBO Rate for any day shall be based on the rate determined on such day
at approximately 11 a.m. (London time) by reference to the British Bankers’
Association Interest Settlement Rates for deposits in Dollars (as set forth by
any service selected by the Administrative Agent that has been nominated by the
British Bankers’ Association as an authorized vendor for the purpose of
displaying such rates).  If the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable

4

--------------------------------------------------------------------------------

 

 

to ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient quotations
in accordance with the terms of the definition thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the preceding sentence until
the circumstances giving rise to such inability no longer exist.  Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate or Adjusted LIBO Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate or Adjusted
LIBO Rate, as the case may be.

“Amortization Payment” shall have the meaning provided in Section 2.11.

“Applicable Law” except as the context may otherwise require, shall mean all
applicable laws, rules, regulations, ordinances, treaties, judgments, decrees,
injunctions, writs and orders of any Governmental Authority and rules,
regulations, orders, licenses and permits of any Governmental Authority.

“Applicable Margin” shall mean, for any day (a) with respect to any Eurodollar
Loan, 7.0% per annum and (b) with respect to any ABR Loan, 6.0% per annum.

“Applicable Percentage” shall mean, with respect to any fiscal year, 50%;
provided that (a) if the Consolidated Leverage Ratio as of the end of such
fiscal year is less than 2.5:1.0, 25% and (b) if the Consolidated Leverage Ratio
as of the end of such fiscal year is less than 1.75:1.0, 0%.

“Applicable Premium” shall mean, with respect to any prepayment under
Section 2.12 or 2.13(b), as applicable: (a) if made prior to the first
anniversary of the date hereof, a cash amount with respect to the aggregate
principal amount of Loans prepaid equal to the present value at such repayment
date of all required interest payments due on such Loans (assuming that the
Adjusted LIBO Rate prevailing at the time of the notice of prepayment applies
throughout such period) to but excluding the first anniversary of the date
hereof (excluding accrued but unpaid interest to the date of such prepayment and
reduction), computed using a discount rate equal to the Treasury Rate as of such
prepayment date plus 50 basis points discounted to the redemption date on a
quarterly basis (assuming a 360 day year consisting of twelve 30 day months);
and (b) if made on or after the first anniversary of the date hereof, $0.

“Approved Hedge Counterparty” shall mean any other Person that, at the time such
Hedging Agreement is entered into is (a) the Administrative Agent, (b) the
Collateral Agent, (c) the Arranger, (d) a Lender, (e) any Affiliate of any of
the foregoing Persons or (f) any other Person whose corporate rating at the time
of entering into the Hedging Agreement is A- or higher by S&P or whose senior
unsecured long-term debt obligations at the time of entering into the Hedging
Agreement are rated A- or higher by S&P (or whose obligations under the Hedging
Agreement are guaranteed by another Person satisfying the foregoing ratings
criteria).

“Arranger” shall mean CS Securities in its capacity as sole lead arranger and
sole bookrunner.

“Asset Sale” shall mean:

(a)     the sale, lease, conveyance or other disposition of any properties or
assets (including by way of a Production Payment, Sale Leaseback Transaction,
conveyance of any royalty interest, overriding royalty interest, net profits
interest, or mergers, consolidations or otherwise); provided, however, that the
disposition of all or substantially all of the properties or assets of Holdings
and its Restricted Subsidiaries taken as a whole will not be an “Asset Sale,”

5

--------------------------------------------------------------------------------

 

 

but will be governed by the provisions of Section 6.09 and not by the provisions
of Section 6.04; and

(b)     the issuance of Equity Interests in any of Holdings’ Restricted
Subsidiaries or the sale of Equity Interests in any of its Restricted
Subsidiaries (other than directors’ qualifying shares or shares required by
Applicable Law to be held by a Person other than Holdings or a Restricted
Subsidiary of Holdings).

Notwithstanding the preceding clauses (a) and (b), the following items will not
be deemed to be Asset Sales:

(1)     any single transaction or series of related transactions that involves
properties or assets having a Fair Market Value of less than the greater of
(i) $5,000,000 and (ii) 0.5% of Holdings’ Adjusted Consolidated Net Tangible
Assets determined as of the date of such transaction;

(2)     subject to compliance with the Additional Guarantor Requirement as of
the date of such disposition, a disposition of assets between or among any of
Holdings and its Restricted Subsidiaries;

(3)     an issuance or sale of Equity Interests by a Restricted Subsidiary to
Holdings or to another Restricted Subsidiary;

(4)     any disposition, abandonment, relinquishment or expiration of equipment,
inventory, products, accounts receivable or other similar properties or similar
assets in the ordinary course of business (excluding, for the avoidance of
doubt, Production Payments);

(5)     the disposition of cash or Cash Equivalents, Hedging Agreements or other
financial instruments in the ordinary course of business;

(6)     a Restricted Payment that is permitted by Section 6.01 or a Permitted
Investment (or a disposition that would constitute a Restricted Payment but for
the exclusion from the definition thereof);

(7)     the farm-out, lease or sublease of developed or undeveloped crude oil or
natural gas properties owned or held by Holdings or any of its Restricted
Subsidiaries in the ordinary course of business or in exchange for crude oil and
natural gas properties or interests owned or held by another Person;

(8)     (i) any trade or exchange by Holdings or any of its Restricted
Subsidiaries of Hydrocarbon properties or other properties or assets for
Hydrocarbon properties or other properties or assets owned or held by one or
more other Persons, and (ii) any transfer or sale of assets, or lease,
assignment or sublease of any real or personal property, (A) in exchange for
services (including in connection with any outsourcing arrangements) related to
the exploration, development, completion or production (and related activities)
of properties of Holdings or any Restricted Subsidiary, (B) in exchange for such
transferee, lessee or assignee (or an Affiliate thereof) agreeing to pay all or
a portion of the costs and expenses related to the exploration, development,
completion or production (and related activities) of properties of Holdings or
any Restricted Subsidiary or (C) in exchange for properties or assets satisfying
the requirements of clause (i) of this clause (8) ((A) and (B) being referred to
herein as a “carry”); provided that the Fair Market Value of the properties or
assets traded, exchanged, transferred, sold, leased, assigned or subleased by
Holdings or such Restricted Subsidiary is equal to or less than the Fair Market
Value of the properties, assets or carry (together with any cash and Cash
Equivalents)

6

--------------------------------------------------------------------------------

 

 

agreed by such other Persons to be transferred, provided or paid to or on behalf
of Holdings or such Restricted Subsidiary, and provided further that any cash or
Cash Equivalents received must be applied in accordance with the provisions of
Section 2.13(a);

(9)     the creation or perfection of a Lien (but not (i) except to the extent
contemplated in clause (10) below, the sale or other disposition of the
properties or assets subject to such Lien or (ii) Production Payments);

(10)    the creation or perfection of a Permitted Lien and the exercise by any
Person in whose favor a Permitted Lien is granted of any of its rights in
respect of that Permitted Lien (but in each case excluding Production Payments);

(11)    a surrender or waiver of contract rights or the settlement, release or
surrender of contract, tort or other claims of any kind;

(12)    the licensing or sublicensing of intellectual property or other general
intangibles in the ordinary course of business to the extent that such license
does not prohibit the licensor from using the intellectual property and
licenses, leases or subleases of other property;

(13)    any sale or other disposition of Equity Interests in an Unrestricted
Subsidiary;

(14)    the sale or other disposition (whether or not in the ordinary course of
business) of Oil and Gas Properties, provided that at the time of such sale or
other disposition such properties do not have associated with them any proved
reserves, and provided further that the sale or other disposition is not for
less than the Fair Market Value of such Oil and Gas Properties;

(15)    any Refinancing Production Payment; and

(16)    the grant or transfer by Holdings or a Restricted Subsidiary of Holdings
of a royalty, overriding royalty or net profits interest, in each case, pursuant
to any incentive compensation programs on terms that are reasonably customary in
the Oil and Gas Business for geologists, geophysicists and other providers of
technical services to Holdings or a Restricted Subsidiary of Holdings.

“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an Eligible Assignee, in the form of Exhibit A or such other
form as shall be approved by the Administrative Agent.

“Attributable Debt” in respect of a Sale Leaseback Transaction shall mean, at
the time of determination, the present value of the obligation of the lessee for
net rental payments during the remaining term of the lease included in such Sale
Leaseback Transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended). Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP. As used in the
preceding sentence, the “net rental payments” under any lease for any period
shall mean the sum of rental and other payments required to be paid with respect
to such period by the lessee thereunder, excluding any amounts required to be
paid by such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease that is
terminable by the lessee upon payment of penalty, such net rental payment shall
also include the amount of such penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated.

7

--------------------------------------------------------------------------------

 

 

“Authorization” shall mean an authorization, consent, permit, approval,
resolution, license, exemption, filing, notarization or registration.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), such “person” will be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
“Beneficially Owns” and “Beneficially Owned” have correlative meanings.

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States.

“Board of Directors” shall mean:

(1)    with respect to a corporation, the board of directors of the corporation
or any committee thereof duly authorized to act on behalf of such board; and

(2)    with respect to any other Person, the board or committee of such Person
serving a similar function.

“Board Resolution” shall mean a copy of a resolution certified by the Secretary
or an Assistant Secretary of the applicable Person and with respect to EIH, its
Responsible Officer, as having been duly adopted by the Board of Directors of
such Person and being in full force and effect on the date of such
certification, and delivered to the Administrative Agent.

“Borrower” and “Borrowers” shall have the meaning provided in the preamble to
this Agreement.

“Borrower Materials” shall have the meaning provided in Section 9.01.

“Borrowing” shall mean a borrowing comprised of Loans of the same Type made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect.

“Borrowing Request” shall mean a request by either Borrower in accordance with
the terms of Section 2.03 and substantially in the form of Exhibit B (or, if
given telephonically in accordance with the terms of Section 2.03, confirmed in
the form of Exhibit B), or such other form as shall be approved by the
Administrative Agent.

“Breakage Event” shall have the meaning provided in Section 2.16.

“Business” shall mean any corporation, limited liability company, partnership or
other business entity (or the adjectival form thereof, where appropriate) or the
equivalent of the foregoing in any jurisdiction outside of the United States or
any State thereof.

“Business Day” shall mean for all purposes, any day except Saturday, Sunday and
any day which shall be in New York, New York or London, England, a legal holiday
or a day on which banking institutions are authorized or required by law or
other government action to close.

“Calculation Date” shall mean each date on which any financial ratio calculation
is calculated.

8

--------------------------------------------------------------------------------

 

 

“Capital Expenditures” shall mean, with respect to any Person, all expenditures
by such Person and its Restricted Subsidiaries which should be capitalized in
accordance with GAAP and, without duplication, the amount of all Capital Lease
Obligations incurred by such Person and its Restricted Subsidiaries.

“Capital Lease Obligation” shall mean, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.

“Capital Stock” shall mean:

(1)     in the case of a corporation, corporate stock;

(2)     in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;

(3)     in the case of a partnership or limited liability company, partnership
interests (whether general or limited) or membership interests; and

(4)     any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person;

but excluding from all of the foregoing any debt securities convertible into
Capital Stock, regardless of whether such debt securities include any right of
participation with Capital Stock.

“Cash Equivalents” shall mean:

(1)    securities issued or directly and fully guaranteed or insured by the
government of the United States or any agency or instrumentality of the
government of the United States (provided that the full faith and credit of the
United States is pledged in support of those securities) having maturities of
not more than one year from the date of acquisition;

(2)     marketable general obligations issued by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and, at
the time of acquisition thereof, having a credit rating of “A” or better from
either S&P or Moody’s;

(3)     certificates of deposit, demand deposits and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers’
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case, with any domestic commercial bank having capital and surplus in
excess of $500,000,000 and a credit rating of “A” or better from either S&P or
Moody’s;

(4)     repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1), (2) and (3) above
entered into with any financial institution meeting the qualifications specified
in clause (3) above;

(5)     commercial paper having one of the two highest ratings obtainable from
Moody’s or S&P and, in each case, maturing within one year after the date of
acquisition;

9

--------------------------------------------------------------------------------

 

 

(6)     money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition; and

(7)    instruments equivalent to those referred to in clauses (1) through (6)
above denominated in Sterling comparable in credit quality and tenor to those
referred to above and customarily used by companies for cash management purposes
in the United Kingdom to the extent reasonably required in connection with any
business conducted by any Subsidiary organized in such jurisdiction.

“Cash Interest Expense” shall mean, with respect to any Person, for any period,
the Consolidated Interest Expense of such Person and its Restricted Subsidiaries
for such period, less the sum of (a) any pay-in-kind interest expense or other
noncash interest expense (including as a result of the effects of purchase
accounting) of such Person and its Restricted Subsidiaries, (b) to the extent
included in Consolidated Interest Expense, the amortization of any financing
fees paid by, or on behalf of, such Person and its Restricted Subsidiaries, (c)
the amortization of debt discounts, if any, or fees in respect of Hedging
Agreements and (d) cash interest income of such Person and its Restricted
Subsidiaries for such period.

“Change in Law” shall mean (a) the adoption of any law, rule, regulation or
treaty after the date hereof, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation, implementation or application
thereof by any Governmental Authority after the  date hereof or (c) compliance
by any Lender (or, for purposes of Section 2.14, by any lending office of such
Lender or by such Lender’s holding company, if any) with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date hereof; provided that notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted or issued.

“Change of Control” shall mean the occurrence of any of the following:

(1)    the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
(including Capital Stock of the Restricted Subsidiaries) of Holdings and its
Restricted Subsidiaries taken as a whole, to any “person” (as that term is used
in Section 13(d)(3) of the Exchange Act);

(2)      the adoption by the stockholders of Holdings of a plan relating to the
liquidation or dissolution of Holdings;

(3)    the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any “person” or “group” (as
those terms are used in Section 13(d)(3) of the Exchange Act) becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock
of Holdings, measured by voting power rather than number of shares, units or the
like;

(4)     the first day on which a majority of the members of the Board of
Directors of Holdings are not Continuing Directors; or

10

--------------------------------------------------------------------------------

 

 

(5)     Holdings shall at any time cease to own (beneficially and of record),
directly or indirectly, 100% of the Equity Interests of either Borrower.

“Charges” shall have the meaning provided in Section 9.09.

“Class” shall mean with respect to Incremental Term Loans, whether such
Incremental Term Loans are Initial Loans or Other Term Loans.  Incremental Term
Loans with different terms and conditions shall be construed to be in different
Classes.

“Class C Convertible Preferred Stock” shall mean Holdings’ Series C Preferred
Stock with the terms set forth in the Certificate of Designation of Series C
Preferred Stock originally filed with the Nevada Secretary of State on October
30, 2006 and amended on December 21, 2006, November 17, 2009 and March 10, 2010.

“Closing Date” shall mean the date on which the conditions specified in Section
4.01 are satisfied (or waived in accordance with Section 9.08).

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and any regulations promulgated thereunder.

“Collateral” shall mean all property (whether real or personal, tangible or
intangible) with respect to which any security interests have been granted (or
purported to be granted) pursuant to any Security Document, including, without
limitation, all Collateral under and as defined in each Security Document;
provided that “Collateral” shall not include any Excluded Assets.

“Collateral Agent” shall have the meaning provided in the preamble to this
Agreement, and shall include any successor to the Collateral Agent appointed
pursuant to Section 8.06.

“Commitment”  shall mean, with respect to each Lender, the commitment of such
Lender to make Loans hereunder as set forth opposite such Lender’s name on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender
assumed its Commitment, as applicable, as the same may be reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04 or pursuant to Section 2.09. Unless the context shall otherwise
require, the "Commitment" of a Lender shall include such Lender's "Incremental
Term Loan Commitment." 

"Commodity Exchange Act" shall mean the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from to time, and any successor statute, or any rule,
regulation or order of the U.S. Commodity Futures Trading Commission (or the
application or official interpretation thereof).

“Commodity Hedging Agreement” shall mean a commodity price risk management
agreement or similar arrangement (including commodity price swap agreements,
forward agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities).

“Communications” shall have the meaning provided in Section 9.01.

“Connection Income Taxes”  shall mean Other Connection Taxes that are imposed on
or measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

11

--------------------------------------------------------------------------------

 

 

“Consolidated EBITDA” shall mean, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period plus, without
duplication:

(1)     provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus 

(2)     the Fixed Charges of such Person and its Restricted Subsidiaries for
such period, to the extent that such Fixed Charges were deducted in computing
such Consolidated Net Income; plus 

(3)     depreciation, depletion, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period), impairment and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, depletion, amortization,
impairment and other non-cash expenses were deducted in computing such
Consolidated Net Income; plus 

(4)     all fees, costs and expenses (other than depreciation, depletion or
amortization expense) incurred in connection with the Transactions, the
execution and delivery of the Term B Credit Agreement and the LC Procurement
Agreement and each other agreement or document executed and delivered in
connection therewith, and the borrowings and/or other transactions contemplated
under the Term B Credit Agreement and/or the LC Procurement Agreement,
including, without limitation, the LC Transactions and the Transactions (as
defined in the Term B Credit Agreement), and any amendment or other modification
of any such agreements, in each case, deducted (and not added back) in computing
Consolidated Net Income; plus

(5)     unrealized non-cash losses resulting from foreign currency balance sheet
adjustments required by GAAP to the extent such losses were deducted in
computing such Consolidated Net Income; minus 

(6)     non-cash items increasing such Consolidated Net Income for such period,
other than items that were accrued in the ordinary course of business; and
minus 

(7)     to the extent increasing such Consolidated Net Income for such period,
the sum of (a) the amount of deferred revenues that are amortized during such
period and are attributable to reserves that are subject to Volumetric
Production Payments and (b) amounts recorded in accordance with GAAP as
repayments of principal and interest pursuant to Dollar-Denominated Production
Payments;

in each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding sentence, clauses (1) through (5) relating to
amounts of a Restricted Subsidiary of the referent Person will be added to
Consolidated Net Income to compute Consolidated EBITDA of such Person only to
the extent (and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating the Consolidated Net Income of such
Person.

“Consolidated Interest Expense” shall mean, with respect to any Person, for any
period, the sum of (a) the interest expense (including imputed interest expense
in respect of Capital Lease Obligations and Synthetic Lease Obligations)
attributable to Indebtedness of such Person and its Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance

12

--------------------------------------------------------------------------------

 

 

with GAAP (but excluding interest expense with regard to any Production
Payment),  plus (b) any interest accrued during such period in respect of
Indebtedness of such Person and its Restricted Subsidiaries that is required to
be capitalized rather than included in consolidated interest expense for such
period in accordance with GAAP,  plus (c) the LC Fee (as defined in the LC
Procurement Agreement) payable by EEUK for such period under the LC Procurement
Agreement.  For purposes of the foregoing, interest expense shall be determined
after giving effect to any net payments made or received by such Person and its
Restricted Subsidiaries with respect to Interest Rate Hedging Agreements.

“Consolidated Leverage Ratio” shall mean, on any Calculation Date, the ratio of
(a) the sum of (i) Total Funded Debt of Holdings and its Restricted Subsidiaries
on such Calculation Date plus (ii) the Maximum LC Procurement Obligation
minus (iii) the aggregate amount of unrestricted cash on the consolidated
balance sheet of Holdings and its Restricted Subsidiaries as of such date
 (provided that the maximum amount of such unrestricted cash shall not exceed
$25,000,000)  to (b) Consolidated EBITDA of Holdings for the period of four
consecutive fiscal quarters most recently ended on or prior to such Calculation
Date, in each case after giving effect to any applicable Pro Forma Adjustments.

“Consolidated Net Income” shall mean, with respect to any specified Person for
any period, the aggregate of the net income (loss) of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP and before any reduction in respect of non-cash preferred
stock dividends of such Person, provided that:

(1)     the net income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting will be
included, but only to the extent of the amount of dividends or similar
distributions paid in cash to the specified Person or a Restricted Subsidiary of
the Person;

(2)     the net income (but not loss) of any Restricted Subsidiary of Holdings
will be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that net income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, partners or members;

(3)     the cumulative effect of a change in accounting principles will be
excluded;

(4)     any gain (loss) realized upon the sale or other disposition of any
property, plant or equipment of such Person or its consolidated Restricted
Subsidiaries (including pursuant to any Sale Leaseback Transaction) that is not
sold or otherwise disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any Capital Stock of any
Person will be excluded;

(5)     any asset impairment writedowns on Oil and Gas Properties under GAAP or
SEC guidelines will be excluded;

(6)     unrealized non-cash losses and gains under Hedging Agreements included
in the determination of Consolidated Net Income, including, without limitation,
those resulting from the application of FASB ASC Topic 815, “Derivatives and
Hedging,” will be excluded;

13

--------------------------------------------------------------------------------

 

 

(7)     any non-cash charges relating to any premium or penalty paid, write off
of deferred financing costs or other financial recapitalization charges in
connection with redeeming or retiring any Indebtedness prior to its Stated
Maturity will be excluded;

(8)     items classified as extraordinary or nonrecurring gains and losses (less
all fees and expenses related thereto) and the related tax effects, in each case
according to GAAP, will be excluded; and

(9)     income resulting from transfers of assets (other than cash) between such
Person or any of its Restricted Subsidiaries, on the one hand, and an
Unrestricted Subsidiary of such Person, on the other hand, will be excluded.

“Contingent Obligation” shall mean, as to any Person, any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends
or other obligations (“primary obligations”) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided, however, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the lower of
(i) the maximum amount of such Contingent Obligation pursuant to the agreement
or instrument under which such Contingent Obligation is created and (ii) the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.

“Continuing Directors” shall mean the directors of Holdings on the date hereof
and each other director if such director’s nomination for election to the Board
of Directors is recommended by a majority of the then Continuing Directors.

“CRD IV” shall mean Directive 2013/36/EU of the European Parliament and of the
Council of 26 June 2013 on access to the activity of credit institutions and the
prudential supervision of credit institutions and investment firms, amending
Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.

“Credit Documents” shall mean this Agreement, each Note, each Security Document,
the Intercreditor Agreement, the Subordination Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
joinder, accession or similar agreement by which any Subsidiary of Holdings
becomes party to the Credit Party Guaranty or any Security Document and each
Incremental Term Loan Assumption Agreement.

“Credit Facility” shall mean any debt facility, commercial paper facility or
Debt Issuance, in each case with banks or other institutional lenders or
institutional investors providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables), letters of credit or other borrowings or Debt Issuances, in each
case, as

14

--------------------------------------------------------------------------------

 

 

amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.

“Credit Party” shall mean Holdings, the Borrowers and each Subsidiary Guarantor.

“Credit Party Guaranty” shall have the meaning provided in Section 4.01(g).

“Credit Suisse” shall have the meaning provided in the preamble to this
Agreement.

“CS Securities” shall mean Credit Suisse Securities (USA) LLC, and its
successors.

“Customer”  shall have the meaning provided in Section 2.20(h)(i).

“De Minimis Guaranteed Amount” shall mean a principal amount of Indebtedness not
to exceed $5,000,000.

“Debt Issuance” shall mean one or more issuances after the date of this
Agreement of Indebtedness evidenced by notes, debentures, bonds or other similar
securities or instruments.

“Debt Service” shall mean, for any fiscal year, Cash Interest Expense of
Holdings for such period plus (a) scheduled principal amortization of Total
Funded Debt of Holdings and its Restricted Subsidiaries for such period and (b)
cash payments made on any Existing Production Payments or any Refinancing
Production Payment.

“Debtor Relief Laws” shall mean, collectively, the Netherlands Bankruptcy Code
(Faillissementswet), Title 11 of the United States Bankruptcy Code and any other
bankruptcy, insolvency, liquidation, restructuring, reorganization, compromise,
arrangement, readjustment of debt, conservatorship, receivership, winding‑up,
dissolution, or similar laws of the United States and any other applicable
jurisdictions from time to time in effect.

“Default” shall mean any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.

“Defaulting Lender” shall mean any Lender that (a) has failed to (i) pay to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder, (ii) fund any portion of its Loans or (iii) pay over to any Credit
Party any other amount required to be paid by it hereunder within two Business
Days of the date when due, (b) has, or has a direct or indirect parent company
that has, (i) become the subject of a proceeding under any Debtor Relief Law, or
(ii) had appointed for it a receiver, custodian, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business or assets, including the
Federal Deposit Insurance Corporation or any other state or federal regulatory
authority acting in such a capacity; provided that a Lender shall not be a
Defaulting Lender solely by virtue of the ownership or acquisition of any Equity
Interest in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such
Lender, (c) has notified the Borrowers or any other Credit Party in writing, or
has made a public statement, to the effect that it does not intend or expect to
comply with any of its funding obligations under this Agreement or generally
under other agreements in which it commits to extend credit or (d) has failed,
within three (3) Business Days after request by the Administrative Agent or a
Credit Party, acting in good faith, to provide a certification in writing from
an authorized officer

15

--------------------------------------------------------------------------------

 

 

of such Lender that it will comply with its obligations to fund prospective
Loans under this Agreement.  Any determination by the Administrative Agent that
a Lender is a Defaulting Lender shall be conclusive and binding absent manifest
error, and such Lender shall be deemed to be a Defaulting Lender (subject to
Section 2.22(b)) upon delivery of written notice of such determination to the
Borrowers and each Lender.

“Deposit Account Control Agreement” shall mean a deposit account control
agreement to be executed and delivered among any Credit Party, the Collateral
Agent and each bank at which such Credit Party maintains any deposit
account other than an Excluded Account, in each case, in accordance with such
bank’s standard form of control agreement or otherwise as may be reasonably
acceptable to the Collateral Agent, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

“Disqualified Stock” shall mean any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the later to occur of the Maturity Date and the Incremental
Term Loan Maturity Date; provided, however, that only the portion of Capital
Stock that so matures or is mandatorily redeemable, is so convertible or
exchangeable or is so redeemable at the option of the holder thereof prior to
such date shall be deemed to be Disqualified Stock. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require
Holdings to repurchase or redeem such Capital Stock upon the occurrence of a
change of control or an asset sale will not constitute Disqualified Stock if the
terms of such Capital Stock provide that Holdings may not repurchase or redeem
any such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 6.01. The amount (or principal amount) of
Disqualified Stock deemed to be outstanding at any time for purposes of this
Agreement will be the maximum amount that Holdings and its Restricted
Subsidiaries may become obligated to pay upon the maturity of, or pursuant to
any mandatory redemption provisions of, such Disqualified Stock, exclusive of
accrued dividends.

“Dollar-Denominated Production Payments” shall mean production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.

“Dollars” and “$” shall each mean lawful money of the United States.

“Domestic Subsidiary” shall mean any Restricted Subsidiary of Holdings that was
incorporated or organized under the laws of the United States, any State thereof
or the District of Columbia.

“Dutch Civil Code” means the Burgerlijk Wetboek.

“Dutch Insolvency Event” means any bankruptcy (faillissement), suspension of
payments (voorlopige surseance van betaling), administration
(onderbewindstelling), dissolution (ontbinding) or the Borrower having filed a
notice under Section 36 of the Tax Collection Act of the Netherlands
(Invorderingswet 1990).

“Dutch Obligor” means any Guarantor organized under the laws of The Netherlands.

16

--------------------------------------------------------------------------------

 

 

“Dutch Process Agent” shall have the meaning provided in Section 9.19(b).

“Dutch Sector” shall mean the jurisdiction of The Netherlands commonly referred
to as the Dutch Sector – North Sea.

“EEUK” shall mean Endeavour Energy UK Limited, a private limited company
organized under the laws of England and Wales.

“EIH” shall have the meaning provided in the preamble to this Agreement.

“Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) a
Related Fund of a Lender and (d) any other Person (other than a natural person)
approved by the Administrative Agent; provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include any Credit Party or any
Affiliate of a Credit Party.

“Employee Benefit Plan” shall mean any Plan, any other “employee benefit plan”
as defined in Section 3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees of
Holdings, any of its Subsidiaries or any ERISA Affiliate.

“English Charge Over Shares” shall have the meaning provided in Section 4.01(j).
 

“English Debenture” shall have the meaning provided in Section 4.01(i).  

“English Security Documents” shall mean and include (a) the English Charge Over
Shares and (b) the English Debenture.

“Environmental Law” shall mean any applicable U.S. federal, state, local, UK or
other non-U.S. law (including common law), rule, regulation, ordinance, code,
directive, judgment or order now or hereafter in effect and in each case as
amended, and any binding judicial or administrative interpretation thereof,
relating to the protection of the environment or of human health and safety (to
the extent such health and safety relate to exposure to Hazardous Materials), or
to the presence, Release or threatened Release, or the manufacture, use,
transportation, treatment, storage, disposal or recycling of Hazardous
Materials, or the arrangement for any such activities.

“Environmental Liability” shall mean all liabilities, obligations, damages,
losses, claims, actions, suits, judgments, orders, fines, penalties, and
reasonable fees, expenses or costs (including administrative oversight costs,
natural resource damages and remediation costs), whether contingent or
otherwise, arising out of or relating to (a) compliance or non-compliance with
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any
contract, agreement or other consensual arrangement made by Holdings or any of
its Subsidiaries pursuant to which liability is assumed or imposed with respect
to any of the foregoing.

“EOC” shall mean Endeavour Operating Corporation, a Delaware corporation.

“Equity Interests” shall mean Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

17

--------------------------------------------------------------------------------

 

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.

“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA)
which together with Holdings and/or any of its Subsidiaries would be deemed to
be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of
the Code.

“ERISA Event” shall mean (a) a Reportable Event; (b) the failure of any Plan to
satisfy the minimum funding standards, if any, applicable to that Plan for a
Plan year under Section 412 of the Code or Section 302 of ERISA or a Plan’s
application for a waiver of such minimum funding standards pursuant to
Section 412(c) of the Code or Section 302(c) of ERISA; (c) the arising of a lien
or encumbrance under Section 4068 of ERISA with respect to property of Holdings,
any of its Subsidiaries or an ERISA Affiliate; (d) a determination that any Plan
is, or is expected to be, in at-risk status under Section 430(i) of the Code or
Section 303(i) of ERISA; (e) the incurrence by Holdings, any of its
Subsidiaries, or an ERISA Affiliate of material liability (including any
indirect, contingent, or secondary liability) to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 4062, 4063, 4064, or 4069 of ERISA or
Section 4971 or 4975 of the Code; (f) the institution of proceedings, or the
occurrence of an event or condition which would reasonably be expected to
constitute grounds for the institution of proceedings by the PBGC to terminate
or appoint a trustee to administer any Plan pursuant to Title IV of ERISA;
(g) the filing of a notice of intent to terminate any Plan, if such termination
would require material additional contributions in order to be considered a
standard termination within the meaning of Section 4041(b) of ERISA, the filing
under Section 4041(a)(2) of ERISA of a notice of intent to terminate any Plan or
the termination of any Plan under Section 4041(c) of ERISA; (h) the complete or
partial withdrawal of Holdings, any Subsidiary or any ERISA Affiliate from a
Multiemployer Plan that gives rise to, or is expected to give rise to a
liability under Section 4201 of ERISA, the reorganization or insolvency under
Title IV of ERISA of any Multiemployer Plan, or the receipt by Holdings, any
Subsidiary or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from Holdings, any Subsidiary or any ERISA Affiliate of any
notice, that a Multiemployer Plan is in endangered or critical status under
Section 432 of the Code or Section 305 of ERISA; or (i) the knowledge of
Holdings of a violation of the applicable requirements of Section 404 or 405 of
ERISA or the exclusive benefit rule under Section 401(a) of the Code by any
fiduciary (as defined in Section 3(21) of ERISA) or disqualified person (as
defined in Section 4975(e)(2) of the Code) with respect to any Plan for which
Holdings or any of its Subsidiaries is reasonably expected to incur a material
liability.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

“Events of Default” shall have the meaning provided in Section 7.01.

“Excess Cash Flow” shall mean, with respect to Holdings for any fiscal year of
Holdings, the Consolidated EBITDA of Holdings for such fiscal year,  minus,
without duplication,

(1)     Debt Service for such fiscal year,

(2)     any optional prepayment of Loans and the amount of any release of the
Payer Deposit (as defined in the LC Procurement Agreement) pursuant to Section
3.04 of the LC Procurement Agreement resulting from an optional reduction in the
“Maximum LC Amount” under Section 3.01 of the LC Procurement Agreement in each
case, that results in a prepayment

18

--------------------------------------------------------------------------------

 

 

of Term B Loans during such fiscal year or prior to the date 100 days following
such fiscal year so long as the amount of such prepayment or release of the
Payer Deposit is not already reflected in Debt Service or otherwise deducted
from Excess Cash Flow,

(3)     the aggregate Capital Expenditures made by Holdings during such fiscal
year that are paid in cash,

(4)     Taxes paid in cash by Holdings and its Restricted Subsidiaries on a
consolidated basis during such fiscal year or that will be paid within six
months after the close of such fiscal year (provided that any amount so deducted
that will be paid after the close of such fiscal year shall not be deducted
again in a subsequent fiscal year) and for which reserves have been established,
including income tax expense,

(5)     an amount equal to any increase in Net Working Capital for such fiscal
year,

(6)     amounts paid in cash during such fiscal year on account of (i) items
that were accounted for as noncash reductions of net income in determining the
Consolidated Net Income of Holdings or as noncash reductions in Consolidated Net
Income in determining Consolidated EBITDA of Holdings in a prior fiscal year and
(ii) reserves or accruals established in purchase accounting,

(7)     the amount related to items that were added to or not deducted from net
income in calculating Consolidated Net Income of Holdings or were added to or
not deducted from Consolidated Net Income of Holdings in calculating
Consolidated EBITDA of Holdings to the extent such items represented a cash
payment (which had not reduced Excess Cash Flow upon the accrual thereof in a
prior fiscal year), or an accrual for a cash payment, by Holdings and its
Restricted Subsidiaries or did not represent cash received by Holdings and its
Restricted Subsidiaries, in each case on a consolidated basis during such fiscal
year,

(8)     amounts paid in cash with respect to an acquisition of assets (including
through mergers, consolidations or otherwise),

(9)     amounts paid in cash with respect to Hedging Agreements, and

(10)    to the extent added to net income in determining Consolidated Net Income
of Holdings or to Consolidated Net Income in determining Consolidated EBITDA of
Holdings, the aggregate amount of all fees, costs and expenses (other than
depreciation, depletion or amortization expense) incurred by Holdings or any
Restricted Subsidiary in connection with the Transactions, the execution and
delivery of the Term B Credit Agreement and the LC Procurement Agreement and
each other agreement or document executed and delivered in connection therewith,
and the borrowings and other transactions contemplated under the Term B Credit
Agreement and/or the LC Procurement Agreement, including, without limitation,
the LC Transactions and the Transactions (as defined in the Term B Credit
Agreement), and any amendment or other modification of any such agreements;

plus, without duplication,

(1)     an amount equal to any decrease in Net Working Capital for such fiscal
year,

(2)     all proceeds received during such fiscal year of Capital Lease
Obligations, purchase money Indebtedness, Sale Leaseback Transactions and any
other Indebtedness, in each case to the extent used to finance any Capital
Expenditure,

19

--------------------------------------------------------------------------------

 

 

(3)     all amounts referred to in clause (3) above to the extent funded with
the proceeds of the issuance of Equity Interests of, or capital contributions
to, Holdings after the Closing Date (to the extent not previously used to prepay
Indebtedness, make any investment or Capital Expenditure or otherwise for any
purpose resulting in a deduction to Excess Cash Flow in any prior fiscal year), 

(4)     cash payments received in respect of Hedging Agreements during such
fiscal year to the extent not included in the computation of the Consolidated
EBITDA of Holdings,

(5)     to the extent deducted in computation of Consolidated EBITDA of
Holdings, cash interest income, and

(6)     the amount related to items that were deducted from or not added to net
income in connection with calculating Consolidated Net Income of Holdings or
were deducted from or not added to Consolidated Net Income of Holdings in
calculating Consolidated EBITDA of Holdings to the extent either (i) such items
represented cash received by Holdings or any Restricted Subsidiary or (ii) does
not represent cash paid by Holdings or any Restricted Subsidiary, in the case of
each of the foregoing clauses, determined on a consolidated basis during such
fiscal year.

“Exchange Act” shall mean the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder.

“Exchange Rate” shall mean, on any day, with respect to any currency other than
Dollars, the noon buying rate in New York City for such currency on such date
for cable transfers as certified for customs purposes by the Federal Reserve
Bank of New York.

“Excluded Account” shall mean (a) a  deposit account of Holdings or any other
Credit Party with a principal balance that does not exceed at any time,  or has
not at any time exceeded within the past 12 months, $250,000 and (b) that
certain deposit account maintained with JPMorgan Chase Bank in Houston, Texas
(reference Endeavour Operating CO 010 General – Enertia) so long as the
principal balance of such account does not exceed $250,000, until the principal
balance of such account on any day exceeds $250,000.

 “Excluded Asset” shall mean, collectively, (a) any Indenture Collateral,  (b)
Oil and Gas Properties owned by Holdings or any of its Restricted Subsidiaries
located in North America to the extent that no Proved Reserves are attributable
thereto, (c) all Oil and Gas Properties owned by  Holdings or any of its
Restricted Subsidiaries located in North America to which Proved Reserves are
attributed to the extent that the aggregate PV-10 Value of all Proved Reserves
attributable thereto is less than $20,000,000, and (d) any individual Oil and
Gas Property owned by Holdings or any of its Restricted Subsidiaries located in
North America to the extent that the PV-10 Value of all Proved Reserves
attributable thereto is less than $1,500,000.

“Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the guaranty by such
Guarantor of, or the grant by such Guarantor of a security interest or lien to
secure, or the provision by such Guarantor of other support of, such Swap
Obligation is or becomes illegal under the Commodity Exchange Act by virtue of
such Guarantor’s failure for any reason to constitute an Eligible Contract
Participant at the time such guaranty, grant of security interest or lien or
provision of support of, such Swap Obligation becomes effective. If a Swap
Obligation arises under a master agreement governing more than one Swap, such
exclusion shall apply only to the portion of such Swap Obligation that is
attributable to Swaps for which such guaranty, grant of security interest or
lien to secure or provision of other support is or becomes illegal.

20

--------------------------------------------------------------------------------

 

 

“Excluded Taxes”  shall mean any of the following Taxes imposed on or with
respect to a Recipient or required to be withheld or deducted from a payment to
a Recipient, (a) Taxes imposed on or measured by net income (however
denominated), franchise Taxes, and branch profits Taxes, in each case,
(i) imposed as a result of such Recipient being organized under the laws of, or
having its principal office or, in the case of any Lender, its applicable
lending office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof), (ii) that are Other Connection Taxes or (iii) that are
imposed under the laws of the Netherlands to the extent such Taxes become
payable as a result of such Recipient having a substantial interest
(aanmerkelijk belang) in a Dutch Borrower as laid down in the Netherlands Income
Tax Act 2001 (Wet inkomstenbelasting 2001), (b) Taxes attributable to such
Recipient’s failure to comply with Section 2.20(e), (c) any United States
federal backup withholding Taxes, and (d) any U.S. federal withholding Taxes
imposed under FATCA.

“Existing Credit Agreement” shall mean that certain Credit Agreement (as
amended, supplemented or otherwise modified), dated as of April 12, 2012, by and
among Holdings, EEUK, as the borrower, MC Admin Co LLC, as administrative agent,
and the lenders party thereto.

“Existing Indebtedness” shall mean the aggregate principal amount of
Indebtedness of Holdings and its Restricted Subsidiaries in existence on the
date hereof and specified on Schedule 3.20 (other than the Indebtedness
referenced in Section 4.01(k)), including the 5.5% Convertible Notes, the
Indenture Notes, the 11.5% Convertible Bonds and Indebtedness under the Existing
Credit Agreement, until such amounts are repaid.

“Existing LC Procurement Agreements” shall mean, collectively, (a) that certain
Reimbursement Agreement (as amended, supplemented or otherwise modified), dated
May 31, 2012 by and among, Holdings, EEUK, New Pearl S.à.r.l. and Cyan Partners,
LP, and (b) that certain LC Procurement Agreement, dated January 9, 2013 among,
inter alia, EEUK and Max Participations II S.à.r.l.

“Existing Production Payments” shall mean (a) the Production Payment over
interests in United Kingdom Production Licence P.213 (Block 16/26a A-ALBA) (the
Alba Field) and Seaward Production Licence P.255 (Blocks 22/6c A and 22/6s A)
(the Bacchus Field) granted to Cidoval S.à.r.l. pursuant to that certain Deed of
Grant of a Production Payment in respect of United Kingdom Continental Shelf
Seaward Production Licence P.213 (Block 16/26a A-ALBA) and Seaward Production
Licence P.255 (Blocks 22/6c A and 22/6s A); and (b) the Production Payment over
interests in United Kingdom Seaward Production Licence P.226 for Block 15/27
Area E and United Kingdom Seaward Production Licence P.1615 for Block 15/26c
(including any other licence issued in substitution or partial substitution
thereof) granted pursuant to that certain Deed of Grant of a Production Payment
in respect of United Kingdom Seaward Production Licence P.226 for Block 15/27
Area E and United Kingdom Seaward Production Licence P.1615 for Block 15/26c
(including any other licence issued in substitution or partial substitution
thereof).

“Facility” shall mean the Initial Loans or a given Class of Other Term Loans, as
the context may require.

“FATCA”  shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or
future regulations or official interpretations thereof and any agreements
entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental
agreement entered into in connection with the implementation of

21

--------------------------------------------------------------------------------

 

 

such Sections of the Code and any fiscal or regulatory legislation, rules or
practices adopted pursuant to such intergovernmental agreement.

“Fair Market Value” shall mean, with respect to any asset or property, the sale
value that would be obtained in an arm’s-length free market transaction between
an informed and willing seller under no compulsion to sell and an unaffiliated
informed and willing buyer under no compulsion to buy, determined on the date of
contractually agreeing to such sale, or in circumstances in which Holdings or a
Restricted Subsidiary grants a third party the right to purchase an asset, the
date of such grant. Fair Market Value will be determined in good faith by the
Board of Directors of Holdings in the case of amounts of $20,000,000 or more and
otherwise by the principal financial or accounting officer of Holdings acting in
good faith.

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding 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 the day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

“Fees” shall mean the fees payable to the Administrative Agent, the Arranger or
any other Person in connection herewith set forth in any separate writing
between any Credit Party and either Agent or the Arranger hereunder.

“Financial Officer” of any Person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such Person.

“First Priority Notes” shall mean the 12% First Priority Notes due 2018 issued
pursuant to the First Priority Notes Indenture, including any such 12% First
Priority Notes issued in the exchange offer as contemplated in the First
Priority Notes Indenture.

“First Priority Notes Indenture” shall mean that certain indenture, dated as of
February 23, 2012, among Holdings, the guarantors party thereto, and Wells Fargo
Bank, National Association, as collateral agent and trustee.

“First-Tier Foreign Subsidiary” shall mean any Foreign Subsidiary the Equity
Interests in which are owned directly by (a) Holdings or (b) a Domestic
Subsidiary that is not a direct or indirect Subsidiary of a Foreign Subsidiary.

“Fixed Charge Coverage Ratio” shall mean with respect to any specified Person
for any four-quarter reference period, the ratio of the Consolidated EBITDA of
such Person for such period to the Fixed Charges of such Person for such period.
In the event that the specified Person or any of its Restricted Subsidiaries
incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise
discharges any Indebtedness (other than ordinary working capital borrowings) or
issues, repurchases or redeems preferred stock subsequent to the commencement of
the applicable four-quarter reference period and on or prior to the Calculation
Date, then the Fixed Charge Coverage Ratio will be calculated giving pro forma
effect to such incurrence, assumption, guarantee, repayment, repurchase,
redemption, defeasance or other discharge of Indebtedness, or such issuance,
repurchase or redemption of preferred stock, and the use of the proceeds
therefrom, as if the same had occurred at the beginning of the applicable
four-quarter reference period.  In addition, calculation of the Fixed Charge
Coverage Ratio shall give effect to all Pro Forma Adjustments.

22

--------------------------------------------------------------------------------

 

 

“Fixed Charges” shall mean, with respect to any specified Person for any period,
the sum, without duplication, of:

(1)     the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (excluding (i) any
interest attributable to Dollar-Denominated Production Payments, (ii) write-off
of deferred financing costs and (iii) accretion of interest charges on future
plugging and abandonment obligations, future retirement benefits and other
obligations that do not constitute Indebtedness; but including, without
limitation, (a) amortization of debt issuance costs and accretion and
amortization of original issue discount (except with respect to any 11.5%
Convertible Bonds outstanding on the date hereof), (b) non-cash interest
payments, (c) the interest component of any deferred payment obligations (other
than that attributable to any Commodity Hedging Agreement), (d) the interest
component of all payments associated with Capital Lease Obligations, (e) imputed
interest with respect to Attributable Debt, and (f) commissions, discounts and
other fees and charges incurred in respect of letters of credit or bankers’
acceptance financings), and net of the effect of all payments made or received
pursuant to Interest Rate Hedging Agreements; plus

(2)     the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus

(3)     any interest expense on Indebtedness of another Person that is
guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such guarantee or Lien is called upon; plus

(4)     all dividends on any Disqualified Stock of such Person or any
Disqualified Stock or series of preferred securities of any of its Restricted
Subsidiaries, whether paid or accrued and whether or not in cash, other than
dividends on Equity Interests payable solely in Equity Interests of Holdings
(other than Disqualified Stock) or to Holdings or a Restricted Subsidiary of
Holdings,

in each case, on a consolidated basis and in accordance with GAAP.

“Foreign Subsidiary” shall mean any Restricted Subsidiary of Holdings that was
not formed under the laws of the United States or any State thereof or the
District of Columbia.

“GAAP” shall mean generally accepted accounting principles in the United States,
which are in effect on the date of this Agreement.

“Governmental Authority” shall mean the government of the United Kingdom, the
United States, the Netherlands, the European Union and any other nation or any
political subdivision thereof, whether state, provincial or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Granting Lender” shall have the meaning provided in Section 9.04(i).

“Guarantors” shall mean Holdings and the Subsidiary Guarantors.

“Hazardous Materials” shall mean any waste or other substance that is listed,
defined, designated or classified as, or otherwise regulated as, hazardous or
toxic or a pollutant or contaminant under or pursuant to any Environmental Law,
including any petroleum, Hydrocarbons and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.

23

--------------------------------------------------------------------------------

 

 

“Hedging Agreement” shall mean any Commodity Hedging Agreement, Interest Rate
Hedging Agreement or foreign currency exchange agreement or other currency
exchange rate hedging agreement.

“Holdings” shall have the meaning provided in the preamble to this Agreement.

“Hydrocarbons” shall mean oil, gas, casinghead gas, condensate, distillate,
liquid hydrocarbons, gaseous hydrocarbons, all products directly or indirectly
refined, separated, settled and dehydrated therefrom, including kerosene,
liquefied petroleum gas, refined lubricating oils, diesel fuel, drip gasoline,
natural gasoline, helium, sulfur and all other minerals.

“Hydrocarbon Interests” shall mean all rights, titles, interests and estates now
owned or hereafter acquired in and to oil, gas and mineral leases, leasehold
interests, production licences in the North Sea and other licenses or other
liquid or gaseous hydrocarbon licenses, leases, fee mineral interests, term
mineral interests, subleases, farm-outs, royalties, overriding royalty and
royalty interests, non-consent interests arising out of or pursuant to Oil and
Gas Contracts, net profit interests, net revenue interests, oil payments,
production payments, production payment interests and similar interests and
estates, including all reserved or residual interest of whatever nature and all
reversionary or carried interests relating to any of the foregoing.

“Immaterial Subsidiary”  shall mean any Restricted Subsidiary that did not, as
of the last day of the most recently ended four full fiscal quarters of Holdings
for which internal financial statements are available, have assets (for this
purpose, determined exclusive of intercompany receivables) with a book value in
excess of 2.5% of the consolidated total assets of Holdings and its Restricted
Subsidiaries; provided, that if at any time the aggregate amount of consolidated
total assets attributable to Immaterial Subsidiaries would otherwise exceed 10%
of the consolidated total assets of Holdings and its Restricted Subsidiaries,
then Restricted Subsidiaries that would otherwise constitute Immaterial
Subsidiaries pursuant to this definition (without giving effect to this proviso)
shall be deemed not to constitute Immaterial Subsidiaries to the extent
necessary so that the percentage limitation in this proviso is not exceeded. For
purposes of calculations of the book value of assets of a Restricted Subsidiary
pursuant to this definition (i) the value of the loan evidenced by that certain
revolving loan facility agreement dated January 23, 2008 (as amended,
supplemented or modified from time to time) between EIH and Endeavour Energy
Luxembourg S.à r.l., and (ii) the value of other loans and receivables in an
aggregate amount not in excess of $5,000,000 owed to such Restricted Subsidiary
by Holdings or any other Subsidiary of Holdings, in each case shall be
disregarded. Notwithstanding anything to the contrary above in this definition,
in no event shall an Indenture Guarantor be considered an Immaterial Subsidiary
for the purposes of this Agreement.

“Incremental Term Borrowing” shall mean a Borrowing comprised of Incremental
Term Loans.

“Incremental Term Lender” shall mean a Lender with an Incremental Term Loan
Commitment or an outstanding Incremental Term Loan.

“Incremental Term Loan Amount” shall mean, at any time, an amount equal to
(a)(i) $25,000,000 or (ii) if the Credit Parties' pro forma Consolidated
Leverage Ratio at such time does not exceed the Credit Parties' Consolidated
Leverage Ratio as of December 31, 2013, $50,000,000 (inclusive of amounts under
(i) above) minus (b) the aggregate amount of all Incremental Term Loan
Commitments established prior to such time pursuant to Section 2.23, minus (c)
the aggregate amount of all Term B Incremental Commitments.

24

--------------------------------------------------------------------------------

 

 

“Incremental Term Loan Assumption Agreement” shall mean an Incremental Term Loan
Assumption Agreement among, and in form and substance reasonably satisfactory
to, the Borrowers, the Administrative Agent and one or more Incremental Term
Lenders.

“Incremental Term Loan Commitment” shall mean the commitment of any Lender,
established pursuant to Section 2.23, to make Incremental Term Loans to the
Borrowers.

“Incremental Term Loan Maturity Date” shall mean the final maturity date of any
Incremental Term Loan, as set forth in the applicable Incremental Term Loan
Assumption Agreement.

“Incremental Term Loan Repayment Dates” shall mean the dates scheduled for the
repayment of principal of any Incremental Term Loan, as set forth in the
applicable Incremental Term Loan Assumption Agreement.

“Incremental Term Loans” shall mean Loans made by one or more Lenders to the
Borrowers pursuant to Section 2.23.  Incremental Term Loans may be made in the
form of additional Loans in the same Facility or, to the extent permitted by
Section 2.23 and provided for in the relevant Incremental Term Loan Assumption
Agreement, Other Term Loans.    Unless the context shall otherwise require,
Incremental Term Loans shall constitute “Loans”.

“Indebtedness” shall mean, with respect to any specified Person:

(1)     any indebtedness of such Person, whether or not contingent, in respect
of borrowed money;

(2)     all obligations evidenced by bonds, notes, debentures or similar
instruments;

(3)     all obligations in respect of bankers’ acceptances or letters of credit
(including reimbursement obligations in respect thereof, except to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such obligation (which shall be deemed to be the principal amount thereof) is
satisfied within five Business Days of payment on such letter of credit);
provided that any such exempted obligations shall be unsecured or secured only
by Liens which would be permitted under clause (8) of the definition of
“Permitted Liens” if such obligations were to constitute Indebtedness;

(4)     all Capital Lease Obligations or Attributable Debt in respect of Sale
Leaseback Transactions;

(5)     all obligations representing the balance deferred and unpaid of the
purchase price of any property (other than (i) property purchased, and expense
accruals and deferred compensation items arising, in the ordinary course of
business, (ii) obligations payable solely in Capital Stock that is not
Disqualified Stock and (iii) purchase price holdbacks in respect of a portion of
the purchase price of an asset to satisfy warranty or other unperformed
obligations of the respective seller);

(6)     all obligations under Hedging Agreements;

(7)     with respect to Production Payments, any warranties or guarantees of
production or payment by such Person with respect to such Production Payment,
but excluding other contractual obligations of such Person with respect to such
Production Payment,

25

--------------------------------------------------------------------------------

 

 

if and to the extent any of the preceding items (other than letters of credit
and obligations under Hedging Agreements) would appear as a liability upon a
balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term “Indebtedness” includes all Indebtedness of other Persons
secured by a Lien on any asset of the specified Person, whether or not such
Indebtedness is assumed by the specified Person (provided that the amount of
such Indebtedness will be the lesser of (a) the Fair Market Value of such asset
at such date of determination and (b) the amount of such Indebtedness of such
other Person), and, to the extent not otherwise included, the guarantee by the
specified Person of any Indebtedness of any other Person.

Notwithstanding the foregoing, the following shall not constitute or be deemed
“Indebtedness”:

(i)     any indebtedness which has been defeased in accordance with GAAP or
defeased pursuant to the deposit of cash or Cash Equivalents (in an amount
sufficient to satisfy all such indebtedness obligations at maturity or
redemption, as applicable, and all payments of interest and premium, if any) in
a trust or account created or pledged for the sole benefit of the holders of
such indebtedness, and subject to no other Liens, and the other applicable terms
of the instrument governing such indebtedness;

(ii)     any obligation of a Person in respect of the balance deferred and
unpaid of the purchase price of any property in respect of a farm-in agreement
or similar arrangement whereby such Person agrees to pay all or a share of the
drilling, development, completion or other expenses of an exploratory or
development well or program (which agreement may be subject to a maximum payment
obligation, after which expenses are shared in accordance with the working or
participation interest therein or in accordance with the agreement of the
parties) or perform the drilling, completion or other operation on such well or
program in exchange for an ownership interest in an oil or gas property;

(iii)    any obligations arising from agreements of a Person providing for
indemnification, guarantees, adjustment of purchase price, holdbacks, contingent
payment obligations based on a final financial statement or performance of
acquired or disposed of assets or similar obligations (other than guarantees of
Indebtedness), in each case, incurred or assumed by such Person in connection
with the acquisition or disposition of assets (including through mergers,
consolidations or otherwise);

(iv)    subject to clause (7) above, any Dollar-Denominated Production Payments
or Volumetric Production Payments;

(v)     any liability arising under a declaration of joint and several liability
(hoofdelijke aansprakelijkheid) as referred to in Article 2:403 of the Dutch
Civil Code; and

(vi)    any liability arising by operation of law as a result of the existence
of a fiscal unity (fiscale eenheid) of which a Dutch Obligor is a member.  

The amount (or principal amount) of any Indebtedness outstanding as of any date
will be:

26

--------------------------------------------------------------------------------

 

 

(1)     the accreted value of the Indebtedness, in the case of any Indebtedness
issued with original issue discount;

(2)     in the case of obligations under any Hedging Agreements, the termination
value of the agreement or arrangement giving rise to such obligations that would
be payable by such Person at such date; and

(3)     the principal amount of the Indebtedness, together with any interest on
the Indebtedness that is more than 30 days past due, in the case of any other
Indebtedness.

(4)     The amount of Indebtedness of any Person at any date will be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by or on account of any obligation of any
Credit Party under any Credit Document and (b) to the extent not otherwise
described in (a), Other Taxes.

“Indemnitee” shall have the meaning provided in Section 9.05(b).

“Indenture Collateral” shall mean (i) any Capital Stock and other Equity
Interests in any First-Tier Foreign Subsidiary and the certificates, if any,
representing such Equity Interests, and all dividends, distributions, return of
capital, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Equity Interests and all subscription warrants, rights or options issued
thereon or with respect thereto, (ii) any promissory notes or other Indebtedness
owed by any Foreign Subsidiary to Holdings or any Domestic Subsidiary of
Holdings and any other instruments or agreements evidencing such Indebtedness,
and all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Indebtedness, (iii) all proceeds of, income and other
payments (including, without limitation, dividends and distributions received)
now or hereafter due and payable with respect to, and supporting obligations
relating to, any of the assets described in preceding clauses (i) and (ii) and
(iv) any other assets not described above in this definition to the extent, but
only to the extent, a Lien is granted in such assets by Holdings or an Indenture
Guarantor for the benefit of the holders of the Indenture Notes pursuant to the
Indenture Security Documents as in effect on the date hereof.

“Indenture Documents” shall mean and include each of the documents, instruments
(including the Indenture Notes) and other agreements (including, without
limitation, the Indentures) relating to the issuance by Holdings of the
Indenture Notes, including, without limitation, the Indenture Security
Documents.  

“Indenture Guarantors” shall mean each of (a) the Restricted Subsidiaries of
Holdings executing the Indentures as initial Indenture Guarantors, (b) any other
Restricted Subsidiary of Holdings that executes a supplement to the Indentures
in accordance with the terms thereof and (c) the respective successors and
assigns of such Restricted Subsidiaries in each case until such time as any such
Restricted Subsidiary shall be released and relieved of its obligations pursuant
to the terms thereof.

“Indenture Notes” shall mean, collectively, the First Priority Notes and the
Second Priority Notes.

27

--------------------------------------------------------------------------------

 

 

“Indenture Obligations” shall mean all advances to, and debts, liabilities,
obligations, covenants and duties of, Holdings or any Indenture Guarantor
arising under the Indentures, the Indenture Notes and the other Indenture
Documents (including all principal, premium, interest, penalties, fees, charges,
charges, expenses, indemnifications, reimbursement obligations, damages,
guarantees, and other liabilities or amounts payable or arising thereunder),
whether direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against
Holdings or any Indenture Guarantor of any proceeding in bankruptcy or
insolvency law naming such Person as the debtor in such proceeding, regardless
of whether such interest and fees are allowed claims in such proceeding.

“Indenture Security Documents” shall mean all (i) Security Documents (as defined
in the First Priority Notes Indenture) and (ii) Security Documents (as defined
in the Second Priority Notes Indenture).

“Indentures” shall mean, collectively, the First Priority Notes Indenture and
the Second Priority Notes Indenture.

“Independent Engineering Firm” shall mean Netherland, Sewell & Associates, Inc.
and/or one or more independent petroleum engineering firms selected by the
Borrowers and reasonably acceptable to the Administrative Agent.

“Information” shall have the meaning provided in Section 9.16.

“Initial Loan” shall have the meaning provided in Section 2.01.

“Initial Reserve Report” shall mean the Reserve Report prepared by Netherland,
Sewell & Associations, Inc., as of December 31, 2012 with respect to the Oil and
Gas Properties of Holdings and its Restricted Subsidiaries.

“Insolvency Regulation” shall mean the Council Regulation (EC) No.1346/2000 29
May 2000 on Insolvency Proceedings

“Intercreditor Agreement” shall mean that certain Second Amended and Restated
Intercreditor Agreement, dated as of December 12, 2013, by and among Holdings,
EEUK, MC Admin Co LLC, Cidoval S.à r.l. and Sand Waves, S.A. and the joinder
agreement referred to in Section 4.01(o).

“Interest Coverage Ratio” shall mean, on any Calculation Date, the ratio of
(a) Consolidated EBITDA of Holdings for the period of four consecutive fiscal
quarters most recently ended on or prior to such Calculation Date to (b) Cash
Interest Expense of Holdings for such period, in each case after giving effect
to any applicable Pro Forma Adjustments.  For purposes of calculating the
Interest Coverage Ratio, in the event that Holdings or a Restricted Subsidiary
incurs, assumes, incurs a Contingent Obligation for, repays, repurchases,
redeems, defeases or otherwise discharges any Indebtedness (other than ordinary
working capital borrowings) subsequent to the commencement of the period for
which the Interest Coverage Ratio is being calculated and on or prior to the
applicable Calculation Date, then the Interest Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, Contingent Obligation,
repayment, repurchase, redemption, defeasance or other discharge of
Indebtedness, and the use of the proceeds therefrom, as if the same had occurred
at the beginning of the applicable four-quarter reference period.

28

--------------------------------------------------------------------------------

 

 

“Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last
Business Day of each March, June, September and December, and (b) with respect
to any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, each day
that would have been an Interest Payment Date had successive Interest Periods of
three months’ duration been applicable to such Borrowing.

“Interest Period” shall mean, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrowers may elect; provided,  however, that (a) 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, (b) any Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period and (c) no Interest Period for any Loan shall extend beyond
the Maturity Date or the Incremental Term Loan Maturity Date, as
applicable.  Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.  For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.

“Interest Rate Hedging Agreement” shall mean any interest rate swap agreement,
interest rate cap agreement, interest collar agreement or other interest rate
protection agreement, interest rate hedging arrangement or other similar
arrangement or arrangement.

 “Investments” shall mean, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans, advances or extensions of credit (including guarantees or similar
arrangements, but excluding (1) commission, travel and similar advances to
officers, directors, employees and consultants made in the ordinary course of
business and (2) advances to customers or suppliers in the ordinary course of
business that are recorded in accordance with GAAP as accounts receivable on the
balance sheet of the lender), or capital contributions, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities (excluding any interest in a crude oil or natural gas leasehold to
the extent constituting a security under Applicable Law), together with all
items that are or would be classified as investments on a balance sheet of such
Person prepared in accordance with GAAP. If Holdings or any Restricted
Subsidiary of Holdings sells or otherwise disposes of any Equity Interests of
any direct or indirect Restricted Subsidiary of Holdings such that, after giving
effect to any such sale or disposition, such Person is no longer a Restricted
Subsidiary of Holdings, Holdings will be deemed to have made an Investment on
the date of any such sale or disposition in an amount equal to the Fair Market
Value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of Section 6.01.
The acquisition by Holdings or any Subsidiary of Holdings of a Person that holds
an Investment in a third Person will be deemed to be an Investment made by
Holdings or such Subsidiary in such third Person in an amount equal to the Fair
Market Value of the Investment held by the acquired Person in such third Person
on the date of any such acquisition in an amount determined as provided in the
final paragraph of Section 6.01. Except as otherwise provided in this Agreement,
the amount of an Investment will be determined at the time the Investment is
made and without giving effect to subsequent changes in value or write-ups,
write-downs or write-offs with respect to such Investment.

29

--------------------------------------------------------------------------------

 

 

“Joint Venture” shall mean any Person that is not a direct or indirect
Subsidiary of Holdings in which Holdings or any of its Restricted Subsidiaries
makes any Investment.

“Judgment Currency” shall have the meaning provided in Section 9.20.

“LC Bank” shall mean Credit Suisse AG, London Branch, in its capacity as the
letter of credit issuing bank under the LC Issuance Agreement.

“LC Finco US” shall mean LC Finco US LLC, a Delaware limited liability company.

“LC Issuance Agreement” shall mean that certain LC Issuance Agreement, dated as
of the date hereof, between Credit Suisse AG, as letter of credit issuing bank,
and LuxCo in respect of the issuance of letters of credit.

“LC Procurement Agreement” shall mean that certain LC Procurement Agreement,
dated the date hereof, by and among Holdings, LuxCo, as payee, EEUK, as payer,
 and Credit Suisse, as collateral agent, as the same may be amended from time to
time as permitted hereunder.

“LC Procurement Guarantor” shall mean each Credit Party that has provided a LC
Procurement Guaranty pursuant to the terms of the LC Procurement Agreement.

“LC Procurement Guaranty” shall mean the guaranty by the LC Procurement
Guarantors of the obligations of EEUK under the LC Procurement Agreement.

“LC Procurement Documents” shall mean the LC Procurement Agreement and each LC
Procurement Guaranty, security agreement, English debenture, English charge over
shares, mortgage, deed, agreement or instrument executed, made or delivered in
connection therewith.

“LC Transactions” shall mean have the meaning provided to the term
“Transactions” in the LC Procurement Agreement.

“Leaseholds” of any Person shall mean all the right, title and interest of such
Person as lessee, sublessee or licensee in, to and under leases, subleases or
licenses of land, improvements and/or fixtures.

“Lenders” shall mean (a) the Persons listed on Schedule 2.01 (other than any
such Person that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any Eligible Assignee that has become a party hereto
pursuant to an Assignment and Acceptance.

“LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the commencement of such Interest Period by reference to the British
Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set
forth by any service selected by the Administrative Agent that has been
nominated by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying such rates) (or the successor thereto if
the British Bankers’ Association is no longer making a LIBO Rate available) for
a period equal to such Interest Period; provided that, to the extent that an
interest rate is not ascertainable pursuant to the foregoing provisions of this
definition, the “LIBO Rate” shall be the interest rate per annum determined by
the Administrative Agent to be the average of the rates per annum at which
deposits in Dollars are offered for such relevant Interest Period to major banks
in the London interbank market in

30

--------------------------------------------------------------------------------

 

 

London, England by the Administrative Agent at approximately 11:00 a.m. (London
time) on the date that is two Business Days prior to the beginning of such
Interest Period.

“Lien” shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under Applicable Law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the UCC (or equivalent statutes) of any jurisdiction other than a precautionary
financing statement respecting a lease not intended as a security agreement.

“Loans” shall have the meaning provided in Section 2.01(b).

“LuxCo” shall mean LC Finco S.à r.l., a private limited company (société à
responsabilité limitée) incorporated under the laws of the Grand Duchy of
Luxembourg , with its registered office at 40, Avenue Monterey, L-2163
Luxembourg, Grand Duchy of Luxembourg, having a share capital of $20,000 and in
the process of being registered with the Luxembourg Register of Commerce and
Companies.

“Margin Stock” shall have the meaning provided in Regulation U.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, property or financial condition of Holdings and its Restricted
Subsidiaries taken as a whole, (b) the rights or remedies of the Lenders, the
Administrative Agent or the Collateral Agent hereunder or under any other Credit
Document, (c) the ability of the Credit Parties, collectively, to perform their
obligations to the Lenders, the Administrative Agent or the Collateral Agent
hereunder or under any other Credit Document or (d) a material portion of the
Collateral.

“Maturity Date” shall mean the date which is the earlier of (a) November 30,
2017 and (b) 91 days prior to the maturity of those certain 5.5% Convertible
Notes and 11.5% Convertible Bonds, if such notes or bonds have not been
converted, cancelled or extinguished prior to such date or extended or
refinanced in full prior to such date with a resulting maturity date not earlier
than March 1, 2018.

“Maximum LC Procurement Obligation” shall mean, as of any date, the amount which
would be payable to LuxCo in Dollars on such date pursuant to Sections 3.04 and
3.05 if the Maximum LC Amount (as defined in the LC Procurement Agreement) was
reduced to zero on such date.

“Maximum Rate” shall have the meaning provided in Section 9.09.

“Minority Interest” shall mean the percentage interest represented by any
Capital Stock of a Restricted Subsidiary of Holdings that is not owned by
Holdings or a Restricted Subsidiary of Holdings.

“MNPI” shall have the meaning provided in the final paragraph of Section 5.01.

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

“Mortgages” shall mean the mortgages, leasehold mortgages, deeds of trust,
leasehold deeds of trust, deeds to secure debt, leasehold deeds to secure debt,
debentures, assignments of leases and rents and similar security instruments
delivered to the Collateral Agent, each in form

31

--------------------------------------------------------------------------------

 

 

and substance satisfactory to the Administrative Agent and Collateral Agent, as
the same may be amended, modified or supplemented from time to time.

“Multiemployer Plan” shall mean any multiemployer plan as defined in
Section 4001(a)(3) of ERISA, which is contributed to by (or to which there is an
obligation to contribute of) Holdings, any of its Subsidiaries and/or any ERISA
Affiliate, and each such plan for the five-year period immediately following the
latest date on which Holdings, any of its Subsidiaries and/or an ERISA Affiliate
contributed to or had an obligation to contribute to such plan.

“Net Proceeds” shall mean the aggregate cash proceeds received by Holdings or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of:

(a)     the direct costs relating to such Asset Sale, including, without
limitation, legal, accounting and investment banking fees, title and recording
tax expenses and sales commissions, and any relocation and severance expenses
and charges of personnel incurred as a result of the Asset Sale, including,
without limitation, the Agreement Value payable under any Hedging Agreement as a
result of such Asset Sale,  

(b)     taxes paid or payable or required to be accrued as a liability under
GAAP as a result of the Asset Sale, in each case, after taking into account any
available tax credits or deductions and any tax sharing arrangements,

(c)     amounts required to be applied to the repayment of Indebtedness (other
than the Obligations) secured by a Lien on the assets that were the subject of
such Asset Sale, or which must by its terms, or in order to obtain a necessary
consent to such Asset Sale or by Applicable Law, be repaid out of the proceeds
from such Asset Sale,

(d)     all distributions and other payments required to be made to Minority
Interest holders in Restricted Subsidiaries or Joint Ventures as a result of
such Asset Sale, and

(e)     any appropriate amounts to be set aside in any reserve established in
accordance with GAAP or any amount placed in escrow, in either case for
adjustment in respect of the sale price of such assets or for liabilities
associated with such Asset Sale and retained by Holdings or any of its
Restricted Subsidiaries until such time as such reserve is reversed or such
escrow arrangement is terminated, in which case Net Proceeds shall include only
the amount of the reserve so reversed or the amount returned to Holdings or its
Restricted Subsidiaries from such escrow arrangement, as the case may be.

“Net Working Capital” shall mean (a) all current assets of Holdings and its
Restricted Subsidiaries except current assets from commodity price risk
management activities arising in the ordinary course of business, less (b) all
current liabilities of Holdings and its Restricted Subsidiaries, except
(i) current liabilities included in Indebtedness, (ii) current liabilities
associated with asset retirement obligations relating to Oil and Gas Properties
and (iii) any current liabilities from commodity price risk management
activities arising in the ordinary course of business, in each case as set forth
in the consolidated financial statements of Holdings prepared in accordance with
GAAP (excluding any adjustments made pursuant to FASB ASC Topic 815,
“Derivatives and Hedging”); provided that, for purposes of calculating Excess
Cash Flow, increases or decreases in Net Working Capital shall be calculated
without regard to any changes in current assets or current liabilities as a
result of (a) any reclassification in accordance

32

--------------------------------------------------------------------------------

 

 

with GAAP of assets or liabilities, as applicable, between current and
noncurrent or (b) the effects of purchase accounting.

“Non-Consenting Lender” shall mean any Lender that does not approve any consent,
waiver or amendment that (a) requires the approval of all affected Lenders in
accordance with the terms of Section 9.08(b) and (b) has been approved by the
Required Lenders.

“Non-Defaulting Lender” shall mean, at any time, each Lender that is not a
Defaulting Lender at such time.

“Non-Guarantor Subsidiary” shall mean each Subsidiary of Holdings (other than
the Borrowers) that is not a Subsidiary Guarantor.

“Non-Public Lender” shall mean (i) until the implementation of CRD IV into Dutch
law: (x) an entity that provides repayable funds to EIH for a minimum amount of
EUR 100,000 (or its equivalent in another currency), and (y) to the extent the
amount of €100,000 (or its equivalent in another currency) does not result in
such entity not qualifying as forming part of the public, such other amount or
such criterion as a result of which such entity shall qualify as not forming
part of the public, (ii) following implementation of CRD IV into Dutch law, but
prior to the publication of any interpretation of "public" by the relevant
authority/ies: (x) or (y) as set out under (i) above, and (iii) following the
publication of any interpretation of "public" by the relevant authority/ies:
such amount or such criterion as a result of which such entity shall qualify as
not forming part of the public. 

“Non-Recourse Debt” shall mean Indebtedness:

(1)     as to which neither Holdings nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or indirectly
liable as a guarantor or otherwise, or (c) is the lender; and

(2)     no default with respect to which (including any rights that the holders
of the Indebtedness may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of any
other Indebtedness (other than the Obligations) of Holdings or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment of the Indebtedness to be accelerated or payable prior to its Stated
Maturity; and

(3)     the explicit terms of which provide there is no recourse against any of
the property or assets of Holdings or its Restricted Subsidiaries.

For purposes of determining compliance with Section 6.03, in the event that any
Non-Recourse Debt of any of Holdings’ Unrestricted Subsidiaries ceases to be
Non-Recourse Debt of such Unrestricted Subsidiary, such event will be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of Holdings.

“Non-U.S. Pension Plan” shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States by Holdings or any one or more of its
Subsidiaries primarily for the benefit of employees of Holdings or such
Subsidiaries residing outside the United States, which plan, fund or other
similar program provides, or results in, retirement income, a deferral of income
in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.

33

--------------------------------------------------------------------------------

 

 

“North Sea” shall mean, collectively, the Dutch Sector, the UK Sector and
surrounding areas of the North Sea, including, without limitation, any such
areas in Scottish or Norwegian waters.

“Note” shall have the meaning provided in the final paragraph of Section
2.04(e).

“Obligations”  shall mean (a) the Loans and all other amounts, obligations,
covenants and duties owing by the Borrowers to any of the Agents, the Lead
Arranger or any Lender pursuant to the terms of this Agreement or any other
Credit Document, together with the due and punctual performance of all other
obligations of the Borrowers under or pursuant to the terms of this Agreement or
the other Credit Documents and (b) all amounts and other obligations owing to
any Approved Hedge Counterparty pursuant to the terms of any Secured Hedging
Agreement, but excluding any additional transactions or confirmations entered
into thereunder after the date such Person ceases to be an Approved Hedge
Counterparty, in the case of each of clause (a) and clause (b), whether direct
or indirect (including those acquired by assumption), absolute or contingent,
due or to become due, now existing or hereafter arising, and including interest
and fees that accrue after the commencement by or against any Credit Party of
any proceeding under any Debtor Relief Law naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding whether on account of principal, interest, fees,
reimbursement obligations, indemnities, costs, expenses (including, all fees,
charges and disbursements of counsel to Agent or to any Lender that are required
to be paid by any Credit Party pursuant hereto) or otherwise; provided that
Excluded Swap Obligations shall not constitute “Obligations”.

“OID” shall have the meaning provided in Section 2.23(c).

“Oil and Gas Business” shall mean:

(1)     the acquisition, exploration, development, production, operation and
disposition of interests in crude oil, natural gas and other Hydrocarbon
properties;

(2)     the gathering, marketing, treating, processing, refining, storage,
distribution, selling and transporting of any production from such interests or
properties;

(3)     any business relating to exploration for or development, production,
treatment, processing, refining, storage, transportation or marketing of crude
oil, natural gas and other Hydrocarbons and products produced in association
therewith; and

(4)     any activity that is ancillary, complementary or incidental to or
necessary or appropriate for the activities described in clauses (1) through
(3) of this definition.

“Oil and Gas Contracts” shall mean all contracts, agreements, operating
agreements, farm-out or farm-in agreements, sharing agreements, mineral purchase
agreements, contracts for the purchase, exchange, transportation, processing or
sale of Hydrocarbons, rights-of-way, easements, surface leases, subleases,
equipment leases, permits, franchises, licenses, pooling or unitization
agreements, and unit or pooling designations and orders now or hereafter
affecting any of the Oil and Gas Properties (or related oil and gas gathering
assets) or Hydrocarbon Interests of Holdings and each of its Subsidiaries, or
which are useful or appropriate in drilling for, producing, treating, handling,
storing, transporting, or marketing oil, gas or other minerals produced from any
of the Oil and Gas Properties of Holdings and each of its Subsidiaries, as any
such contracts and agreements as may be amended, restated, modified, substituted
or supplemented from time to time.

34

--------------------------------------------------------------------------------

 

 

“Oil and Gas Properties” shall mean (a) Hydrocarbon Interests; (b) the
properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all currently existing or future rights arising under (i) unitization
agreements, orders or other arrangements, (ii) pooling orders, agreements or
other arrangements and (iii) declarations of pooled units and the units created
thereby (including all units created under orders, regulations and rules of any
Governmental Authority having jurisdiction) which may affect all or any portion
of the Hydrocarbon Interests; (d) all pipelines, gathering lines, compression
facilities, tanks and processing plants; (e) all interests held in royalty
trusts whether currently existing or hereafter created; (f) all Hydrocarbons in
and under and which may be produced, saved, processed or attributable to the
Hydrocarbon Interests, the lands covered thereby and all Hydrocarbons in
pipelines, gathering lines, tanks and processing plants and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to
the Hydrocarbon Interests; (g) all tenements, hereditaments, appurtenances,
interests and properties in any way appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests, and all rights, titles, interests and
estates described or referred to above (including (i) any and all Real Property,
now owned or hereafter acquired, leased or subleased or otherwise used or held
for use in connection with the operating, working or development of any such
Hydrocarbon Interests or property and (ii) any and all surface leases,
subleases, rights-of-way, easements and servitudes together with all additions,
substitutions, replacements, accessions and attachments to any and all of the
foregoing); (h) all production units, drilling and spacing units (and the
properties covered thereby) which may affect all or any portion of the other Oil
and Gas Properties and any units created by agreement or designation or under
orders, regulations, rules or other official acts of any Governmental Authority
having jurisdiction; and (i) all operating agreements, contracts and other
agreements, including production sharing contracts and agreements, which relate
to any of the Hydrocarbon Interests or the production, sale, purchase, exchange
or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests.

“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes
imposed as a result of a present or former connection between such Recipient and
the jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Credit Document, or sold or assigned an interest in any Loan or Credit
Document).

“Other Taxes”  shall mean all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Credit Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 2.21). 

“Other Term Loans” shall have the meaning provided in Section 2.23(a).

“Parallel Debt” shall have the meaning provided in Section 8.01.

“Participant Register” shall have the meaning provided in Section 9.04(f).

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.

“Permitted Acquisition Indebtedness” shall mean Indebtedness or Disqualified
Stock of Holdings or any of its Restricted Subsidiaries to the extent such
Indebtedness or Disqualified

35

--------------------------------------------------------------------------------

 

 

Stock was Indebtedness or Disqualified Stock of any other Person existing at the
time (a) such Person became a Restricted Subsidiary of Holdings, (b) such Person
was merged or consolidated with or into Holdings or any of its Restricted
Subsidiaries or (c) properties or assets of such Person were acquired by
Holdings or any of its Restricted Subsidiaries and such Indebtedness was assumed
in connection therewith (excluding any such Indebtedness that is repaid
contemporaneously with such event), provided that on the date such Person became
a Restricted Subsidiary of Holdings or the date such Person was merged or
consolidated with or into Holdings or any of its Restricted Subsidiaries, or on
the date of such property or asset acquisition, as applicable, either

(1)     immediately after giving effect to such transaction on a pro forma basis
as if the same had occurred at the beginning of the applicable four-quarter
period, Holdings or such Restricted Subsidiary, as applicable, would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 6.03, or

(2)     immediately after giving effect to such transaction on a pro forma basis
as if the same had occurred at the beginning of the applicable four-quarter
period, the Fixed Charge Coverage Ratio of Holdings would be equal to or greater
than the Fixed Charge Coverage Ratio of Holdings immediately prior to such
transaction.

“Permitted Business Investments” shall mean Investments made in the ordinary
course of, and of a nature that is or shall have become customary in, the Oil
and Gas Business, including investments or expenditures for actively exploring
for, acquiring, developing, producing, processing, gathering, marketing or
transporting Hydrocarbons through agreements, transactions, interests or
arrangements that permit one to share risk or costs, comply with regulatory
requirements regarding local ownership or satisfy other objectives customarily
achieved through the conduct of the Oil and Gas Business jointly with third
parties, including without limitation:

(1)     direct or indirect ownership of crude oil, natural gas, other related
Hydrocarbon properties or any interest therein, gathering, transportation,
processing, storage or related systems, or ancillary real property interests and
interests therein; and

(2)     the entry into operating agreements, joint ventures, processing
agreements, working interests, royalty interests, mineral leases, farm-in
agreements, farm-out agreements, development agreements, production sharing
agreements, area of mutual interest agreements, contracts for the sale,
transportation or exchange of crude oil and natural gas and related Hydrocarbons
and minerals, unitization agreements, pooling arrangements, joint bidding
agreements, service contracts, partnership agreements (whether general or
limited), or other similar or customary agreements, transactions, properties,
interests or arrangements, and Investments and expenditures in connection
therewith or pursuant thereto, in each case made or entered into in the ordinary
course of the Oil and Gas Business, excluding, however, Investments in
corporations and publicly-traded limited partnerships.

“Permitted Debt” shall have the meaning provided in Section 6.03.

“Permitted Intercompany Debt” shall have the meaning provided in Section
6.03(6).

 

“Permitted Investments” shall mean:

(1)     any Investment in Holdings or, subject to compliance with the Additional
Guarantor Requirement as of the date of such Investment, in a Restricted
Subsidiary of Holdings;

36

--------------------------------------------------------------------------------

 

 

(2)     any Investment in cash and Cash Equivalents;

(3)     subject to compliance with the Additional Guarantor Requirement as of
the date of such Investment, any Investment by Holdings or any Restricted
Subsidiary of Holdings in a Person, if as a result of such Investment:

(a)     such Person becomes a Restricted Subsidiary of Holdings; or

(b)     such Person is merged or consolidated with or into, or transfers or
conveys substantially all of its properties or assets to, or is liquidated into,
Holdings or a Restricted Subsidiary of Holdings;

(4)     any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with
Section 6.04;

(5)     any Investment in any Person solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Holdings;

(6)     any Investments received in compromise or resolution of, or upon
satisfaction of judgments with respect to, (a) obligations of trade creditors or
customers that were incurred in the ordinary course of business, including
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer, or (b) litigation,
arbitration or other disputes (including pursuant to any bankruptcy or
insolvency proceedings) with Persons who are not Affiliates;

(7)     Hedging Agreements permitted under this Agreement;

(8)     guarantees by Holdings or any of its Restricted Subsidiaries of
operating leases (other than Capital Lease Obligations) or of other obligations
that do not constitute Indebtedness, in each case entered into by Holdings or
any Restricted Subsidiary of Holdings in the ordinary course of business or
otherwise customary in the Oil and Gas Business;

(9)     Permitted Business Investments (including any Permitted Business
Investment made as the result of the receipt of non-cash consideration pursuant
to clause (8) of the items deemed not to be Asset Sales under the definition of
“Asset Sale”);

(10)    Investments that are in existence on the date of this Agreement;

(11)    bid, performance, surety and similar bonds (other than with respect to
Indebtedness) and lease, utility, tax and workers’ compensation, performance and
other similar deposits and prepaid expenses made in the ordinary course of
business by Holdings or any of its Restricted Subsidiaries and necessary or
appropriate in connection with their operations;

(12)    loans or advances to officers, directors, employees or consultants made
in the ordinary course of business or otherwise customary in the Oil and Gas
Business and otherwise in compliance with Section 6.05 of this Agreement;

(13)    Investments of a Restricted Subsidiary acquired after the date hereof or
of any entity merged into or consolidated with Holdings or a Restricted
Subsidiary in accordance with Section 6.09 of this Agreement, to the extent that
such Investments were not made in contemplation of or in connection with such
acquisition, merger or consolidation and were in existence on the date of such
acquisition, merger or consolidation;

37

--------------------------------------------------------------------------------

 

 

(14)    Investments received as a result of a foreclosure by, or other transfer
of title to, Holdings or any of its Restricted Subsidiaries with respect to any
secured Investment in default; and

(15)    subject to compliance with the Additional Guarantor Requirement as of
the date of such Investment, other Investments (but excluding repurchases of or
other Investments in the Indenture Notes or Unsecured Notes) having an aggregate
Fair Market Value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (15) that are at the time
outstanding, not to exceed the greater of $35,000,000 and 3.0% of Holdings’
Adjusted Consolidated Net Tangible Assets determined at the time of such
Investment (after giving effect to any dividends, interest payments, return of
capital and subsequent reduction in the amount of any Investment made pursuant
to this clause (15) as a result of the repayment or other disposition thereof,
in an amount not to exceed the amount of such Investments previously made
pursuant to this clause (15)); provided, however, that (a) if any Investment
pursuant to this clause (15) is made in any Person that is not a Restricted
Subsidiary of Holdings at the date of the making of such Investment and such
Person becomes a Restricted Subsidiary of Holdings after such date, such
Investment shall, subject to compliance with the Additional Guarantor
Requirement, thereafter be deemed to have been made pursuant to clause (1) above
and shall cease to have been made pursuant to this clause (15) for so long as
such Person continues to be a Restricted Subsidiary and (b) with respect to any
Investment, Holdings may, in its sole discretion, allocate all or any portion of
any Investment and later re-allocate all or any portion of any Investment to one
or more of the above clauses (1) through (15) so that the entire Investment
would be a Permitted Investment.

“Permitted Liens” shall mean:

(1)     Liens created in favor of the Secured Parties by or pursuant to this
Agreement, the Security Documents, the LC Procurement Agreement and the Security
Documents (as defined in the LC Procurement Agreement);  

(2)     Liens in favor of any Credit Party (other than Liens securing
intercompany Indebtedness);  

(3)     Liens on any asset or property of a Person existing at the time such
Person is merged with or into or consolidated with Holdings or any Restricted
Subsidiary of Holdings, provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
properties or assets other than those of the Person merged into or consolidated
with Holdings or the Restricted Subsidiary;

(4)     Liens on any asset or property existing at the time of acquisition of
the asset or property by Holdings or any Restricted Subsidiary of Holdings,
provided that such Liens were in existence prior to the contemplation of such
acquisition and do not extend to other assets or properties of Holdings or any
Restricted Subsidiary (other than any asset or property affixed or appurtenant
thereto);

(5)     any interest or title of a lessor to the property subject to a Capital
Lease Obligation;

(6)     Liens on any asset or property acquired, constructed or improved by
Holdings or any of its Restricted Subsidiaries in the ordinary course of
business; provided that (a) such Liens are in favor of the seller of such asset
or property, in favor of the Person or Persons developing, constructing,
repairing or improving such asset or property, or in favor of the Person or
Persons

38

--------------------------------------------------------------------------------

 

 

that provided the funding for the acquisition, development, construction, repair
or improvement cost, as the case may be, of such asset or property, (b) such
Liens are created within 180 days after the acquisition, development,
construction, repair or improvement, (c) the aggregate principal amount of the
Indebtedness secured by such Liens is otherwise permitted to be incurred under
this Agreement and does not exceed the greater of (i) the cost of the asset or
property so acquired, constructed or improved plus related financing costs and
(ii) the Fair Market Value of the asset or property so acquired, constructed or
improved, measured at the date of such acquisition, or the date of completion of
such construction or improvement, and (d) such Liens are limited to the asset or
property so acquired, constructed or improved (including the proceeds thereof,
accessions thereto, upgrades thereof and improvements thereto);

(7)     Liens existing on the date of this Agreement, other than Liens securing
any Credit Facility or any guarantees thereof; 

(8)     Liens securing the performance of tenders, bids, statutory obligations,
appeal bonds, government contracts, bid, performance, surety or similar bonds or
other obligations of a like nature incurred in the ordinary course of business
of Holdings and its Restricted Subsidiaries and necessary or appropriate in
connection with their operations (or letters of credit supporting such
obligations); 

(9)     Liens on and pledges of the Equity Interests of any Unrestricted
Subsidiary or any Joint Venture owned by Holdings or any Restricted Subsidiary
of Holdings to the extent securing Non-Recourse Debt of such Unrestricted
Subsidiary or Joint Venture;

(10)    Liens in respect of the Existing Production Payments and any Refinancing
Production Payment;

(11)    Liens arising under oil and gas leases, operating agreements, joint
venture agreements, partnership agreements, oil and gas leases, farm-out
agreements, farm-in agreements, division orders, contracts for the sale,
transportation or exchange of crude oil and natural gas and related Hydrocarbons
and minerals, unitization and pooling declarations and agreements, area of
mutual interest agreements, land purchase option arrangements, participation and
development agreements, joint operating agreements, and other agreements
(including, without limitation, options, put and call arrangements, rights of
first offer, rights of first refusal, preferential rights, restrictions on
dispositions and the like and those of the type described in the definition of
“Permitted Business Investments” but excluding any Production Payments) arising
in the ordinary course of business of Holdings and its Restricted Subsidiaries
or that are customary in the Oil and Gas Business;

(12)    Liens upon specific items of inventory, receivables or other goods or
proceeds of Holdings or any of its Restricted Subsidiaries securing such
Person’s obligations in respect of bankers’ acceptances or receivables
securitizations issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory, receivables or other goods
or proceeds and permitted by Section 6.03;

(13)    Liens on the Indenture Collateral securing the Indenture Obligations;

(14)    Liens in favor of Approved Hedge Counterparties to secure payment and
performance of Secured Hedging Agreements of Holdings or any of its Restricted
Subsidiaries provided, if such Approved Hedge Counterparty is a Person defined
under clause (f) of the definition thereof, such Approved Hedge Counterparty
enters into an intercreditor agreement

39

--------------------------------------------------------------------------------

 

 

with the Administrative Agent, for the benefit of the Secured Parties, in form
and substance and with terms and subject to conditions acceptable to the
Administrative Agent;  

(15)    any attachment or judgment Lien that does not constitute an Event of
Default;

(16)    survey exceptions, easements or reservations of, or rights of others
for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to the use
of real property that were not incurred in connection with Indebtedness and that
do not in the aggregate materially adversely affect the value of said properties
or materially impair their use in the operation of the business of Holdings or
any of its Restricted Subsidiaries;

(17)    Liens arising solely by virtue of clause 24 or clause 25 of the general
terms and conditions (algemene bankvoorwaarden) of any member of the Dutch
Bankers’ Association (Nederlandse Vereniging van Banken) or any similar term
applied by a financial institution in the Netherlands pursuant to its general
terms and conditions, any statutory or common law provisions relating to
banker’s Liens, rights of set-off or similar rights and remedies as to deposit
accounts or other funds maintained or deposited with a depositary institution;
provided that (a) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by Holdings in excess
of those set forth by regulations promulgated by the Federal Reserve Board and
(b) such deposit account is not intended by Holdings or any of its Restricted
Subsidiaries to provide collateral to the depositary institution;

(18)    Liens arising from UCC financing statement filings regarding operating
leases entered into by Holdings and its Restricted Subsidiaries in the ordinary
course of business;

(19)    leases or subleases granted to others that do not materially interfere
with the ordinary course of business of Holdings and its Restricted
Subsidiaries, taken as a whole;

(20)    Liens arising from the deposit of funds or securities in trust for the
purpose of decreasing or defeasing Indebtedness so long as such deposit of funds
or securities and such decreasing or defeasing of Indebtedness are permitted
under Section 6.01 of this Agreement;

(21)    Liens arising from royalties, revenue interests, net revenue interests,
reversionary interests, preferential rights of purchase, working interests and
other similar interests in Hydrocarbons, all as ordinarily exist with respect to
properties and assets of Holdings and its Restricted Subsidiaries or otherwise
as are customary in the Oil and Gas Business other than any Production Payment;
 

(22)    Liens securing Indebtedness under the Existing Credit Agreement, the
Existing LC Procurement Agreements and guarantees thereof by Holdings and the
Subsidiary Guarantors; provided that such Liens shall not be permitted under
this clause (22) at any time after the Closing Date;

(23)    Liens securing Indebtedness not exceeding the greater of (a) $25,000,000
and (b) 2.0% of Holdings' Adjusted Consolidated Net Tangible Assets; provided
that such Liens are subordinated and junior to the Liens securing the
Obligations pursuant to an intercreditor agreement in form and substance
satisfactory to the Administrative Agent;

(24)    Liens securing the payment of Taxes that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as to which
adequate reserves have been established in accordance with GAAP;

40

--------------------------------------------------------------------------------

 

 

(25)    Liens securing any Permitted Refinancing Indebtedness permitted to be
incurred under this Agreement and incurred to refinance Indebtedness that was
previously so secured other than Indebtedness referred to in clause (1) above,
provided that any such Lien is limited to all or part of the same assets (plus
improvements, accessions, proceeds or dividends or distributions in respect
thereof) that secured (or, under the written arrangements under which the
original Lien arose, could secure) the Indebtedness being refinanced or is in
respect of assets that is the security for a Permitted Lien hereunder;  

(26)    Liens securing any Permitted Intercompany Debt between or among Credit
Parties; provided that (a) such Liens are expressly subordinated in all respects
to the prior payment in full in cash of all Obligations and Liens securing the
Obligations pursuant to a written subordination agreement satisfactory in form
and substance to the Administrative Agent and (b) such intercompany Indebtedness
is pledged to the Collateral Agent, for the benefit of the Secured Parties and
LuxCo, and to no other Person; and

(27)    Liens in favor of the LC Bank on any Payer Deposit.  

“Permitted Refinancing Indebtedness” shall mean any Indebtedness of Holdings or
any of its Restricted Subsidiaries or any Disqualified Stock of Holdings
incurred or issued in exchange for, or the net proceeds of which shall be used
to extend, refinance, renew, replace, defease, discharge, refund or otherwise
retire for value, in whole or in part, any other Indebtedness of Holdings or any
of its Restricted Subsidiaries (other than intercompany Indebtedness) or any
Disqualified Stock of Holdings (the “Refinanced Indebtedness”); provided that:

(1)     the principal amount, or in the case of Disqualified Stock, the amount
thereof as determined in accordance with the definition of Disqualified Stock,
of such Permitted Refinancing Indebtedness does not exceed the principal amount
of the Refinanced Indebtedness (plus all accrued (including, for the purposes of
defeasance, future accrued) and unpaid interest on, or accrued and unpaid
dividends on, the Refinanced Indebtedness, as the case may be, and the amount of
all fees, expenses and premiums incurred in connection therewith);

(2)     such Permitted Refinancing Indebtedness has a final maturity date or
redemption date, as applicable, later than or equal to the shorter of (A) 91
days following the later to occur of the Maturity Date and the Incremental Term
Loan Maturity Date or (B) the final maturity date or redemption date, as
applicable, of the Refinanced Indebtedness;

(3)     such Permitted Refinancing Indebtedness has a Weighted Average Life to
Maturity at the time such Permitted Refinancing Indebtedness is incurred equal
to or greater than the shorter of (A) the Weighted Average Life to Maturity of
the Refinanced Indebtedness and (B) the Weighted Average Life to Maturity that
would result if all payments of principal on the Refinanced Indebtedness that
were due on or after the date that is 91 days following the later to occur of
the Maturity Date and the Incremental Term Loan Maturity Date were instead due
on the later to occur of the Maturity Date and the Incremental Term Loan
Maturity Date;

(4)     if the Refinanced Indebtedness is contractually subordinated or
otherwise junior in right of payment to the Obligations, such Permitted
Refinancing Indebtedness is contractually subordinated or otherwise junior in
right of payment to the Obligations on terms at least as favorable to the
Lenders as those contained in the documentation governing the Refinanced
Indebtedness;

41

--------------------------------------------------------------------------------

 

 

(5)     such Permitted Refinancing Indebtedness is not incurred or guaranteed by
any Person that is not the issuer or otherwise an obligor with respect to the
Refinanced Indebtedness unless such Person is a Credit Party; and

except as otherwise provided in clause (3) of the second paragraph of
Section 6.01, the proceeds of the Permitted Refinancing Indebtedness shall be
used substantially concurrently with the incurrence thereof to extend,
refinance, renew, replace, defease, discharge, refund or otherwise retire the
Refinanced Indebtedness, unless the Refinanced Indebtedness is not then due and
is not redeemable or prepayable, defeasable or dischargeable, as the case may
be, at the option of the obligor thereof or is redeemable or prepayable or may
be defeased or discharged only with notice, in which case, such proceeds shall
be held in a segregated account of the obligor of the Refinanced Indebtedness
until the Refinanced Indebtedness becomes due or redeemable, prepayable or
subject to defeasance or discharge, as the case may be, or such notice period
lapses and then shall be used to extend, refinance, renew, replace, defease,
discharge, refund or otherwise retire the Refinanced Indebtedness; provided that
in any event the Refinanced Indebtedness shall be extended, refinanced, renewed,
replaced, defeased, discharged, refunded or otherwise retired within 60 days of
the incurrence of the Refinancing Indebtedness.

“Person” shall mean any natural person, corporation, business trust, joint
venture, association, company, joint stock company, unincorporated organization,
limited liability company, partnership, Governmental Authority or other entity.

“Plan” shall mean any pension plan as defined in Section 3(2) of ERISA, other
than a Multiemployer Plan, which is maintained or contributed to by (or to which
there is an obligation to contribute of) Holdings, any of its Subsidiaries or an
ERISA Affiliate, and each such plan for the five-year period immediately
following the latest date on which Holdings, any of its Subsidiaries or any
ERISA Affiliate maintained, contributed to or had an obligation to contribute to
such plan.

“Platform” shall have the meaning provided in Section 9.01.

“Prime Rate” shall mean the rate of interest per annum determined from time to
time by Credit Suisse as its prime rate in effect at its principal office in
New York City and notified to the Borrowers.  The prime rate is a rate set by
Credit Suisse based upon various factors including Credit Suisse’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such rate.

“Pro Forma Adjustments” shall mean, for purposes of calculating compliance with
any financial covenant or financial term:

(1)     acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers, consolidations or otherwise
(including acquisitions of assets used or useful in the Oil and Gas Business),
or any Person or any of its Restricted Subsidiaries acquired by the specified
Person or any of its Restricted Subsidiaries, and including in each case any
related financing transactions and increases in ownership of Restricted
Subsidiaries, during the applicable four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date, will be given
pro forma effect as if they had occurred on the first day of the four-quarter
reference period, and the Consolidated EBITDA for such reference period will be
calculated giving pro forma effect to any expense and cost reductions or
operating improvements that have occurred or are reasonably expected to occur,
in the reasonable judgment of a Financial Officer of Holdings and in accordance
with Regulation S-

42

--------------------------------------------------------------------------------

 

 

X promulgated under the Securities Act or any other regulation or policy of the
SEC related thereto;

(2)     the Consolidated EBITDA attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses (and ownership
interests therein) disposed of prior to the Calculation Date, will be excluded;

(3)     the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses (and ownership interests
therein) disposed of prior to the Calculation Date, will be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted Subsidiaries
following the Calculation Date;

(4)     any Person that is a Restricted Subsidiary of the specified Person on
the Calculation Date will be deemed to have been a Restricted Subsidiary of the
specified Person at all times during such four-quarter period;

(5)     any Person that is not a Restricted Subsidiary of the specified Person
on the Calculation Date will be deemed not to have been a Restricted Subsidiary
of the specified Person at any time during such four-quarter period; and

(6)     if any Indebtedness bears a floating rate of interest, the interest
expense on such Indebtedness will be calculated as if the rate in effect on the
Calculation Date had been the applicable rate for the entire period (taking into
account any obligations arising under any Hedging Agreement applicable to such
Indebtedness if such Hedging Agreement has a remaining term as at the
Calculation Date in excess of 12 months), but if the remaining term of such
Hedging Agreement is less than 12 months, then it shall only be taken into
account for that portion of the period equal to the remaining term thereof.

“Probable Reserves” shall mean the estimated quantities of crude oil,
condensate, natural gas and natural gas liquids that geological and engineering
data suggests are more likely than not to be recoverable with presently
available technology at an economically viable cost (as determined in accordance
with the guidelines of the Society of Petroleum Engineers).

“Process Agent” shall have the meaning provided in Section 9.19(a).

“Production Payments” shall mean, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.

“Projections” shall have the meaning provided in Section 3.07.

“Proved Reserves” shall mean those Oil and Gas Properties designated as “proved”
(in accordance with SEC definitions and regulations) in the Reserve Report most
recently delivered to the Administrative Agent pursuant to this Agreement.

“Proved Reserves Coverage Ratio” shall mean, as of any date of calculation, the
ratio of the PV‑10 Value as reflected in the most recently prepared Reserve
Report which has been delivered to the Administrative Agent (together with any
supplements, revisions or updates thereto after such date and to the date of
such calculation) to Total Funded Secured Debt as shown in Holdings’ financial
statements as of the end of the immediately preceding fiscal quarter.

“Public Lender” shall have the meaning provided in Section 9.01.

43

--------------------------------------------------------------------------------

 

 

“PV‑10 Value” shall mean, as of any date of determination, the present value of
future cash flows from Proved Reserves on Holdings’ and each of its Restricted
Subsidiaries’ Oil and Gas Properties as set forth in the most recent Reserve
Report delivered pursuant to Section 5.01(c), utilizing (a) in the case of any
Oil and Gas Properties located in the United States, the Three-Year Strip Price
for crude oil (WTI Cushing) and natural gas (Henry Hub), quoted on the New York
Mercantile Exchange (or its successor), (b) in the case of any Oil and Gas
Properties located in the North Sea, the Three-Year Strip Price for crude oil
(North Sea Brent) and natural gas (UK National Balancing Point), in each case
quoted on the International Petroleum Exchange (or its successor) and (c) in the
case of any Oil and Gas Properties located in any other jurisdiction, the
Three-Year Strip Price for crude oil and natural gas, in each case quoted on any
commodities exchange or other price quotation source generally recognized in the
oil and gas industry in such jurisdiction and reasonably acceptable to the
Administrative Agent, in the case of each of clauses (a), (b), and (c), as of
the date as of which the information set forth in such Reserve Report is
provided (as adjusted for basis differentials) and utilizing a 10% discount
rate. For purposes of calculating PV-10 Value, (i) any future cash flow
calculations set forth in any Reserve Report and made in any currency other than
Dollars shall be converted into Dollars based on the Exchange Rate on the date
as of which the information set forth in such Reserve Report is provided, (ii)
PV-10 Value shall be calculated net of the present value of future cash flows
attributable to reserves that are required to be delivered to third parties to
fully satisfy the obligations of such Person and its Restricted Subsidiaries
with respect to Production Payments on the schedules specified with respect
thereto, participation interests, overriding royalty interests, net profits
interests or other interests of third parties, pursuant to participation,
partnership, vendor financing or other agreements then in effect, or which
otherwise are required to be delivered to third parties and (iii) PV-10 Value
shall be calculated net of all associated plugging, abandoning and/or
decommissioning expense or liabilities, contingent or otherwise, of Holdings and
its Restricted Subsidiaries. 

“Real Property” of any Person shall mean all the right, title and interest of
such Person in and to land, improvements and fixtures, including Leaseholds.

“Recipient” shall mean (a) any Agent and (b) any Lender, as applicable.

“Refinancing Production Payment” shall mean a Production Payment granted, sold,
assigned or otherwise conveyed by any Credit Party for purposes of refinancing
an Existing Production Payment; provided such Refinancing Production Payment
does not have a notional principal amount greater than the notional principal
amount of the Existing Production Payment refinanced.

“Register” shall have the meaning provided in Section 9.04(d).

“Regulation D” shall mean Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

44

--------------------------------------------------------------------------------

 

 

“Related Fund” shall mean, with respect to any Lender that is a fund or
commingled investment vehicle that invests in bank loans, any other fund that
invests in bank loans and is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.

“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the respective partners, directors, trustees, officers,
employees, agents, administrators, managers, advisors and representatives of
such Person and such Person’s Affiliates.

“Release” shall mean actively or passively disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying,
pouring, seeping or migrating into or upon any land or water or air, or
otherwise entering into the environment.

“Repayment Date” shall have the meaning provided in Section 2.11.

“Reportable Event” shall mean an event described in Section 4043(c) of ERISA
with respect to a Plan that is subject to Title IV of ERISA other than those
events as to which the 30-day notice period is waived under PBGC Regulations
promulgated under Section 4043 of ERISA.

“Reporting Default” shall mean a Default arising from a failure to comply with
Section 5.01, subject to the applicable grace period set forth in Section 7.01
with regards to Section 5.01(f)(i).

“Required Lenders” shall mean, (a) prior to the Closing Date, Lenders having
Commitments representing more than 50% of the aggregate Commitments of all
Lenders as of such date and (b) on or after the Closing Date, Lenders having
Loans representing more than 50% of the sum of all Loans outstanding at such
time; provided that the Loans of any Defaulting Lender shall be disregarded in
the determination of the Required Lenders at any time.

“Reserve Report” shall mean (a) the Initial Reserve Report, (b) each annual
reserve report prepared by Holdings and audited by an Independent Engineering
Firm with respect to Oil and Gas Properties of Holdings and each of its
Restricted Subsidiaries as of December 31 of the year immediately preceding the
year in which such report is delivered pursuant to Section 5.01(c),  in form and
detail consistent with the Initial Reserve Report or otherwise reasonably
acceptable to the Administrative Agent and (c) each interim reserve report
prepared by Holdings, in form and detail reasonably acceptable to the
Administrative Agent;  it being understood and agreed that (i) each Reserve
Report will set forth Holdings’ and its Restricted Subsidiaries’ royalty
interests, working interest, net revenue interest, Proved Reserves (including
proved developed producing, proved developed non-producing and proved
undeveloped), Probable Reserves, a projection of the rate of production and
future net income, production and ad valorem taxes, operating expenses and
capital expenditures with respect thereto as of such date, in each case, with
respect to 100% of their Oil and Gas Properties, all in accordance with the
guidelines published by the SEC (but utilizing the pricing parameters set forth
in the definition of the term PV‑10 Value and, in the case of an annual Reserve
Report, in addition to such pricing parameters those specified in such SEC
guidelines) and utilizing such operating cost and other assumptions as proposed
by Holdings, (ii) Holdings will prepare each interim reserve report based on the
most recent annual Reserve Report, as adjusted for actual production, operating
costs, capital costs and net additions of Proved Reserves during the calendar
months of the respective year specified therein and (iii) each Reserve Report
prepared by Holdings shall be certified by the chief engineering officer of
Holdings as being accurate in all material respects.

45

--------------------------------------------------------------------------------

 

 

“Responsible Officer” of any Person shall mean any executive officer or
Financial Officer of such Person and any other officer or similar official
thereof responsible for the administration of the obligations of such Person and
with respect to EIH, its Board of Directors (or any other Person authorized to
represent EIH pursuant to a power of attorney),  in respect of this Agreement.

“Restricted Investment” shall mean any Investment other than a Permitted
Investment

“Restricted Payment” shall have the meaning provided in Section 6.01(e).

“Restricted Subsidiary” of a Person shall mean any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

“Returns” shall have the meaning provided in Section 3.09.

“S&P” shall mean Standard & Poor’s Ratings Services, or any successor thereto.

“Sale Leaseback Transaction” shall mean an arrangement relating to property now
owned or hereafter acquired whereby Holdings or a Restricted Subsidiary
transfers such property to a Person and Holdings or a Restricted Subsidiary
leases it from such Person.

“SEC” shall mean the Securities and Exchange Commission or any Governmental
Authority succeeding to any of its principal functions.

“Second Priority Notes” shall mean the 12% Second Priority Notes due 2018 issued
pursuant to the Second Priority Notes Indenture, including any such 12% Second
Priority Notes issued in the exchange offer contemplated in the Second Priority
Notes Indenture.

“Second Priority Notes Indenture” shall mean that certain indenture, dated as of
February 23, 2012, among Holdings, the guarantors party thereto, Wilmington
Trust, National Association, as trustee, and Wells Fargo Bank, National
Association, as collateral agent.

“Secured Hedging Agreement” shall mean any Hedging Agreement by or among
Holdings or any of its Restricted Subsidiaries and any Approved Hedge
Counterparty.

“Secured Parties” shall mean, collectively, the Administrative Agent, the
Collateral Agent, each Lender and any Approved Hedge Counterparty (to the
extent, and for so long as, the obligations in respect of Secured Hedging
Agreements constitute “Obligations” hereunder). 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

“Security Documents” shall mean the Mortgages, the Credit Party Guaranty, the
U.S. Security Agreement, the English Security Documents, the Deposit Account
Control Agreements, after the execution and delivery thereof, the Additional
Security Documents, and the other security agreements, mortgages and other
instruments and documents, including each that is executed and delivered
pursuant to any of the foregoing or pursuant to Section 5.12 or any other
Section of this Agreement.

“Series B Preferred Stock” shall mean Holdings’ Series B Preferred Stock with
the terms set forth in the Amended and Restated Certificate of Designation of
Series B Preferred Stock originally filed with the Nevada Secretary of State on
February 26, 2004.

46

--------------------------------------------------------------------------------

 

 

“SPV” shall have the meaning provided in Section 9.04(i).

“Stated Maturity” shall mean, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

“Statutory Reserves” shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch, Affiliate
or other fronting office making or holding a Loan) is subject for Eurocurrency
Liabilities (as defined in Regulation D).  Eurodollar Loans shall be deemed to
constitute Eurocurrency Liabilities (as defined in Regulation D) and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D.  Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.

“Sterling” means the lawful currency of the United Kingdom.

“Subject Party” shall have the meaning provided in Section 2.20(h)(i).

“Subordination Agreement” shall have the meaning provided in Section 4.01(k).

“Subsidiary” shall mean, with respect to any specified Person:

(1)     any corporation, association or other business entity (other than a
partnership or limited liability company) of which more than 50% of the total
voting power of Voting Stock is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and

(2)     any partnership (whether general or limited) or limited liability
company (a) the sole general partner or member of which is such Person or a
Subsidiary of such Person, or (b) if there is more than a single general partner
or member, either (x) the only managing general partners or managing members of
which are such Person or one or more Subsidiaries of such Person (or any
combination thereof) or (y) such Person owns or controls, directly or
indirectly, a majority of the outstanding general partner interests, member
interests or other Voting Stock of such partnership or limited liability
company, respectively.

“Subsidiary Guarantor” shall mean each Subsidiary of Holdings whether existing
on the date hereof or established, created or acquired after the date hereof,
that has executed and delivered the Credit Party Guaranty or has otherwise
become a party thereto by means of the execution and delivery of a joinder,
accession or similar agreement (in form and substance satisfactory to the
Administrative Agent) by such Subsidiary unless and until such time as the
respective Subsidiary is released from all of its obligations under the Credit
Party Guaranty in accordance with the terms and provisions thereof. The
Subsidiary Guarantors on the Closing Date are listed on Schedule 1.01(a).

“Successor Company” shall have the meaning provided in Section 6.09(a).

“Supplier” shall have the meaning provided in Section 2.20(h)(i).

47

--------------------------------------------------------------------------------

 

 

“Swap” shall mean any “swap” within the meaning of section 1a(47) of the
Commodity Exchange Act. 

“Swap Obligation” shall mean any obligation to pay or perform under any Swap,
whether as a party to such Swap or by providing any guarantee of or provision of
support for such Swap (and whether or not such obligation is an Obligation
hereunder).

“Synthetic Lease” shall mean, as to any Person, any lease (including leases that
may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) (a) that is accounted for as an operating lease under GAAP
and (b) in respect of which the lessee retains or obtains ownership of the
property so leased for income tax purposes, other than any such lease under
which such Person is the lessor.

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to
the capitalized amount of the remaining lease payments under any Synthetic Lease
that would appear on a balance sheet of such person in accordance with GAAP if
such obligations were accounted for as Capital Lease Obligations.

“Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“Term B Borrowers” shall mean LuxCo and LC Finco US.

“Term B Credit Agreement” shall mean that certain Credit Agreement, dated as of
the date hereof, among LuxCo and LC Finco US LLC, a Delaware limited liability
company, as co-borrowers, the lenders, Credit Suisse AG,  as administrative
agent and as collateral agent.

“Term B Commitments” shall have the meaning provided to the term “Commitment” as
defined in the Term B Credit Agreement.

“Term B Incremental Commitments” shall mean "Incremental Term Loan Commitments"
as defined in the Term B Credit Agreement. 

“Term B Loan” means any loan made under the Term B Credit Agreement.

“Term Loan Facility” shall mean, collectively, the Commitments and the Loans
made hereunder.

“Three-Year Strip Price” shall mean, as of any date of determination, (a) for
the 36-month period commencing with the month immediately following the month in
which the date of determination occurs, the monthly futures contract prices for
crude oil and natural gas for the 36 succeeding months as quoted on the
applicable commodities exchange or other price quotation source as contemplated
in the definition of “PV-10 Value” and (b) for periods after such 36-month
period, the average of such quoted prices for the period from and including the
25th month in such 36-month period through the 36th month in such period.

“Total Commitment” shall mean, at any time, the sum of the Commitments of each
of the Lenders at such time.

“Total Funded Debt” shall mean, at any time, all Indebtedness of the type
described in clauses (1), (2), (3), (4) and (5) of the definition of
“Indebtedness”.

48

--------------------------------------------------------------------------------

 

 

“Total Funded Secured Debt” shall mean, at any time, the Total Funded Debt of
Holdings and its Restricted Subsidiaries to the extent such Total Funded Debt is
secured by a Lien on the assets of Holdings and its Restricted Subsidiaries
(excluding any Indebtedness under the Indenture Notes to the extent secured only
by the Indenture Collateral as in effect on the date hereof).

“Transactions” shall mean, collectively, (a)  the execution, delivery and
performance by each Credit Party of the Credit Documents to which it is a party,
(b) the incurrence of Loans and the use of proceeds thereof,  (c) the execution,
delivery and performance by each Credit Party of the LC Procurement Documents to
which it is a party and (d) the payment of all fees and expenses paid or payable
by any Credit Party in connection with the foregoing.

“Treasury Rate” shall mean, as of any date of determination, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) that has become publicly
available at least two business days prior to the redemption date (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)).

“Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate
by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.  For purposes hereof, the term “Rate” shall mean the
Adjusted LIBO Rate and the Alternate Base Rate.

“UCC” shall mean the Uniform Commercial Code as from time to time in effect in
the relevant jurisdiction.

“UK Sector” shall mean the jurisdiction of the United Kingdom commonly referred
to as the UK Sector – North Sea.

“Unfunded Current Liability” of any Plan subject to Title IV of ERISA shall mean
the amount, if any, by which the value of the accumulated plan benefits under
such Plan determined on a plan termination basis in accordance with actuarial
assumptions at such time consistent with those prescribed by the PBGC for
purposes of Section 4044 of ERISA, exceeds the Fair Market Value of all plan
assets allocable to such liabilities under Title IV of ERISA (excluding any
accrued but unpaid contributions), but only to the extent such excess could
reasonably be expected to result in material liability to Holdings or a
Subsidiary.

“United Kingdom” and “UK” shall mean each of England, Wales, Northern Ireland
and Scotland, as the case may be, and shall include the U.K. Sector – North Sea.

“United States” and “U.S.” shall each mean the United States of America and any
of its territories (including U.S. federal waters in the Gulf of Mexico).

“Unrestricted Subsidiary” shall mean any Subsidiary of Holdings (including any
newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary
through merger or consolidation or investment therein), other than the
Borrowers, any parent company of the Borrowers or any Subsidiary owning
Collateral, that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent
that such Subsidiary:

(1)     has no Indebtedness other than Non-Recourse Debt owing to any Person
other than Holdings or any of its Restricted Subsidiaries;

49

--------------------------------------------------------------------------------

 

 

(2)     is not party to any agreement, contract, arrangement or understanding
with Holdings or any Restricted Subsidiary of Holdings unless (a) the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to Holdings or such Restricted Subsidiary than those that might be obtained at
the time from Persons who are not Affiliates of Holdings and (b) to the extent
that clause (a) is not satisfied, the excess value of such agreement, contract,
arrangement or understanding shall be deemed a Restricted Payment;

(3)     is a Person with respect to which neither Holdings nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe
for additional Equity Interests or (b) to maintain or preserve such Person’s
financial condition or to cause such Person to achieve any specified levels of
operating results;

(4)     has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Holdings or any of its Restricted Subsidiaries,
except to the extent such guarantee or credit support would be released upon
such designation;

(5)     does not (and none of its Subsidiaries) own any Capital Stock or
Indebtedness of or have any Investment in, or own or hold any Lien on any
property of, any other Subsidiary of Holdings that is not a Subsidiary of the
Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; and

(6)     either alone or in the aggregate with all other Unrestricted
Subsidiaries, does not own or operate all or substantially all of the
properties, assets or business of Holdings and its Subsidiaries;

provided, however, that items (1) through (6) shall not be deemed to prevent
Permitted Investments in Unrestricted Subsidiaries that are otherwise allowed
under this Agreement or to prevent an Unrestricted Subsidiary from providing a
guarantee of the Obligations.

Any Subsidiary of an Unrestricted Subsidiary shall also be an Unrestricted
Subsidiary.

Any designation of a Subsidiary of Holdings as an Unrestricted Subsidiary will
be evidenced to the Administrative Agent by filing with the Administrative Agent
a Board Resolution giving effect to such designation and a certificate of a
Responsible Officer of Holdings certifying that such designation complied with
the preceding conditions and was permitted by Section 6.01 in accordance with
Section 6.08. In the case of any designation by Holdings of a Person as an
Unrestricted Subsidiary on the first day that such Person is a Subsidiary of
Holdings in accordance with the provisions of this Agreement, such designation
shall be deemed to have occurred for all purposes of this Agreement
simultaneously with, and automatically upon, such Person becoming a Subsidiary.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it will thereafter cease to be an
Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of
such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of
Holdings as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 6.03, Holdings will be in default of such
covenant.

“Unsecured Notes” shall mean any senior unsecured Indebtedness of Holdings or
any other Credit Party evidenced by notes, debentures, bonds or other similar
securities or instruments, including, without limitation, under the 5.5%
Convertible Notes and the 11.5% Convertible Bonds.

50

--------------------------------------------------------------------------------

 

 

“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107‑56 (signed into law October 26, 2001)).

“U.S. Security Agreement” shall have the meaning provided in Section 4.01(h).

“VAT” shall mean (a) any tax imposed in compliance with the council directive of
28 November 2006 on the common system of value added tax (EC Directive
2006/112), and (b) any other tax of similar nature, whether imposed in a member
state of the European Union in substitution for, or levied in addition to such
tax referred to in clause (a), or elsewhere.

“Volumetric Production Payments” shall mean production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all related
undertakings and obligations.

“Voting Stock” of any Person as of any date shall mean the Capital Stock of such
Person that is at the time entitled (without regard to the occurrence of any
contingency) to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness
or Disqualified Stock at any date, the number of years obtained by dividing:

(1)     the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity or redemption, in
respect of the Indebtedness or Disqualified Stock, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by

(2)     the then outstanding aggregate principal amount of such Indebtedness or
Disqualified Stock.

“Withholding Agent” shall mean any Credit Party and the Administrative Agent.

“Yield Differential” shall have the meaning provided in Section 2.23(c).

SECTION 1.02     Terms Generally.  The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined.  Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation” except in
cases where such words are already expressed.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”.  Unless the
context requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and
permitted assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) any reference to any law or
regulation herein shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (v) the
words “asset” and “property” shall be construed as having the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.  All
references herein to Articles, Sections, Exhibits and Schedules shall be deemed

51

--------------------------------------------------------------------------------

 

 

references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect on the date hereof and
consistent with financial statements delivered pursuant to Section 3.05(a);
provided, however that, notwithstanding anything to the contrary herein, all
accounting or financial terms used herein shall be construed, and all financial
computations pursuant hereto shall be made, without giving effect to any
election under ASC 825 to value any Indebtedness or other liabilities of any
Credit Party at “fair value”, as defined therein.

 

SECTION 1.03     Pro Forma Calculations.  All pro forma calculations permitted
or required to be made by Holdings or any Subsidiary pursuant to this Agreement
shall include only those adjustments that have been certified by a Financial
Officer of Holdings as having been prepared in good faith based upon assumptions
that were believed to be reasonable at the time of preparation and, where
required calculated in accordance with Regulation S-X under the Exchange Act.

 

SECTION 1.04     Classification of Loans and Borrowings.  For purposes of this
Agreement, Loans may be classified by Type (e.g., a “Eurodollar
Loan”).  Borrowings also may be classified and referred to by Type (e.g., a
“Eurodollar Borrowing”).

 

SECTION 1.05     Joint and Several Obligations.  All obligations of the
Borrowers hereunder shall be joint and several.  Any notice, request, waiver,
consent or other action made, given or taken by either Borrower shall bind both
of the Borrowers.   

 

Article II
Term Loan Facility

 

SECTION 2.01     Commitments. 

 

(a)     Subject to the terms and conditions and relying upon the representations
and warranties herein set forth, each Lender agrees, severally and not jointly,
to make a term loan (an “Initial Loan”) to EIH on the Closing Date in
a principal amount not to exceed its Commitment. 

(b)     Subject to the terms and conditions hereof, if at any time any
prepayment is made of Term B Loans as a result of the release of any Cash
Collateral (as defined in the LC Procurement Agreement), EIH may, by written
notice to the Administrative Agent, elect to borrow additional term loans of an
aggregate principal amount equal to the aggregate principal amount of the
related prepayment on the Term B Loans (each an “Additional Term Loan”, and
together with Initial Loans, “Loans”); provided that (i) the proceeds of such
Additional Term Loans are advanced by EIH to EEUK as additional Permitted
Intercompany Debt, (ii) such release of Cash Collateral is not in connection
with a sale of the related assets, and (iii) no Default or Event of Default has
occurred and is continuing or would result therefrom.   The Borrowing of the
Additional Term Loans will occur concurrently with the prepayment on the Term B
Loans and each Lender will be obligated to fund its pro rata share of the
aggregate amount such Borrowing (not to exceed the portion of the prepayment of
the Term B Loans then repaid to such Lender or its Affiliates).  Each Lender
acknowledges and agrees that, as an administrative convenience, EIH may cause
the Cash Collateral to be released directly to EEUK but that each of the
prepayment of the Term B Loans, the advance of Additional Term Loans in an equal
aggregate principal amount and the funding of additional Permitted Intercompany
Debt in an equal aggregate principal amount shall be deemed to have occurred
nonetheless.  The

52

--------------------------------------------------------------------------------

 

 

obligation of each Lender to fund Additional Term Loans pursuant to this clause
(b) will be in addition to its Commitment.

(c)     Amounts paid or prepaid in respect of Loans may not be reborrowed.

SECTION 2.02     Loans.

 

(a)     Each Loan shall be made as part of a Borrowing consisting of Loans made
by the Lenders ratably in accordance with their applicable Commitments;
provided, however, that the failure of any Lender to make any Loan shall not in
itself relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender).  The
Loans comprising any Borrowing shall be in an aggregate principal amount that is
(i) an integral multiple of $1,000,000 and not less than $5,000,000 or
(ii) equal to the remaining available balance of the applicable Commitment,
 provided that the Initial Loans from any Lender to EIH shall at all times be
provided by a Lender that is a Non-Public Lender.

(b)     Subject to Sections 2.08, 2.10 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrowers may request
pursuant to Section 2.03.  Each Lender may at its option make any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrowers to repay such Loan in accordance with the terms of
this Agreement.  Borrowings of more than one Type may be outstanding at the same
time; provided,  however, that the Borrowers shall not be entitled to request
any Borrowing that, if made, would result in more than five Eurodollar
Borrowings outstanding hereunder at any time.  For purposes of the foregoing,
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.

(c)     Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in New York City as the Administrative Agent may designate not later
than 1:00 p.m., New York City time, and the Administrative Agent shall promptly
credit the amounts so received to an account designated by the Borrowers in the
applicable Borrowing Request or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met, return
the amounts so received to the respective Lenders.

(d)     Notwithstanding anything to the contrary contained herein (and without
affecting any other provisions hereof), the funded portion of each Loan to be
made on the Closing Date (i.e., the amount advanced to the Borrowers on the
Closing Date) shall be equal to 98.5% of the principal amount of such Loan (it
being agreed that the full principal amount of each such Loan shall be the
“initial” principal amount of such Loan and deemed outstanding on the Closing
Date and the Borrowers shall be obligated to repay 100% of the principal amount
of each such Loan as provided hereunder).

SECTION 2.03     Borrowing Procedure.  In order to request a Borrowing, the
Borrowers shall notify the Administrative Agent of such request by telephone
(a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon), New
York City time, three Business Days before a proposed Borrowing, and (b) in the
case of an ABR Borrowing, not later than 12:00 (noon), New York City time, one
Business Day before a proposed Borrowing.  Each such telephonic Borrowing
Request shall be irrevocable, and shall be confirmed promptly by hand delivery
or fax to the Administrative Agent of a written Borrowing Request and shall
specify the following information:  (i) whether such Borrowing is to be a
Eurodollar Borrowing or an ABR

53

--------------------------------------------------------------------------------

 

 

Borrowing (provided that, until the Administrative Agent shall have notified the
Borrowers that the primary syndication of the Commitments has been completed
(which notice shall be given as promptly as practicable and, in any event,
within 30 days after the Closing Date), the Borrowers shall not be permitted to
request a Eurodollar Borrowing with an Interest Period in excess of one month)
and, if applicable, whether such Borrowing is an Incremental Term Borrowing;
(ii) the date of such Borrowing (which shall be a Business Day); (iii) the
number and location of the account to which funds are to be disbursed; (iv) the
amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar
Borrowing, the Interest Period with respect thereto; provided, however, that,
notwithstanding any contrary specification in any Borrowing Request, each
requested Borrowing shall comply with the requirements set forth in
Section 2.02.  If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing.  If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrowers shall be deemed to have selected an Interest
Period of one month’s duration.  The Administrative Agent shall promptly advise
the applicable Lenders of any notice given pursuant to this Section 2.03 (and
the contents thereof), and of each Lender’s portion of the requested Borrowing.

 

SECTION 2.04     Evidence of Debt; Repayment of Loans.

 

(a)     The Borrowers hereby unconditionally promise to pay to the
Administrative Agent for the account of each Lender the principal amount of each
Loan of such Lender as provided in Section 2.11.

(b)     Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.

(c)     The Administrative Agent shall maintain accounts in which it will record
(i) the amount of each Loan made hereunder, the Type thereof and, if applicable,
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrowers or any Guarantor and each Lender’s share
thereof.

(d)     The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) above shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided,  however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrowers to repay the Loans in
accordance with their terms.

(e)     Any Lender may request that Loans made by it hereunder be evidenced by a
promissory note substantially in the form of Exhibit D (a “Note”).  In such
event, the Borrowers shall execute and deliver to such Lender a Note payable to
such Lender and its registered assigns and in a form and substance reasonably
acceptable to the Administrative Agent and the Borrower.  Notwithstanding any
other provision of this Agreement, in the event any Lender shall request and
receive such a Note, the interests represented by such Note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more notes payable to the payee named
therein or its registered assigns.

SECTION 2.05     Fees. The Borrowers agree to pay to the Administrative Agent
and the Arranger the fees separately agreed in writing between the Borrowers and
such Person at the

54

--------------------------------------------------------------------------------

 

 

times and in the amounts specified therein.  All fees shall be paid on the date
on which such fees are due and payable, in immediately available funds, to the
Administrative Agent for distribution to the parties entitled thereto.  Once
paid, none of the fees shall be refundable under any circumstances.

 

SECTION 2.06     Interest on Loans.

 

(a)     Subject to the provisions of Section 2.07, the Loans comprising each
ABR Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be, and calculated
from and including the date of such Borrowing to but excluding the date of
repayment thereof) at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.

(b)     Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days and calculated from and including
the date of such Borrowing to but excluding the date of repayment thereof) at a
rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin.

(c)     Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement.  The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.

SECTION 2.07     Default Interest.  If the Borrowers shall default in the
payment of any principal of or interest on any Loan or any other amount due
hereunder or under any other Credit Document, by acceleration or otherwise, then
until such defaulted amount shall have been paid in full, to the extent
permitted by law, such overdue amount shall bear interest (after as well as
before judgment), payable on demand, (a) in the case of overdue principal, at
the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00%
per annum and (b) in all other cases, at a rate per annum (computed on the basis
of the actual number of days elapsed over a year of 365 or 366 days, as the case
may be, equal to the rate that would be applicable to an ABR Loan plus 2.00% per
annum.

 

SECTION 2.08     Alternate Rate of Interest.  In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that Dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such Dollar deposits are being offered will not
adequately and fairly reflect the cost to the majority of Lenders of making or
maintaining Eurodollar Loans during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or fax notice of
such determination to the Borrowers and the Lenders.  In the event of any such
determination, until the Administrative Agent shall have advised the Borrowers
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrowers for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing.  Each
determination by the Administrative Agent under this Section 2.08 shall be
conclusive absent manifest error.

 

SECTION 2.09     Termination of Commitments.  The Commitments (other than any
Incremental Term Loan Commitments, which shall terminate as provided in the
related

55

--------------------------------------------------------------------------------

 

 

Incremental Term Loan Assumption Agreement) shall automatically terminate upon
the making of the Loans on the Closing Date.

 

SECTION 2.10     Conversion and Continuation of Borrowings.  The Borrowers shall
have the right at any time upon prior irrevocable notice to the Administrative
Agent (a) not later than 12:00 (noon), New York City time, one Business Day
prior to conversion, to convert any Eurodollar Borrowing into an ABR Borrowing,
(b) not later than 12:00 (noon), New York City time, three Business Days prior
to conversion or continuation, to convert any ABR Borrowing into a Eurodollar
Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for
an additional Interest Period, and (c) not later than 12:00 (noon), New York
City time, three Business Days prior to conversion, to convert the Interest
Period with respect to any Eurodollar Borrowing to another permissible Interest
Period, subject in each case to the following:

 

(a)     unless the Administrative Agent shall have notified the Borrowers that
the primary syndication of the Commitments has been completed (which notice
shall be given as promptly as practicable), no ABR Borrowing may be converted
into a Eurodollar Borrowing with an Interest Period in excess of one month prior
to the date that is 30 days after the Closing Date;

(b)     each conversion or continuation shall be made pro rata among the Lenders
in accordance with the respective principal amounts of the Loans comprising the
converted or continued Borrowing;

(c)     if less than all the outstanding principal amount of any Borrowing shall
be converted or continued, then each resulting Borrowing shall satisfy the
limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal
amount and maximum number of Borrowings of the relevant Type;

(d)     each conversion shall be effected by each Lender and the Administrative
Agent by recording for the account of such Lender the new Loan of such Lender
resulting from such conversion and reducing the Loan (or portion thereof) of
such Lender being converted by an equivalent principal amount; accrued interest
on any Eurodollar Loan (or portion thereof) being converted shall be paid by the
Borrowers at the time of conversion;

(e)     if any Eurodollar Borrowing is converted at a time other than the end of
the Interest Period applicable thereto, the Borrowers shall pay, upon demand,
any amounts due to the Lenders pursuant to Section 2.16;

(f)     any portion of a Borrowing maturing or required to be repaid in less
than one month may not be converted into or continued as a Eurodollar Borrowing;

(g)     any portion of a Eurodollar Borrowing that cannot be converted into or
continued as a Eurodollar Borrowing by reason of the immediately preceding
clause shall be automatically converted at the end of the Interest Period in
effect for such Borrowing into an ABR Borrowing;

(h)     no Interest Period may be selected for any Eurodollar Borrowing that
would end later than a Repayment Date or Incremental Term Loan Repayment Date,
as applicable, occurring on or after the first day of such Interest Period if,
after giving effect to such selection, the aggregate outstanding amount of
(i) the Eurodollar Borrowings comprised of Loans or Other Term Loans, as
applicable, with Interest Periods ending on or prior to such Repayment Date or
Incremental Term Loan Repayment Date and (ii) the ABR Borrowings comprised of
Loans or Other Term Loans, as applicable, would not be at least equal to the
principal amount of Borrowings to be paid on such Repayment Date or Incremental
Term Loan Repayment Date; and

56

--------------------------------------------------------------------------------

 

 

(i)     upon notice to the Borrowers from the Administrative Agent given at the
request of the Required Lenders, after the occurrence and during the continuance
of an Event of Default, no outstanding Loan may be converted into, or continued
as, a Eurodollar Loan.

Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer
to this Agreement and specify (i) the identity and amount of the Borrowing that
the Borrowers request be converted or continued, (ii) whether such Borrowing is
to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing,
(iii) if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (iv) if such Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect
thereto.  If no Interest Period is specified in any such notice with respect to
any conversion to or continuation as a Eurodollar Borrowing, the Borrowers shall
be deemed to have selected an Interest Period of one month’s duration.  The
Administrative Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender’s portion of any converted or
continued Borrowing.  If the Borrowers shall not have given notice in accordance
with this Section 2.10 to continue any Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be converted to an ABR Borrowing.

SECTION 2.11     Repayment of Loans.

 

The Borrowers shall pay to the Administrative Agent, for the account of the
Lenders, on the last Business Day of each fiscal quarter, beginning with the
fiscal quarter ending on June 30, 2014 (each such date being called a “Repayment
Date”), a principal amount of the Loans other than Other Term Loans equal to (i)
the product of (A) the aggregate Commitments and Term B Commitments on the
Closing Date multiplied by (B) one percent (.01) divided by (ii) four (4) (each
such payment being called an “Amortization Payment”) (such amount to be reduced
from time to time pursuant to Sections 2.11(c), 2.12(b) or 2.13(e)), together in
each case with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of such payment.

(a)     To the extent not previously paid, all Loans shall be due and payable on
the Maturity Date, together with accrued and unpaid interest on the principal
amount to be paid to but excluding the date of payment.

(b)     All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.

(c)     To the extent the Term B Borrowers prepay the Term B Loans and EIH does
not elect to borrow Additional Term Loans pursuant to Section 2.01(b) in
connection with such prepayment, the remaining scheduled installments of
principal due in respect of the Loans pursuant to Section 2.11 shall be reduced
pro rata by the amount equal to the amount of such prepayment of the Term B
Loans.

SECTION 2.12     Voluntary Prepayment.  

 

(a)     Subject to the concurrent payment of the Applicable Premium, the
Borrowers may at any time and from time to time prepay any Borrowing, in whole
or in part, upon at least three Business Days’ prior written or fax notice (or
telephone notice promptly confirmed by written or fax notice) in the case of
Eurodollar Loans, or written or fax notice (or telephone notice promptly
confirmed by written or fax notice) at least one Business Day prior to the date
of prepayment in the case of ABR Loans, to the Administrative Agent before
12:00 (noon), New York City time;

57

--------------------------------------------------------------------------------

 

 

provided, however, that each partial prepayment shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.

(b)     Voluntary prepayments of Loans under Section 2.12(a) shall be applied
pro rata against the remaining scheduled installments of principal due in
respect of the Loans under Section 2.11 and shall be applied as a credit against
the next maturing amounts owing by the Borrowers pursuant to Section 2.13(c).

(c)     Each notice of prepayment under Section 2.12(a) shall specify the
prepayment date and the principal amount of each Borrowing (or portion thereof)
to be prepaid, shall be irrevocable and shall commit the Borrowers to prepay
such Borrowing by the amount stated therein on the date stated therein;
provided,  however, that if such prepayment is for all of the then outstanding
Loans, then the Borrowers may revoke such notice by written notice to the
Administrative Agent no later than 12:00 (noon), New York City time, on the date
of prepayment and/or extend the prepayment date by not more than five Business
Days; provided further,  however, that the provisions of Section 2.16 shall
apply with respect to any such revocation or extension.  All prepayments under
this Section 2.12 shall be subject to Section 2.16.  All prepayments under this
Section 2.12 shall be accompanied by the concurrent payment of the accrued and
unpaid interest on the principal amount to be prepaid to but excluding the date
of payment and the Applicable Premium.

SECTION 2.13     Mandatory Prepayments. 

 

(a)     Not later than the third Business Day following the receipt of Net
Proceeds in excess of $10,000,000 in the aggregate by Asset Sales for Holdings
and its Restricted Subsidiaries, the Borrowers shall apply 100% of the Net
Proceeds received with respect thereto to prepay outstanding Loans;  provided
that no such prepayment shall be required under this Section 2.13(a) if (i) the
Borrowers shall deliver a certificate of a Financial Officer to the
Administrative Agent at the time of receipt thereof setting forth the intent of
Holdings or the applicable Restricted Subsidiary to use such Net Proceeds to (A)
subject to compliance with the Additional Guarantor Requirement as of the date
of such investment, invest in or acquire Additional Assets or (B) make Capital
Expenditures in respect of Holdings’ or its Restricted Subsidiaries’ Oil and Gas
Business, in each case, within 365 days after receipt of such proceeds and (ii)
no Default or Event of Default shall have occurred and shall be continuing or
would result therefrom at the time of such certificate; provided further that if
such Net Proceeds are not applied as pursuant to clause (A) or (B) above within
such 365-day period, such Net Proceeds shall be applied to prepay the
outstanding Loans pursuant to this Section 2.13(a).  The requirement of
clause (A) or (B) above shall be deemed to be satisfied if a bona fide binding
contract committing to make the investment, acquisition or expenditure referred
to therein is entered into by Holdings or any of its Restricted Subsidiaries
with a Person other than an Affiliate of Holdings within the time period
specified above in this paragraph and such Net Proceeds are subsequently applied
in accordance with such contract within six months following the date such
agreement is entered into.

(b)     In the event that Holdings or any Restricted Subsidiary of Holdings
shall receive Net Proceeds from the issuance or incurrence of Indebtedness for
money borrowed of any Credit Party or any Subsidiary of a Credit Party (other
than any cash proceeds from the issuance of Indebtedness permitted pursuant to
Section 6.03), the Borrowers shall substantially simultaneously with (and in any
event not later than the third Business Day following) the receipt of such Net
Proceeds by Holdings or such Restricted Subsidiary, apply an amount equal to
100% of such Net Proceeds to prepay outstanding Loans.

58

--------------------------------------------------------------------------------

 

 

(c)     Not later than 100 days after the end of each fiscal year of Holdings
beginning with the fiscal year ending December 31, 2014, the Borrowers shall
calculate Excess Cash Flow for such fiscal year and, subject to Section 2.12(b),
apply an aggregate amount equal to the Applicable Percentage of such Excess Cash
Flow to the prepayment of the Loans.  Not later than the date on which the
Borrowers are required to deliver financial statements with respect to the end
of each fiscal year under Section 5.01(a), the Borrowers will deliver to the
Agent a certificate signed by a Financial Officer of Holdings setting forth the
amount, if any, of Excess Cash Flow for such fiscal year and the calculation
thereof in reasonable detail.

(d)     All prepayments of Borrowings under Section 2.13(a) and (b) shall be
accompanied by the concurrent payment of the accrued and unpaid interest on the
principal amount to be prepaid to but excluding the date of payment, and all
prepayments of Borrowings under Section 2.13(b) shall be accompanied by the
concurrent payment of the Applicable Premium.

(e)     Mandatory prepayments of Loans under this Agreement shall be applied pro
rata against the remaining scheduled installments of principal due in respect of
the Loans under Section 2.11.

(f)     The Borrowers shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.13, (i) a certificate signed by a
Financial Officer of the Borrowers setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) at least three Business
Days prior written notice of such prepayment.  Each notice of prepayment shall
specify the prepayment date, the Type of each Loan being prepaid and the
principal amount of each Loan (or portion thereof) to be prepaid.  All
prepayments of Borrowings under this Section 2.13 shall be subject to
Section 2.16.

SECTION 2.14     Reserve Requirements; Change in Circumstances.

 

(a)     If any Change in Law shall (i) impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement
reflected in the Adjusted LIBO Rate); (ii) subject any Recipient to any Taxes
(other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through
 (d) of the definition of Excluded Taxes, (C) Connection Income Taxes and (D)
Bank Levies) on its loans, loan principal, letters of credit, commitments, or
other obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or (iii) impose on any Lender or the London interbank
market any other condition, cost or expense (other than Taxes) affecting this
Agreement or Loans made by such Lender; and the result of any of the foregoing
shall be to increase the cost to such Lender or such other Recipient of making,
converting to, continuing or maintaining any Loan or of maintaining its
obligation to make any such Loan, or to reduce the amount of any sum received or
receivable by such Lender or other Recipient hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender or other
Recipient, the Borrowers will pay to such Lender or other Recipient, as the case
may be, such additional amount or amounts as will compensate such Lender or
other Recipient, as the case may be, for such additional costs incurred or
reduction suffered

(b)     If any Lender determines that any Change in Law affecting such Lender or
any lending office of such Lender or such Lender’s holding company, if any,
regarding capital or liquidity requirements, has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement, the
Commitments of such Lender or the Loans made by such Lender to a level below
that which such Lender or such Lender’s holding company could have achieved but
for

59

--------------------------------------------------------------------------------

 

 

such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy),
then from time to time the Borrowers will pay to such Lender such additional
amount or amounts as will compensate such Lender or such Lender’s holding
company for any such reduction suffered.

(c)     A certificate of a Lender setting forth the amount or amounts necessary
to compensate such Lender or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section 2.14 and delivered to the
Borrowers, shall be conclusive absent manifest error.  The Borrowers shall pay
such Lender  the amount shown as due on any such certificate within 10 days
after receipt thereof.

(d)     Failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.14 shall not constitute a waiver of such Lender’s
right to demand such compensation; provided that the Borrowers shall not be
required to compensate a Lender pursuant to this Section 2.14 for any increased
costs incurred or reductions suffered more than 270 days prior to the date that
such Lender notifies the Borrowers of the Change in Law giving rise to such
increased costs or reductions, and of such Lender’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270 day period referred
to above shall be extended to include the period of retroactive effect thereof).

SECTION 2.15     Change in Legality.

 

(a)     Notwithstanding any other provision of this Agreement, if any Change in
Law shall make it unlawful for any Lender to make or maintain any Eurodollar
Loan or to give effect to its obligations as contemplated hereby with respect to
any Eurodollar Loan, then, by written notice to the Borrowers and to the
Administrative Agent:

(i)     such Lender may declare that Eurodollar Loans will not thereafter (for
the duration of such unlawfulness) be made by such Lender hereunder (or be
continued for additional Interest Periods) and ABR Loans will not thereafter
(for such duration) be converted into Eurodollar Loans, whereupon any request
for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar
Borrowing or to continue a Eurodollar Borrowing for an additional Interest
Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a
request to continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such
declaration shall be subsequently withdrawn; and

(ii)     such Lender may require that all outstanding Eurodollar Loans made by
it be converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such notice as
provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.

(b)     For purposes of this Section 2.15, a notice to the Borrowers by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the

60

--------------------------------------------------------------------------------

 

 

Interest Period then applicable to such Eurodollar Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrowers.

SECTION 2.16     Breakage.  The Borrowers shall indemnify each Lender against
any loss or expense that such Lender actually sustains or incurs as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder (including such Lender being a
Defaulting Lender), which results in (i) such Lender receiving or being deemed
to receive any amount on account of the principal of any Eurodollar Loan prior
to the end of the Interest Period in effect therefor, (ii) the conversion of any
Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with
respect to any Eurodollar Loan, in each case other than on the last day of the
Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by
such Lender (including any Eurodollar Loan to be made pursuant to a conversion
or continuation under Section 2.10) not being made after notice of such Loan
shall have been given by the Borrowers hereunder (any of the events referred to
in this clause (a) being called a “Breakage Event”) or (b) any default in the
making of any payment or prepayment required to be made hereunder.  In the case
of any Breakage Event, such loss shall include an amount equal to the excess of
(i) its cost of obtaining funds for the Eurodollar Loan that is the subject of
such Breakage Event for the period from the date of such Breakage Event to the
last day of the Interest Period in effect (or that would have been in effect)
for such Loan over (ii) the amount of interest realized by such Lender in
redeploying the funds released or not utilized by reason of such Breakage Event
for such period.  A certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to this Section 2.16
shall be delivered to the Borrowers and shall be conclusive absent manifest
error.

 

SECTION 2.17     Pro Rata Treatment.  Subject to the express provisions of this
Agreement which require, or permit, differing payments to be made to
Non-Defaulting Lenders as opposed to Defaulting Lenders, and as required under
Section 2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans and each conversion of any
Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall
be allocated pro rata among the Lenders in accordance with their respective
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding
Loans).  Each Lender agrees that in computing such Lender’s portion of any
Borrowing to be made hereunder, the Administrative Agent may, in its discretion,
round each Lender’s percentage of such Borrowing to the next higher or lower
whole Dollar amount.

 

SECTION 2.18     Sharing of Setoffs.  Each Lender agrees that if it shall,
through the exercise of a right of banker’s lien, setoff or counterclaim against
the Borrowers or any other Credit Party, or pursuant to a secured claim under
Section 406 of Title 11 of the United States Bankruptcy Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Loan or Loans as a result of which the unpaid principal portion
of its Loans shall be proportionately less than the unpaid principal portion of
the Loans of any other Lender, it shall be deemed simultaneously to have
purchased from such other Lender at face value, and shall promptly pay to such
other Lender the purchase price for, a participation in the Loans of such other
Lender, so that the aggregate unpaid principal amount of the Loans and
participations in Loans held by each Lender shall be in the same proportion to
the aggregate unpaid principal amount of all Loans then outstanding as the
principal amount of its Loans prior to such exercise of banker’s lien, setoff or
counterclaim or other event was to the principal amount of all Loans outstanding
prior to such exercise of banker’s lien, setoff or counterclaim or other event;

61

--------------------------------------------------------------------------------

 

 

provided, however, that (i) if any such purchase or purchases or adjustments
shall be made pursuant to this Section 2.18 and the payment giving rise thereto
shall thereafter be recovered, such purchase or purchases or adjustments shall
be rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest, and (ii) the provisions of this
Section 2.18 shall not be construed to apply to any payment made by the
Borrowers pursuant to and in accordance with the express terms of this Agreement
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans to any assignee or participant,
other than to Holdings, the Borrowers or any of its Affiliates (as to which the
provisions of this Section 2.18 shall apply).  The Borrowers and Holdings
expressly consent to the foregoing arrangements and agree that any Lender
holding a participation in a Loan deemed to have been so purchased may exercise
any and all rights of banker’s lien, setoff or counterclaim with respect to any
and all moneys owing by the Borrowers and Holdings to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrowers in
the amount of such participation.

 

SECTION 2.19     Payments.

 

(a)     The Borrowers shall make each payment (including principal of or
interest on any Borrowing or any Fees or other amounts) hereunder and under any
other Credit Document not later than 12:00 (noon), New York City time, on the
date when due in immediately available Dollars, without setoff, defense or
counterclaim.  Each such payment shall be made to the Administrative Agent at
its offices at Eleven Madison Avenue, New York, NY 10010.  The Administrative
Agent shall promptly distribute to each Lender any payments received by the
Administrative Agent on behalf of such Lender.

(b)     Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder or under any other Credit Document shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.

SECTION 2.20     Tax Gross-Up and Indemnities.

 

(a)     Any and all payments by or on account of any obligation of any Borrower
or any other Credit Party under any Credit Document shall be made without
deduction or withholding for any Taxes, except as required by Applicable
Law.  If any Applicable Law (as determined in the good faith discretion of an
applicable Withholding Agent) requires the deduction or withholding of any Tax
from any such payment by a Withholding Agent, then the applicable Withholding
Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then
the sum payable by the applicable Credit Party shall be increased as necessary
so that after such deduction or withholding has been made (including such
deductions and withholdings of Indemnified Taxes applicable to additional sums
payable under this Section 2.20) the applicable Recipient receives an amount
equal to the sum it would have received had no such deduction or withholding
been made.

(b)     In addition, the Credit Parties shall timely pay to the relevant
Governmental Authority in accordance with Applicable Law, or at the option of
the Administrative Agent timely reimburse it for the payment of, any Other
Taxes.

62

--------------------------------------------------------------------------------

 

 

(c)     The Credit Parties shall indemnify each Recipient, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section 2.20) payable or paid by such Recipient or required to be
withheld or deducted from a payment to such Recipient and any reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority; provided, however, that if an Agent or Lender, as the
case may be, makes demand for such payment more than 270 days after the earlier
of (i) the date on which the relevant Governmental Authority makes written
demand upon such Person for payment of such Indemnified Taxes or Other Taxes,
and (ii) the date on which such Person has made payment of such Indemnified
Taxes or Other Taxes (except that, if the Indemnified Taxes or Other Taxes
imposed or asserted giving rise to such claims are retroactive, then the 270-day
period referred to above shall be extended to include the period of retroactive
effort thereof), the Borrowers shall not be required to make any payment in
connection with such claim pursuant to this Section 2.20(c) of any interest,
penalties or additions to tax accruing after such date.  A certificate as to the
amount of such payment or liability delivered to a Borrower by a Recipient (with
a copy to the Administrative Agent), or by the Administrative Agent on its own
behalf or on behalf of a Recipient, shall be conclusive absent manifest error.
Notwithstanding the foregoing, in no event shall the Credit Parties be required
to indemnify any Recipient for any Bank Levies pursuant to this Section 2.20(c).

(d)     As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by a Borrower or any other Credit Party to a Governmental Authority, the
applicable Borrower or Credit Party shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e)

(i)     Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Credit Document shall
deliver to EIH and the Administrative Agent, at the time or times reasonably
requested by EIH or the Administrative Agent, such properly completed and
executed documentation reasonably requested by EIH or the Administrative Agent
as will permit such payments to be made without withholding or at a reduced rate
of withholding.  In addition, any Lender, if reasonably requested by EIH or the
Administrative Agent, shall deliver such other documentation prescribed by
Applicable Law or reasonably requested by EIH or the Administrative Agent as
will enable the Borrowers or the Administrative Agent to determine whether or
not such Lender is subject to withholding, backup withholding or information
reporting requirements.  Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Section 2.20(e)(ii)
and (iii) below) shall not be required if in the Lender’s reasonable judgment
such completion, execution or submission would subject such Lender to any
material unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender.

(ii)     Each Lender shall provide to the Administrative Agent on or prior to
the date on which such Lender becomes a Lender under this Agreement a properly
executed applicable IRS Form W-8 or W-9 in order to establish that payments to
such Lender under the Credit Documents are not subject to any United States
federal backup withholding tax.

63

--------------------------------------------------------------------------------

 

 

(iii)    If a payment made to a Recipient under any Credit Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Recipient were
to fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Recipient shall deliver to EIH and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by EIH or the
Administrative Agent such documentation prescribed by Applicable Law (including
as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by EIH or the Administrative Agent as may be
necessary for the Borrowers and the Administrative Agent to comply with their
obligations under FATCA and to determine that such Recipient has complied with
such Recipient’s obligations under FATCA or to determine the amount to deduct
and withhold from such payment.  Solely for purposes of this clause (iii),
“FATCA” shall include any amendments made to FATCA after the date of this
Agreement.

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify EIH and the Administrative Agent in
writing of its legal inability to do so.

(f)     Each Lender shall severally indemnify the Administrative Agent, within
10 days after demand therefor, for (i) any Indemnified Taxes attributable to
such Lender (but only to the extent that any Credit Party has not already
indemnified the Administrative Agent for such Indemnified Taxes and without
limiting the obligation of the Credit Parties to do so), (ii) any Taxes
attributable to such Lender’s failure to comply with the provisions of Section
9.04 relating to the maintenance of a Participant Register and (iii) any
Excluded Taxes attributable to such Lender, in each case, that are payable or
paid by the Administrative Agent in connection with any Credit Document, and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as to the amount of such payment or
liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error.  Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Credit Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (f).

(g)     If any party determines, in its sole discretion exercised in good faith,
that it has received a refund of any Taxes as to which it has been indemnified
pursuant to this Section 2.20 (including by the payment of additional amounts
pursuant to this Section 2.20), it shall pay to the indemnifying party an amount
equal to such refund (but only to the extent of indemnity payments made under
this Section with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) of such indemnified party and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund).  Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over
pursuant to this paragraph (g) (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) in the event that such
indemnified party is required to repay such refund to such Governmental
Authority.  Notwithstanding anything to the contrary in this paragraph (g), in
no event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this paragraph (g) the payment of which would
place the indemnified party in a less favorable net after-Tax position than the
indemnified party would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid. 

64

--------------------------------------------------------------------------------

 

 

This paragraph shall not be construed to require any indemnified party to make
available its Tax returns (or any other information relating to its Taxes that
it deems confidential) to the indemnifying party or any other Person.

(h)     All amounts set out, or expressed in this Agreement to be payable by
either Borrower to a Lender or Agent which (in whole or in part) constitute the
consideration for a supply or supplies for VAT purposes shall be deemed to be
exclusive of any VAT which is chargeable on such supply or supplies, and
accordingly, subject to paragraph (i) below, if VAT is or becomes chargeable on
any supply made by any Lender or Agent to either Borrower under this Agreement
that Borrower shall pay to the Lender or Agent (in addition to and at the same
time as paying any other consideration for such supply) an amount equal to the
amount of such VAT (and such Lender or Agent shall promptly provide an
appropriate VAT invoice to such Borrower) or in case where the reverse charge
mechanism is applicable, the Borrower shall directly account for such VAT and
pay the relevant VAT amount directly to the competent tax authority.

(i)     If VAT is or becomes chargeable on any supply made by any Lender or
Agent (the “Supplier”) to any other Lender or Agent (the “Customer”) under a
Credit Document, and either Borrower other than the Customer (the “Subject
Party”) is required by the terms of this Agreement to pay an amount equal to the
consideration for such supply to the Supplier (rather than being required to
reimburse the Customer in respect of that consideration), such Borrower shall
also pay to the Supplier (provided the Supplier is required to account for VAT)
or the Customer (if the Customer is required to account for the VAT) (in
addition to and at the same time as paying such amount) an amount equal to the
amount of such VAT. The Customer will promptly pay to the Subject Party an
amount equal to any credit or repayment obtained by the Customer from the
relevant tax authority which the Customer reasonably determines in respect of
such VAT.  

(ii)     Where this Agreement requires either Borrower to reimburse or indemnify
a Lender or Agent for any cost or expense, the Borrower shall reimburse or
indemnify (as the case may be) such Lender or Agent for the full amount of such
cost or expense, including such part thereof as represents VAT, save to the
extent that such Lender or Agent reasonably determines that it is entitled to
credit or repayment in respect of such VAT from the relevant tax authority. 

(iii)    Any reference in this Section 2.20(h) to any Borrower  shall, at any
time when such Borrower is treated as a member of a group for VAT purposes,
include (where appropriate and unless the context otherwise requires) a
reference to the person who is treated as making the supply, or (as appropriate)
receiving the supply, under the grouping rules (as provided for in Article 11 of
Council Directive 2006/112/EC as amended (or as implemented by a member state of
the European Union).

(i)     Each party’s obligations under this Section 2.20 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Credit
Document.  For purposes of this Section 2.20, the term “Applicable Law” includes
FATCA.

SECTION 2.21     Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate.

 

65

--------------------------------------------------------------------------------

 

 

(a)In the event (i) any Lender delivers a certificate requesting compensation
pursuant to Section 2.14, (ii) any Lender delivers a notice described in
Section 2.15, (iii) EIH is required to pay any additional amount or
indemnification to any Lender or any Governmental Authority on account of any
Lender pursuant to Section 2.20, (iv) any Lender is a Non-Consenting Lender, or
(v) any Lender is a Defaulting Lender, then, in each case, EIH may, at its sole
expense and effort (including with respect to the processing and recordation fee
referred to in Section 9.04(b)), upon notice to such Lender and the
Administrative Agent, require such Lender to transfer and assign, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all of its interests, rights and obligations under this Agreement
to an Eligible Assignee that shall assume such assigned obligations and, with
respect to clause (v) above, shall consent to such requested amendment, waiver
or other modification of any Credit Documents (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (x) such assignment
shall not conflict with any law, rule or regulation or order of any court or
other Governmental Authority having jurisdiction, (y) the Borrowers shall have
received the prior written consent of the Administrative Agent, which consent
shall not unreasonably be withheld or delayed, and (z) EIH or such assignee
shall have paid to the affected Lender in immediately available funds an amount
equal to the sum of the principal of and interest accrued to the date of such
payment on the outstanding Loans of such Lender plus all Fees and other amounts
accrued for the account of such Lender hereunder with respect thereto (including
any Applicable Premium and any amounts under Sections 2.14 and 2.16); provided
further that, if prior to any such transfer and assignment the circumstances or
event that resulted in such Lender’s claim for compensation under Section 2.14,
notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the
case may be, cease to cause such Lender to suffer increased costs or reductions
in amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.15, or cease to result in amounts
being payable under Section 2.20, as the case may be (including as a result of
any action taken by such Lender pursuant to paragraph (b) below), or if such
Lender shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event or shall consent to the proposed
amendment, waiver, consent or other modification, as the case may be, then such
Lender shall not thereafter be required to make any such transfer and assignment
hereunder.  Each Lender hereby grants to the Administrative Agent an irrevocable
power of attorney (which power is coupled with an interest) to execute and
deliver, on behalf of such Lender as assignor, any Assignment and Acceptance
necessary to effectuate any assignment of such Lender’s interests hereunder in
the circumstances contemplated by this Section 2.21(a).

(b)     If (i) any Lender shall request compensation under Section 2.14,
(ii) any Lender delivers a notice described in Section 2.15 or (iii) EIH is
required to pay any additional amount to any Lender or any Governmental
Authority on account of any Lender, pursuant to Section 2.20, then such Lender
shall use reasonable efforts (which shall not require such Lender to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take any action
inconsistent with its internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden deemed by it to be significant) (x) to file
any certificate or document reasonably requested in writing by EIH or (y) to
assign its rights and delegate and transfer its obligations hereunder to another
of its offices, branches or affiliates, if such filing or assignment would
reduce its claims for compensation under Section 2.14 or enable it to withdraw
its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to
Section 2.20, as the case may be, in the future.  EIH hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
filing or assignment, delegation and transfer.

SECTION 2.22     Defaulting Lenders.

66

--------------------------------------------------------------------------------

 

 

 

(a)     Notwithstanding anything to the contrary contained in this Agreement, if
any Lender becomes a Defaulting Lender, then, until such time as such Lender is
no longer a Defaulting Lender, to the extent permitted by applicable law:

(i)     Such Defaulting Lender’s right to approve or disapprove any amendment,
waiver or consent with respect to this Agreement shall be restricted as set
forth in the definition of Required Lenders.

(ii)     Any payment of principal, interest, fees or other amounts received by
the Administrative Agent for the account of such Defaulting Lender (whether
voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) shall
be applied at such time or times as may be determined by the Administrative
Agent as follows:  first, to the payment of any amounts owing by such Defaulting
Lender to the Administrative Agent hereunder; second, as the Borrowers may
request (so long as no Event of Default exists), to the funding of any Loan in
respect of which such Defaulting Lender has failed to fund its portion thereof
as required by this Agreement, as determined by the Administrative Agent; third,
to the payment of any amounts owing to the Lenders as a result of any judgment
of a court of competent jurisdiction obtained by any Lender against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; fourth, so long as no Event of Default exists,
to the payment of any amounts owing to the Borrowers as a result of any judgment
of a court of competent jurisdiction obtained by the Borrowers against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; and fifth, provided all amounts owing to the
Borrowers under “fourth” above have been paid to the Borrowers, to such
Defaulting Lender or as otherwise directed by a court of competent jurisdiction;
provided that if (x) such payment is a payment of the principal amount of any
Loans in respect of which such Defaulting Lender has not fully funded its
appropriate share, and (y) such Loans were made at a time when the conditions
set forth in Section 4.02 were satisfied or waived, such payment shall be
applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata
basis prior to being applied to the payment of any Loans of such Defaulting
Lender until such time as all Loans are held by the Lenders pro rata in
accordance with their Commitments.  Any payments, prepayments or other amounts
paid or payable to a Defaulting Lender that are applied (or held) to pay amounts
owed by a Defaulting Lender pursuant to this Section 2.22(a)(ii) shall be deemed
paid to and redirected by such Defaulting Lender, and each Lender irrevocably
consents hereto.

(b)     If the Borrowers and the Administrative Agent agree in writing that a
Lender is no longer a Defaulting Lender, the Administrative Agent will so notify
the parties hereto, whereupon as of the effective date specified in such notice
and subject to any conditions set forth therein, that Lender will, to the extent
applicable, purchase at par that portion of outstanding Loans of the other
Lenders or take such other actions as the Administrative Agent may determine to
be necessary to cause the Loans to be held pro rata by the Lenders in accordance
with their Commitments, whereupon such Lender will cease to be a Defaulting
Lender; provided that no adjustments will be made retroactively with respect to
fees accrued or payments made by or on behalf of the Borrowers while that Lender
was a Defaulting Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Lender will constitute a waiver or release of any claim of
any party hereunder arising from that Lender’s having been a Defaulting Lender.

SECTION 2.23     Incremental Term Loans.

 

67

--------------------------------------------------------------------------------

 

 

(a)     The Borrowers may, by written notice to the Administrative Agent from
time to time, request Incremental Term Loan Commitments in an amount not to
exceed the Incremental Term Loan Amount at such time. Such notice shall set
forth (i) the amount of the Incremental Term Loan Commitments being requested
(which shall be in minimum increments of $1,000,000 and a minimum amount of
$5,000,000 or such lesser amount equal to the remaining Incremental Term Loan
Amount), (ii) the date on which such Incremental Term Loan Commitments are
requested to become effective (which shall not be less than 10 Business Days nor
more than 60 days after the date of such notice), and (iii) whether such
Incremental Term Loan Commitments are commitments to make additional Loans in
the same Facility or a new Class of term loans (“Other Term Loans”).

(b)     The Borrowers may seek Incremental Term Loan Commitments from existing
Lenders (each of which shall be entitled to agree or decline to participate in
its sole discretion) and additional banks, financial institutions and other
institutional lenders who will become Incremental Term Lenders in connection
therewith.  The Borrowers and each Incremental Term Lender shall execute and
deliver to the Administrative Agent an Incremental Term Loan Assumption
Agreement and such other documentation as the Administrative Agent shall
reasonably specify to evidence the Incremental Term Loan Commitment of each
Incremental Term Lender.

(c)     The terms and provisions of any Other Term Loans shall be identical to
those of the Loans except as otherwise set forth herein or in the Incremental
Term Loan Assumption Agreement; provided, that without the prior written consent
of the Required Lenders, (i) the final maturity date of any Other Term Loans
shall be no earlier than the Maturity Date, (ii) the average life to maturity of
the Other Term Loans shall be no shorter than the average life to maturity of
the Loans, and (iii) if the initial yield on such Other Term Loans (as
determined by the Administrative Agent to be equal to the sum of (x) the margin
above the Adjusted LIBO Rate on such Other Term Loans and (y) if such Other Term
Loans are initially made at a discount or the Lenders making the same receive a
fee directly or indirectly from Holdings, any Borrower or any Subsidiary for
doing so (the amount of such discount or fee, expressed as a percentage of the
Other Term Loans, being referred to herein as “OID”), the amount of such OID
divided by the lesser of (A) the average life to maturity of such Other Term
Loans and (B) four) exceeds the Applicable Margin then in effect for Eurodollar
Loans by more than 50 basis points (the amount of such excess above 50 basis
points being referred to herein as the “Yield Differential”), then the
Applicable Margin then in effect for Term Loans shall automatically be increased
by the Yield Differential, effective upon the making of the Other Term
Loans.  The Administrative Agent shall promptly notify each Lender as to the
effectiveness of each Incremental Term Loan Assumption Agreement, and if the
Other Term Loans are secured, the Other Term Loans shall not be secured by
assets other the Collateral then securing the Loans. Each of the parties hereto
hereby agrees that, upon the effectiveness of any Incremental Term Loan
Assumption Agreement, this Agreement shall be deemed amended to the extent (but
only to the extent) necessary to reflect the existence and terms of the
Incremental Term Loan Commitment and the Incremental Term Loans evidenced
thereby, and the Administrative Agent and the Borrowers may revise this
Agreement to evidence such amendments. 

(d)     Notwithstanding the foregoing, no Incremental Term Loan Commitment shall
become effective under this Section 2.23 unless (i) on the date of such
effectiveness, the conditions set forth in paragraphs (b) and (c) of Section
4.02 shall be satisfied and the Administrative Agent shall have received a
certificate to that effect dated such date and executed by a Financial Officer
of the Borrowers, (ii) except as otherwise specified in the applicable
Incremental Term Loan Assumption Agreement, the Administrative Agent shall have
received (with sufficient copies for each of the Incremental Term Lenders) legal
opinions, board

68

--------------------------------------------------------------------------------

 

 

resolutions and other closing certificates reasonably requested by the
Administrative Agent and consistent with those delivered on the Closing Date
under Section 4.01, (iii) after giving pro forma effect to such Incremental Term
Loan Commitments as if such Incremental Term Loans with respect thereto had been
funded and any applicable Pro Forma Adjustments, Holdings shall be in pro forma
compliance with the financial covenants set forth in Sections 6.10, 6.11 and
6.12 and in Section 8.10, 8.11 and 8.12 of the LC Procurement Agreement, (iv)
all fees and expenses owed to the Agents, the Arranger and the Lenders under the
Incremental Term Loan Assumption Agreement and the other Credit Documents shall
have been paid, and (v) the Lender providing such Incremental Term Loan
Commitment also provides a corresponding pro rata Term B Incremental Commitment.

(e)     Each of the parties hereto hereby agrees that the Administrative Agent
may, in consultation with the Borrowers, take any and all action as may be
reasonably necessary to ensure that all Incremental Term Loans (other than Other
Term Loans), when originally made, are included in each Borrowing of outstanding
Loans on a pro rata basis. This may be accomplished by requiring each
outstanding Eurodollar Borrowing to be converted into an ABR Borrowing on the
date of each Incremental Term Loan, or by allocating a portion of each
Incremental Term Loan to each outstanding Eurodollar Borrowing on a pro rata
basis. Any conversion of Eurodollar Loans to ABR Loans required by the preceding
sentence shall be subject to Section 2.16.  If any Incremental Term Loan is to
be allocated to an existing Interest Period for a Eurodollar Borrowing, then the
interest rate thereon for such Interest Period and the other economic
consequences thereof shall be as set forth in the applicable Incremental Term
Loan Assumption Agreement. In addition, to the extent any Incremental Term Loans
are not Other Term Loans, the scheduled Amortization Payments required to be
made after the making of such Incremental Term Loans shall be ratably increased
by the aggregate principal amount of such Incremental Term Loans and shall be
further increased for all Lenders on a pro rata basis to the extent necessary to
avoid any reduction in the Amortization Payments to which the Lenders were
entitled before such recalculation.

Article III
Representations and Warranties

 

Each of Holdings and the Borrowers represents and warrants to the Administrative
Agent, the Collateral Agent and each of the Lenders that:

 

SECTION 3.01     Company Status. Each of Holdings and each of its Subsidiaries
(a) is a duly organized and validly existing Business in good standing (or, in
the case of any Foreign Subsidiary of Holdings, the applicable equivalent of
“good standing” to the extent that such concept exists in such Foreign
Subsidiary’s jurisdiction of organization) under the laws of the jurisdiction of
its organization, (b) has the Business power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (c) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified or authorized which,
either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. No certifications by any Governmental Authority
are required for operation of the business of Holdings and its Subsidiaries that
are not in place, except for such certifications or agreements, the absence of
which could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.

 

69

--------------------------------------------------------------------------------

 

 

SECTION 3.02     Power and Authority. Each Credit Party has the Business power
and authority to execute, deliver and perform the terms and provisions of each
of the Credit Documents to which it is a party and has taken all necessary
Business action to authorize the execution, delivery and performance by it of
each of such Credit Documents. Each Credit Party has duly executed and delivered
each of the Credit Documents to which it is a party, and each of such Credit
Documents constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors’ rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).

 

SECTION 3.03     No Violation. Neither the execution, delivery or performance by
any Credit Party of the Credit Documents to which it is a party, nor compliance
by it with the terms and provisions thereof, (a) will contravene any provision
of any law, statute, rule or regulation or any order, writ, injunction or decree
of any court or Governmental Authority, (b) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of the property or assets of any Credit Party or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other material agreement, contract or
instrument, in each case to which any Credit Party or any of its Subsidiaries is
a party or by which it or any its property or assets is bound or to which it may
be subject, or (c) will violate any provision of the certificate or articles of
incorporation, certificate of formation, limited liability company agreement or
by-laws (or equivalent constitutional, organizational and/or formation
documents), as applicable, of any Credit Party or any of its Subsidiaries.

 

SECTION 3.04     Approvals. No order, consent, approval, license, authorization
or validation of, or filing, recording or registration with (except (a) for
those that have otherwise been obtained or made on or prior to the date hereof
and remain in full force and effect on the date hereof and (b) filings which are
necessary to perfect the security interests created or intended to be created
under the Security Documents, which filings will be made within ten days
following the Closing Date), or exemption by, any Governmental Authority or
other Person is required to be obtained or made by, or on behalf of, any Credit
Party to authorize, or is required to be obtained or made by, or on behalf of,
any Credit Party in connection with, (i) the execution, delivery and performance
of any Credit Document or (ii) the legality, validity, binding effect or
enforceability of any such Credit Document.

 

SECTION 3.05     Financial Statements; Financial Condition; Undisclosed
Liabilities.

 

(a)     The audited consolidated balance sheets of Holdings and its subsidiaries
at December 31, 2010, December 31, 2011 and December 31, 2012 and the related
consolidated statements of operations, stockholders’ equity and cash flows for
the fiscal years of Holdings ended on such dates, in each case furnished to the
Lenders prior to the date hereof, present fairly in all material respects the
consolidated financial position of Holdings and subsidiaries at the dates of
said financial statements and the results of their operations and their cash
flows for the respective periods covered thereby. All such financial statements
have been prepared in accordance with GAAP consistently applied except to the
extent provided in the notes to said financial statements.

 

(b)     On and as of the Closing Date, and after giving effect to those of the
Transactions to be consummated on the Closing Date and to all Indebtedness being
incurred or assumed and

70

--------------------------------------------------------------------------------

 

 

Loans incurred by the Credit Parties in connection therewith on such date,
(i) the sum of the fair value of the assets, at a fair valuation, of the Credit
Parties and their Subsidiaries (taken as a whole) will exceed their debts (taken
as a whole), (ii) the sum of the present fair salable value of the assets of the
Credit Parties and their Subsidiaries (taken as a whole) will exceed their debts
(taken as a whole), (iii) the Credit Parties and their Subsidiaries (taken as a
whole) have not incurred and do not intend to incur, and do not believe that
they will incur, debts beyond their ability to pay such debts as such debts
mature, and (iv) the Credit Parties and their Subsidiaries (taken as a whole)
will have sufficient capital with which to conduct their businesses. For
purposes of this Section 3.05(b), “debt” means any liability on a claim, and
“claim” means (A) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (B) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

 

(c)     Except as disclosed in the financial statements delivered pursuant to
Section 3.05(a), and except for the obligations under this Agreement, there are
as of the date hereof and the Closing Date no liabilities or obligations with
respect to Holdings or any of its Subsidiaries of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether or not due) which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. As of the date hereof and the Closing Date, neither
Holdings nor the Borrowers know of any basis for the assertion against Holdings
or any of its Subsidiaries of any liability or obligation of any nature
whatsoever that is not disclosed in such financial statements delivered pursuant
to Section 3.05(a) or referred to in the immediately preceding sentence which,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

(d)     After giving effect to the Transactions, since December 31, 2012,
nothing has occurred that has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.

 

SECTION 3.06     Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of Holdings or the Borrowers, threatened (a) with respect
to the Transactions or any Credit Document or (b) that has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

 

SECTION 3.07     True and Complete Disclosure. All written factual information
(taken as a whole) furnished by or on behalf of Holdings or the Borrowers to the
Administrative Agent or any Lender (including, without limitation, all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement, the other Credit Documents or any transaction contemplated
herein or therein is, and all other such written factual information (taken as a
whole) hereafter furnished by or on behalf of Holdings or the Borrowers in
writing to the Administrative Agent or any Lender will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.  Any projections or forward-looking statements (the “Projections”)
furnished by or on behalf of Holdings or the Borrowers to the Administrative
Agent or any Lender will be based on

71

--------------------------------------------------------------------------------

 

 

assumptions and estimates developed by management of Holdings in good faith that
management believes to be reasonable as of the date thereof.  It is understood
that all such information, including, without limitation, any Projections
furnished by or on behalf of Holdings or the Borrowers to the Administrative
Agent or any Lender is supplemented in its entirety by Holdings’ filings with
the SEC. Whether or not such Projections are in fact achieved will depend upon
future events some of which are not within the control of Holdings and the
Borrowers. Accordingly, actual results may vary from the Projections and such
variations may be material. Such Projections should not be regarded as a
representation by Holdings or the Borrowers or its or their management that the
projected results will be achieved.

 

SECTION 3.08     Use of Proceeds; Margin Regulations. 

 

(a)     All proceeds of the Loans funded on the Closing Date shall be advanced
by EIH to EEUK as an unsecured intercompany loan, the proceeds of which shall be
used by EEUK to repay in full the Indebtedness outstanding under the Existing
Credit Agreement, together with all fees and other amounts owing thereon, and to
pay expenses related thereto.  All proceeds of the Incremental Term Loans shall
be used only for the purposes specified in the applicable Incremental Term Loan
Assumption Agreement.

 

(b)     No part of the proceeds of any Loan will be used to purchase or carry
any Margin Stock or to extend credit for the purpose of purchasing or carrying
any Margin Stock. Neither the making of any Loan nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulation T, U
or X.

 

SECTION 3.09     Tax Returns and Payments; Tax Residency.  Each of Holdings and
each of its Subsidiaries has timely filed or caused to be timely filed with the
appropriate taxing authority all federal and all material foreign, state and
local returns, statements, forms and reports for Taxes (the “Returns”) required
to be filed by, or with respect to the income, properties or operations of,
Holdings and/or any of its Subsidiaries, and has paid all Taxes and assessments
payable by it which have become due, other than (a) Taxes that are being
contested in good faith and adequately disclosed and for which adequate reserves
have been established in accordance with GAAP or (b) where the failure to pay
any such Taxes would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Each Credit Party is resident
for Tax purposes only in its jurisdiction of organization. The DE Borrower is a
“disregarded entity” for U.S. federal income tax purposes and does not carry out
any business activities in the United States.

SECTION 3.10     Compliance with ERISA.  

 

(a)     Schedule 3.10(a) hereto sets forth each Plan as of the date of this
Agreement. Each Plan (and each related trust, insurance contract or fund) is in
compliance with its terms and with all applicable laws, including without
limitation ERISA and the Code, except to the extent that any non-compliance
could not reasonably be expected to result in a material liability to Holdings
or any of its Subsidiaries; each Plan (and each related trust, if any) which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (or has
submitted, or is within the remedial amendment period for submitting, an
application for a determination letter with the Internal Revenue Service, and is
awaiting receipt of a response) to the effect that it meets the requirements of
Sections 401(a) and 501(a) of the Code or is comprised of a master or prototype
plan that has received a favorable opinion letter from the Internal Revenue
Service or a volume submitter plan that has received a favorable advisory letter
from the Internal Revenue Service; as of the date of this Agreement, no Employee
Benefit Plan is a Multiemployer Plan; no Plan has an Unfunded Current Liability
that

72

--------------------------------------------------------------------------------

 

 

could reasonably be expected to result in a material liability; no ERISA Event
has occurred, or is reasonably expected to occur, with respect to any Plan that
could reasonably be expected to result in a material liability to Holdings or
any of its Subsidiaries; all contributions required to be made with respect to a
Plan have been timely made or have been reflected on the most recent
consolidated balance sheet filed prior to the date hereof or accrued in the
accounting records of Holdings and its Subsidiaries; no action, suit,
proceeding, hearing, or audit or investigation by a Governmental Authority with
respect to the administration, operation or the investment of assets of any Plan
(other than routine claims and appeals for benefits) is pending, expected or
threatened that is reasonably expected to result in a material liability to
Holdings or any of its Subsidiaries; no Multiemployer Plan that is subject to
Section 412 of the Code or Section 302 of ERISA has applied for or received an
extension of any amortization period, within the meaning of Section 431(d) of
the Code or Section 304(d) of ERISA; Holdings, any of its Subsidiaries and any
ERISA Affiliate have not withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA or ceased making
contributions to any Plan subject to Section 4064(a) of ERISA that has
terminated and to which it made contributions at any time within the five Plan
years preceding the date of termination; none of Holdings, any of its
Subsidiaries or any ERISA Affiliate have incurred or reasonably expect to incur
any liability to the PBGC except for any liability for premiums due in the
ordinary course or other liability which could not reasonably be expected to
result in material liability, and no lien imposed under the Code or ERISA on the
assets of Holdings or any of its Subsidiaries or any ERISA Affiliate exists or
is expected to arise on account of any Plan; none of Holdings, any of its
Subsidiaries or any ERISA Affiliate has incurred, or is expected to incur, any
liability under Section 4069 or 4212(c) of ERISA; each Employee Benefit Plan
that is a group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) has at all times been operated in compliance
with the provisions of Part 6 of subtitle B of Title I of ERISA and
Section 4980B of the Code, except to the extent that any non-compliance with any
such provisions could not reasonably be expected to result in a material
liability to Holdings or any of its Subsidiaries; each Employee Benefit Plain
that is group health plan (as defined in 45 Code of Federal Regulations
Section 160.103) has at all times been operated in compliance with the
provisions of the Health Insurance Portability and Accountability Act of 1996
and the regulations promulgated thereunder, except to the extent that any
non-compliance with such provisions and regulations could not reasonably be
expected to result in a material liability to Holdings or any of its
Subsidiaries; and Holdings and its Subsidiaries may amend any Plan sponsored by
any of them (other than a defined benefit plan) to cease contributions
thereunder and may terminate any Plan sponsored by any of them without, in each
case, incurring any material liability (other than ordinary administrative
termination costs that are immaterial in nature).

 

(b)     Except as could not reasonably be expected to result in a material
liability to Holdings or any of its Subsidiaries, each Non-U.S. Pension Plan has
been maintained in substantial compliance with its terms and with the
requirements of any and all applicable laws, statutes, rules, regulations and
orders and has been maintained, where required, in good standing with applicable
regulatory authorities. All contributions required to be made with respect to a
Non-U.S. Pension Plan have been timely made. Neither Holdings nor any of its
Subsidiaries has incurred any obligation in connection with the termination of,
or withdrawal from, any Non-U.S. Pension Plan (other than a defined contribution
plan). The present value of the accrued benefit liabilities (whether or not
vested) under each Non-U.S. Pension Plan (other than a Non-U.S. Pension Plan
that (i) is not required to be funded under applicable law or (ii) is a defined
contribution plan), determined as of the end of Holdings’ most recently ended
fiscal year on the basis of actuarial assumptions, each of which is reasonable,
did not exceed the current value of the assets of such Non-U.S. Pension Plan
allocable to such benefit liabilities by an amount that could reasonably be
expected to have a Material Adverse Effect.

73

--------------------------------------------------------------------------------

 

 

 

(c)     Without limiting the effect of preceding clauses (a) and (b), neither
Holdings nor any of its Subsidiaries is or has at any time been, within the
United Kingdom, an employer (for the purposes of sections 38 to 51 of the United
Kingdom’s Pensions Act 2004) of an occupational pension scheme which is not a
money purchase scheme (both terms as defined in the United Kingdom’s Pension
Schemes Act 1993) or has at any time been “connected” with or an “associate” of
(as those terms are used in sections 38 and 43 of the United Kingdom’s Pensions
Act 2004) such an employer.

 

SECTION 3.11     Security Documents. When executed and delivered pursuant to
Section 4.01, the provisions of each Security Document, will be effective to
create in favor of the Collateral Agent for the benefit of the Secured Parties a
legal, valid and enforceable security interest of the type that it purports to
create in all right, title and interest of the Credit Parties in the Collateral
described therein, and the Collateral Agent, for the benefit of the Secured
Parties, upon such execution and delivery, will have (or upon filing of UCC
financing statements and other required filings registrations or notices or
taking of possession or control (which shall occur within 10 days following the
Closing Date) will have) a fully perfected security interest in all right, title
and interest in all of the Collateral described therein, subject to no other
Liens other than Permitted Liens, and such security interest shall be a first
priority security interest, subject to Permitted Liens; provided that (i) the
Borrowers shall not be deemed to represent pursuant to the foregoing that the
U.S. Security Agreement creates a legal, valid and enforceable security interest
in any Collateral (as defined in the U.S. Security Agreement) granted by any
Grantor (as defined in the U.S. Security Agreement) that is not organized under
the laws of the United States or any state thereof (other than Equity Interests
held by any such Grantor in any Person that is organized under the laws of the
United States or any state thereof), and (ii) no steps have been taken in order
to perfect any such security interest in the Collateral referred to in clause
(i) above (other than Equity Interests held by any such Grantor in any Person
that is organized under the laws of the United States or any state thereof), in
each case granted pursuant to the U.S. Security Agreement. The recordation of
(i) the grant of security interest in Patents (as defined in the U.S. Security
Agreement) and (ii) the grant of security interest in Trademarks (as defined in
the U.S. Security Agreement) in the respective form attached to the U.S.
Security Agreement, in each case in the United States Patent and Trademark
Office, together with filings on Form UCC-1 made pursuant to the U.S. Security
Agreement, will create, to the extent as may be perfected by such filings and
recordation, a perfected security interest in the United States trademarks and
patents covered by the U.S. Security Agreement, and the recordation of the grant
of security interest in Copyrights (as defined in the U.S. Security Agreement)
in the form attached to the U.S. Security Agreement with the United States
Copyright Office, together with filings on Form UCC-1 made pursuant to the U.S.
Security Agreement, will create, to the extent as may be perfected by such
filings and recordation, a perfected security interest in the United States
copyrights covered by the U.S. Security Agreement.

 

SECTION 3.12     Properties. 

 

(a)     All Real Property (other than Oil and Gas Properties) leased by Holdings
or any of its Subsidiaries as of the date hereof and the Closing Date, and the
nature of the interest therein, is set forth in Schedule 3.12(a) hereto. Each of
Holdings and each of its Subsidiaries has a valid and indefeasible leasehold
interest in the material properties set forth in Schedule 3.12(a) free and clear
of all Liens other than Permitted Liens. As of the date hereof and the Closing
Date, none of Holdings or any of its Subsidiaries owns any Real Property other
than Oil and Gas Properties.

 

74

--------------------------------------------------------------------------------

 

 

(b)     All Oil and Gas Properties owned or leased by Holdings or any of its
Subsidiaries as of the date hereof and the Closing Date (other than Oil and Gas
Properties (i) which are not developed, (ii) which have no reserves or (iii) in
which none of Holdings or any of its Subsidiaries have any material working
interests) are reflected in the Reserve Report as of December 31, 2012 or are
otherwise set forth in Schedule 3.12(b).

 

(c)     Each of Holdings and each of its Subsidiaries, as applicable, has good
and defensible (from the perspective of a reasonably prudent investor in the Oil
and Gas Business) title to all of the Oil and Gas Properties included in the
most recent Reserve Report delivered pursuant to Section 4.01(f) or 5.01(c), as
the case may be, free from all Liens, claims and title imperfections, except for
(i) such imperfections of title as do not in the aggregate detract from the
value thereof to, or the use thereof in, the business of Holdings and its
Subsidiaries in any material respect, (ii) Oil and Gas Properties disposed of
since the date of the most recent Reserve Report as permitted by Section 6.04 or
Section 8.04 of the Existing Credit Agreement and (iii) Liens expressly
permitted by Section 6.06. Except as set forth on Schedule 3.12(c) or to the
extent otherwise permitted under this Agreement, the quantum and nature of the
interest of Holdings and each of its Subsidiaries in and to the Oil and Gas
Properties as set forth in each Reserve Report includes or will include the
entire interest of Holdings and each of its Subsidiaries in such Oil and Gas
Properties as of the date of such Reserve Report and are or will be complete and
accurate in all material respects as of the date of such Reserve Report; and
there are no “back-in” or “reversionary” interests held by third parties which
could reduce the interest (working, net revenue or otherwise) of Holdings and
its Subsidiaries in such Oil and Gas Properties in any material respect, except
as expressly set forth or given effect to in such Reserve Report or on Schedule
3.12(c). Except for obligations to contribute a proportionate share of the costs
of defaulting or non-consenting co-owners or as otherwise expressly set forth in
the most recent Reserve Report, neither Holdings nor any Subsidiary is obligated
to bear any percentage share of the costs and expenses relating to the drilling,
development and production of the Oil and Gas Properties in excess of its
working interests.

 

(d)     Holdings and each of its Subsidiaries has complied with all obligations
under all licenses, leases, subleases and term mineral interests in their
respective Oil and Gas Properties and all such licenses, leases, subleases and
term mineral interests are valid, subsisting and in full force and effect, and
neither Holdings nor any of its Subsidiaries has knowledge that a default exists
under any of the terms or provisions, express or implied, of any of such
licenses, leases, subleases or interests or under any agreement to which the
same are subject, except to the extent any inaccuracy in the foregoing could not
reasonably be expected to result in a Material Adverse Effect. All of the Oil
and Gas Contracts and obligations of Holdings and each of its Subsidiaries that
relate to the Oil and Gas Properties are in full force and effect and constitute
legal, valid and binding obligations of Holdings and its Subsidiaries party
thereto, except to the extent any inaccuracy in the foregoing could not
reasonably be expected to result in a Material Adverse Effect. None of Holdings
or any of its Subsidiaries or, to the knowledge of Holdings or its Subsidiaries,
any other party to any licenses, leases, subleases or term mineral interests in
the Oil and Gas Properties or any Oil and Gas Contract (i) is in breach of or
default, or with the lapse of time or the giving of notice, or both, would be in
breach or default, with respect to any obligations thereunder, whether express
or implied, except such that could not reasonably be expected to result in a
Material Adverse Effect or (ii) has given or threatened to give notice of any
default under or inquiry into any possible default under, or action to alter,
terminate, rescind or procure a judicial reformation of, any licenses or lease
in the Oil and Gas Properties or any Oil and Gas Contract. Holdings and each of
its Subsidiaries enjoys peaceful and undisturbed possession under all such
licenses, leases, subleases and term mineral interests.

 

75

--------------------------------------------------------------------------------

 

 

(e)     Holdings and each of its Subsidiaries has complied with all obligations
under all Authorizations, and to the best knowledge of Holdings and the
Borrowers, no steps have been taken for the revocation, variation or refusal of
any Authorization, except to the extent any non-compliance with such obligations
or any such revocation, variation or refusal could not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.

 

SECTION 3.13     [Reserved].  

 

SECTION 3.14     Subsidiaries. On and as of the date hereof, Holdings has no
Subsidiaries other than those Subsidiaries listed on Schedule 3.14 hereto.
Schedule 3.14 sets forth, as of the date hereof and the Closing Date, the
percentage ownership (direct and indirect) of Holdings in each class of Capital
Stock of each of its Subsidiaries and also identifies the direct owner thereof.
All outstanding Capital Stock of each Subsidiary of Holdings has been duly and
validly issued, is fully paid and non-assessable and has been issued free of
preemptive rights. Other than as set forth on Schedule 3.14, no Subsidiary of
Holdings has outstanding any securities convertible into or exchangeable for its
Capital Stock or outstanding any right to subscribe for or to purchase, or any
options or warrants for the purchase of, or any agreement providing for the
issuance (contingent or otherwise) of or any calls, commitments or claims of any
character relating to, its Capital Stock or any appreciation or similar rights.
On the date hereof and the Closing Date, 100% of the Equity Interests of each
Credit Party is owned directly or indirectly by Holdings.

 

SECTION 3.15     Compliance with Statutes, etc.    

 

(a)     Each of Holdings and each of its Subsidiaries is qualified under and is
in compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, and has obtained all required Authorizations
from, all Governmental Authorities in respect of the conduct of its business and
the ownership of its property (including statutes, regulations, orders and
restrictions applicable to the Oil and Gas Business and applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls, except such statutes, regulations, orders and restrictions that are
expressly addressed in Section 3.17), except such non-compliances as could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(b)     Each of Holdings and each of its Subsidiaries is in compliance with all
bonding requirements for the ownership and operation of its Oil and Gas
Properties.

 

SECTION 3.16     Investment Company Act. Neither Holdings nor any of its
Subsidiaries is an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

 

SECTION 3.17     Environmental Matters. Except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect:
(a) each of Holdings and each of its Subsidiaries is in compliance with all
applicable Environmental Laws and, with respect to its current operations, has
obtained and is in compliance with all permits required of it under
Environmental Law, and there are no proceedings pending or, to the knowledge of
Holdings or the Borrowers, threatened to revoke or rescind any such permit;
(b) there are no claims, proceedings, investigations or notices of violation
pending or, to the knowledge of Holdings or the Borrowers, threatened against
Holdings or any of its Subsidiaries under any Environmental Law; (c) no Lien,
other than a Permitted Lien, has been recorded or, to the

76

--------------------------------------------------------------------------------

 

 

knowledge of Holdings or the Borrowers, threatened under any Environmental Law
with respect to any Real Property currently owned by Holdings or any of its
Subsidiaries; (d) neither Holdings nor any of its Subsidiaries has contracted to
assume or accept responsibility for any liability of any non-affiliated Person
under any Environmental Law; and (e) there are no facts, circumstances,
conditions or occurrences with respect to the past or present business or
operations of Holdings, any of its Subsidiaries or any of their respective
predecessors, or any Real Property or facility at any time owned, leased or
operated by Holdings, any of its Subsidiaries or any of their respective
predecessors, that could be reasonably expected to give rise to any claim,
proceeding, investigation, action or liability of or against Holdings or any of
its Subsidiaries under any Environmental Law.

 

SECTION 3.18     Employment and Labor Relations. 

 

(a)     Neither Holdings nor any of its Subsidiaries is engaged in any unfair
labor practice that could reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect. There is (i) no unfair labor
practice complaint pending against Holdings or any of its Subsidiaries or, to
the knowledge of Holdings or the Borrowers, threatened against any of them,
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against Holdings or any of its Subsidiaries or, to the knowledge of
Holdings or the Borrowers, threatened (in writing) against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against Holdings or any of
its Subsidiaries or, to the knowledge of Holdings or the Borrowers, threatened
(in writing) against Holdings or any of its Subsidiaries, (iii) no union
representation question exists with respect to the employees of Holdings or any
of its Subsidiaries, (iv) no legal actions, lawsuits, arbitrations,
administrative or other proceedings, charges, complaints, investigations,
inspections, audits or notices of violations or possible violations are pending
or, to the knowledge of Holdings or the Borrowers, threatened against Holdings
or any of its Subsidiaries by or on behalf of, or otherwise involving, any
current or former employee, any person alleging to be a current or former
employee, any applicant for employment, or any class of the foregoing, or any
Governmental Authority, that involve the labor or employment relations and
practices of Holdings or any of its Subsidiaries, including but not limited to
claims of employment discrimination and (v) no violation of the Fair Labor
Standards Act or any other applicable federal, state or foreign wage and hour
laws, except (with respect to any matter specified in clauses (i) and
(ii) above, either individually or in the aggregate) such as could not
reasonably be expected to have a Material Adverse Effect.

 

(b)     Neither Holdings nor any of its Subsidiaries is, within the United
Kingdom, engaged in any unfair or unlawful employment practice that could
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect. There is within the United Kingdom (i) no unfair or
discriminatory employment practice complaint or investigation pending against
Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the
Borrowers, threatened against any of them, before the United Kingdom’s Equality
and Human Rights Commission or Health and Safety Executive or any other bodies
with similar functions in relation to any person engaged as a worker or afforded
the status of a worker (under any laws applicable within the United Kingdom),
and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against Holdings or the Borrowers
or any of either of their Subsidiaries or, to the knowledge or Holdings or the
Borrowers, threatened (in writing) against any of them, (ii) no strike or other
employee relations dispute pending against Holdings or any of its Subsidiaries
or, to the knowledge of Holdings or the Borrowers, threatened (in writing)
against any of them, (iii) no disagreement pending against Holdings or any of
its Subsidiaries or, to the knowledge of Holdings or the Borrowers, threatened
(in writing)

77

--------------------------------------------------------------------------------

 

 

against any of them in respect of the relations of any of them with any trade
union, works council, special negotiating body, staff association or any other
body representing individuals afforded the status of workers (under any laws
applicable within the United Kingdom), (iv) no legal actions, lawsuits,
arbitrations, administrative or other proceedings, charges, complaints,
investigations, inspections, audits or notices of violations or possible
violations are pending or, to the knowledge of Holdings or the Borrowers,
threatened against Holdings or any of its Subsidiaries by or on behalf of, or
otherwise involving, any current or former employee, any person alleging to be a
current or former employee, any applicant for employment or any other individual
claiming the status of, or protection afforded to, a worker (under any laws
applicable within the United Kingdom), or any Governmental Authority, that
involve the employment relations and practices of Holdings or any of its
Subsidiaries, including but not limited to claims of employment discrimination,
victimization or harassment on any irrational, perverse or prohibited bases,
accidents or injuries, breach of contract or unfair dismissal or any claims
under the United Kingdom’s Working Time Regulations 1998, National Minimum Wage
Act 1998, Data Protection Act 1998, Equal Pay Act 1970, Sex Discrimination Act
1975, Race Relations Act 1976, Disability Discrimination Act 1995, Employment
Equality (Sexual Orientation) Regulations 2003, Employment Equality (Age)
Regulations 2006 or Employment Equality (Religion and Belief) Regulations 2003,
and (v) no complaint of non-compliance by Holdings or any of its Subsidiaries
with any provisions of the Treaty of Rome, European Union directives or other
directly applicable European Union laws, statutes, regulations, codes of
conduct, collective agreements, terms and conditions of employment, orders,
declarations and awards relevant to any individual afforded the status of a
worker, except (with respect to any matter specified in clauses (i) – (v) above,
either individually or in the aggregate) such as could not reasonably be
expected to have a Material Adverse Effect.

 

SECTION 3.19     Intellectual Property, etc.  Each of Holdings and each of its
Subsidiaries owns or has the right to use all the patents, trademarks, permits,
domain names, service marks, trade names, copyrights, licenses, franchises,
inventions, trade secrets, proprietary information and know-how of any type,
whether or not written (including, but not limited to, rights in computer
programs and databases) and formulas, and has obtained assignments of all
leases, licenses and other rights of whatever nature, necessary for the present
conduct of its business, without any known conflict with the rights of others
which, or the failure to own or have which, as the case may be, could reasonably
be expected, either individually or in the aggregate, to have a Material Adverse
Effect.

 

SECTION 3.20     Indebtedness. Schedule 3.20 hereto sets forth a list of all
Indebtedness (including Contingent Obligations) and preferred stock of Holdings
and its Subsidiaries as of the date hereof and the Closing Date and which is to
remain outstanding after giving effect to those of the Transactions to be
consummated on the Closing Date (excluding the Obligations) in each case showing
the aggregate principal amount or stated amount thereof and the name of the
respective borrower or issuer and any Person that directly or indirectly
guarantees such debt or preferred stock.

 

SECTION 3.21     Insurance. Schedule 3.21 hereto sets forth a listing of all
insurance maintained by Holdings and its Subsidiaries as of the date hereof and
the Closing Date, with the amounts insured (and any deductibles) set forth
therein.

 

SECTION 3.22     Holding Company. Holdings is a holding company and does not
(a) have any material liabilities (other than (i) liabilities arising under the
Credit Documents, any Class C Convertible Preferred Stock and Series B Preferred
Stock outstanding on the date hereof and any Existing Indebtedness to which it
is a party, (ii) other liabilities which are permitted by

78

--------------------------------------------------------------------------------

 

 

the LC Procurement Documents or the Security Documents (as defined in the LC
Procurement Agreement) and are incurred in connection with the financing and
operation of Holdings’ and its Subsidiaries’ businesses, (iii) taxes and other
liabilities arising under applicable law) and (iv) obligations arising under
this Agreement or the Security Documents or (b) own any material assets or
engage in any operations or business (other than (i) its direct or indirect
ownership of its Subsidiaries and (ii) Investments permitted under
Section 6.05).

 

SECTION 3.23     Immaterial Subsidiaries. On the date hereof and the Closing
Date, each of Endeavour Energy Luxembourg S.à r.l., Endeavour Colorado
Corporation, Endeavour Energy North Sea Limited, Endeavour Energy Netherlands
B.V., Endeavour Energy New Ventures Inc., END Management Company is an
Immaterial Subsidiary.

 

SECTION 3.24     Liens. Schedule 3.24 hereto sets forth a list of all Liens
(other than Liens arising under the Security Documents and the Security
Documents (as defined in the LC Procurement Agreement) or securing Indebtedness
under the Existing Credit Agreement or guarantees thereof) on the assets of
Holdings and its Restricted Subsidiaries as of the date hereof and the Closing
Date that secure Indebtedness for borrowed money or Capital Lease Obligations
and which are to remain outstanding after giving effect to those of the
Transactions to be consummated on the Closing Date, in each case showing the
aggregate principal amount of Indebtedness or other obligations secured thereby
and the name of the respective grantor.

 

SECTION 3.25     Stamp Taxes.  It is not necessary that any stamp, registration,
documentary, transfer, notarial or similar Taxes or fees be paid on or in
relation to the entry into this Agreement, except any tax or fee payable
referred to in any legal opinion delivered to the Administrative Agent and which
will be made or paid promptly after the date of the relevant Credit Document.

 

SECTION 3.26     Withholdings. It is not required to make a withholding or
deduction for any Taxes from any payment it may make under this Agreement to any
Recipient, except no warranty is provided in respect of any U.S. federal
withholding taxes imposed under FATCA.

 

SECTION 3.27     No Works Council. As of the date of this Agreement, no works
council (ondernemingsraad) has been established or is in the process of being
established with respect to the business of EIH nor does an obligation exist for
EIH to establish a works council pursuant to the Dutch Works Councils Act (Wet
op de ondernemingsraden).

 

Article IV
Conditions Precedent

 

SECTION 4.01     Closing Date.  The obligations of the Lenders to make Loans
hereunder on the Closing Date are subject to the satisfaction of the following
conditions on the Closing Date:

 

(a)     Legal Opinions.  The Administrative Agent shall have received, on behalf
of itself, the Collateral Agent, the Arranger and the Lenders, a favorable
written opinion of (i) Vinson & Elkins L.L.P., special New York to the Credit
Parties, in substantially the form attached as Exhibit J-1 hereto, (ii) Vinson &
Elkins R.L.L.P., special English counsel to the Credit Parties, in substantially
the form attached as Exhibit J-2 hereto, (iii) Vinson & Elkins L.L.P., special
New York counsel to the Credit Parties, in connection with the joinder agreement
to the Intercreditor Agreement referenced in Section 5.01(o) and with respect to
such matters, and in form, reasonably acceptable to the Collateral Agent; (iv)
Woodburn and Wedge, special Nevada

79

--------------------------------------------------------------------------------

 

 

counsel to Holdings, in substantially the form attached as Exhibit J-3 hereto,
and (v) Allen & Overy, special Dutch counsel to EIH, in substantially the form
attached as Exhibit J-4 hereto, in each case, dated the Closing Date.

 

(b)     Officer’s Certificates.  The Administrative Agent shall have received
(i) a copy of the certificate or articles of incorporation or formation,
including all amendments thereto, of each Credit Party except EIH, to the extent
applicable, certified, as of a recent date by the Secretary of State of the
state of its formation (or equivalent Governmental Authority), and, to the
extent applicable, a certificate as to the good standing of each Credit Party as
of a recent date, from such Secretary of State (or equivalent Governmental
Authority) and with respect to EIH, an extract from the chamber of commerce
(kamer van koophandel), a copy of the articles of association (statuten) and a
copy of the deed of incorporation (akte van oprichting); (ii) a certificate of a
Responsible Officer of each Credit Party dated the Closing Date and certifying
(A) that attached thereto is a true and complete copy of the governing documents
of such Credit Party as in effect on the Closing Date and at all times since a
date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the members, board of directors or other appropriate governing body
(if required) of such Credit Party authorizing the execution, delivery and
performance of the Credit Documents to which such Person is a party and, in the
case of the Borrowers, the borrowings hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and effect,
(C) that the certificate or articles of incorporation of such Credit Party
except EIH have not been amended since the date of the last amendment thereto
shown on the certificate of good standing and with respect to EIH, the date of
the last amendment thereto shown on the extract from the chamber of commerce
(kamer van koophandel), furnished pursuant to clause (i) above, and (D) as to
the incumbency and specimen signature of each officer executing any Credit
Document or any other document delivered in connection herewith on behalf of
such Credit Party; and (iii) a certificate of another officer as to the
incumbency and specimen signature of the Responsible Officer executing the
certificate pursuant to clause (ii) above.

 

(c)     Certificate.  The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Responsible Officer of the
Borrowers, certifying compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.02.

 

(d)     Fees.  The Administrative Agent and the Arranger shall have received all
Fees and other amounts due and payable on or prior to the Closing Date (or
arrangements for the netting of such Fees and other amounts due and payable on
the Closing Date shall have been made), including, to the extent invoiced at
least two Business Days prior to the Closing Date, reimbursement or payment of
all reasonable and documented legal fees and all out-of-pocket expenses required
to be reimbursed or paid by the Borrowers hereunder or under any other Credit
Document.

 

(e)     Credit  Documents.  The Administrative Agent shall have received each of
(i) this Agreement, (ii) any requested promissory notes and (iii) the Security
Documents, in each case, duly executed by each applicable Credit Party and each
other party that is to be a party thereto and each such document shall be in
full force and effect on the Closing Date.  The Collateral Agent on behalf of
the Lenders shall have a security interest in the Collateral of the type and
priority described in each Security Document.

 

(f)     Reserve Report.  The Administrative Agent shall have received the
Initial Reserve Report.

80

--------------------------------------------------------------------------------

 

 

 

(g)     Credit Party Guaranty.  Each Guarantor shall have duly authorized,
executed and delivered the Credit Party Guaranty in the form of Exhibit E (as
amended, modified, restated and/or supplemented from time to time, the “Credit
Party Guaranty”).

 

(h)     U.S. Security Agreement.  Each Credit Party party thereto shall have
duly authorized, executed and delivered the U.S. Security Agreement in the form
of Exhibit F (as amended, modified, restated and/or supplemented from time to
time, the “U.S. Security Agreement”) and, in connection therewith, the Credit
Parties shall have delivered to the Collateral Agent:

 

(i)     proper financing statements (Form UCC-1 or the equivalent) fully
executed or authorized for filing under the UCC or other appropriate filing
offices of each jurisdiction as may be necessary or, in the reasonable opinion
of the Collateral Agent, desirable, to perfect the security interests purported
to be created by the U.S. Security Agreement;

 

(ii)     copies of requests for information or copies (Form UCC-11), or
equivalent reports as of a recent date, listing all effective financing
statements that name any Credit Party as debtor and that are filed where each
Credit Party is organized and, to the extent reasonably requested by the
Collateral Agent, in such other jurisdictions in which Collateral is located on
the Closing Date, together with copies of such other financing statements that
name Holdings or any of its Subsidiaries as debtor (none of which shall cover
any of the Collateral except (x) to the extent evidencing Permitted Liens or
(y) those in respect of which the Collateral Agent shall have received
termination statements (Form UCC-3) or such other termination statements as
shall be required by local law fully executed or authorized for filing);

 

(iii)    evidence of the completion (or arrangements therefor satisfactory to
the Collateral Agent) of all other recordings and filings of, or with respect
to, and all action necessary in connection with, the U.S. Security Agreement as
may be necessary or, in the reasonable opinion of the Collateral Agent,
desirable, to perfect the security interests intended to be created by the U.S.
Security Agreement; and

 

(iv)     evidence that all other actions necessary or, in the reasonable opinion
of the Collateral Agent, desirable, to perfect the security interests purported
to be created by the U.S. Security Agreement have been taken (or arrangements
therefor satisfactory to the Collateral Agent).

 

(i)     English Debenture.  Each Credit Party party thereto shall have duly
authorized, executed and delivered to the Administrative Agent an English
Debenture in the form of Exhibit G (as amended, modified, restated and/or
supplemented from time to time the “English Debenture”) and, in connection
therewith, the Credit Parties shall have delivered to the Collateral Agent
copies of lien searches with respect to each such Credit Party.

 

(j)     English Charge Over Shares.  Each Credit Party party thereto shall have
duly authorized, executed and delivered to the Administrative Agent an English
Charge Over Shares in the form of Exhibit H (as amended, modified, restated
and/or supplemented from time to time, the “English Charge Over Shares”).

 

81

--------------------------------------------------------------------------------

 

 

(k)     Subordination Agreement.  The Administrative Agent shall have received a
subordination agreement, duly executed by each of EOC, EEUK, EIH and Endeavour
Energy Luxembourg S.à r.l. (as amended, modified, restated and/or supplemented
from time to time, the “Subordination Agreement”), with respect to (i) that
certain Inter-Company Loan Agreement, dated as of May 31, 2012, and between EOC
and EEUK and (ii) that certain revolving loan facility agreement dated January
23, 2008 between EIH and Endeavour Energy Luxembourg S.à.r.l., which agreement
shall be in form and substance acceptable to the Administrative Agent.

 

(l)     Solvency Certificate.  The Administrative Agent shall have received a
solvency certificate from a Financial Officer of Holdings in the form of Exhibit
I;

 

(m)     Insurance Certificates.  The Administrative Agent shall have received
certificates of insurance complying with the requirements of Section 5.03 for
the business and properties of Holdings and its Restricted Subsidiaries, in form
and substance reasonably satisfactory to the Administrative Agent and naming the
Collateral Agent as an additional insured and/or as loss payee, as applicable.

 

(n)     PATRIOT Act.  At least five Business Days prior to the Closing Date, the
Lenders shall have received, to the extent previously requested, all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including the USA PATRIOT Act.

 

(o)     Joinder to Intercreditor Agreement.  The Collateral Agent shall have
become a party to the Intercreditor Agreement, pursuant to a joinder agreement
in form and substance acceptable to the Collateral Agent, and shall have acceded
to all of the rights and privileges of MC Admin Co LLC thereunder.

 

(p)     Termination of Existing LC Procurement Agreements.  Each Existing LC
Procurement Agreement shall have been terminated, all letters of credit issued
pursuant thereto shall have been terminated and the Administrative Agent shall
have received satisfactory payoff letters, lien release documentation or similar
agreements which evidence the foregoing.

 

(q)     Termination of Existing Credit Agreement.  All Indebtedness arising
under the Existing Credit Agreement shall have been repaid in full, and the
Administrative Agent shall have received satisfactory payoff letters, lien
release documentation or similar agreements which evidence the foregoing.

 

(r)     LC Procurement Agreement.  The Administrative Agent shall have received
evidence satisfactory to it that the LC Procurement Agreement and the other
Security Documents (as defined thereunder) shall have been duly authorized,
executed and delivered by each of the parties thereto and in full force and
effect and that all conditions to the effectiveness of the parties obligations
thereunder (other than the effectiveness of this Agreement) shall have been
satisfied. 

 

(s)     Term B Credit Agreement.  The Administrative shall have received
evidence satisfactory to it that the Term B Credit Agreement and the other
Credit Documents (as defined thereunder) shall have been duly authorized,
executed and delivered by each of the parties thereto and in full force and
effect and that all conditions to the effectiveness of the parties obligations
thereunder (other than the effectiveness of this Agreement) shall have been
satisfied.

 

82

--------------------------------------------------------------------------------

 

 

(t)     Service of Process.  On or prior to the Closing Date, the Administrative
Agent shall have received evidence satisfactory to it that (i) each Credit Party
has appointed each of CT Corporation and Endeavour International Holding B.V. as
agents for service of process as contemplated in Section 9.19 and (ii) each of
CT Corporation and Endeavour International Holding B.V. has accepted its
appointment.  

 

SECTION 4.02     All Borrowings.  The obligations of the Lenders to make Loans
hereunder are subject to the satisfaction of the following conditions on the
date of each Borrowing (other than a conversion or a continuation of a
Borrowing):

 

(a)     The Administrative Agent shall have received a notice of such Borrowing
as required by Section 2.03.

 

(b)     The representations and warranties set forth in Article III and in each
other Credit Document shall be true and correct in all material respects (other
than representations and warranties qualified as to materiality, which will be
true and correct in all respects) on and as of the date of such Borrowing with
the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date in which case
they will be true and correct as of such earlier date.

 

(c)     At the time of and immediately after such Borrowing, no Default or Event
of Default shall have occurred and be continuing.

 

Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrowers and Holdings on the date thereof as to the matters specified in
paragraphs (b) and (c) of this Section 4.02.

 

Article V
Affirmative Covenants

 

Each of Holdings and the Borrowers hereby covenants and agrees with each Lender
that until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other Obligations (other than
indemnities described in Section 9.05 which are not then due and payable and for
which no claim has been made) shall have been paid in full, unless waived in
accordance with Section 9.08:

 

SECTION 5.01     Financial Statements and Other Reports.  Holdings will furnish
to the Administrative Agent and each Lender:

 

(a)     Annual Financial Statements.  Within 90 days after the close of each
fiscal year of Holdings, (i) the consolidated balance sheet of Holdings as at
the end of such fiscal year and the related consolidated statements of
operations, stockholders’ equity and cash flows for such fiscal year, setting
forth comparative figures for the preceding fiscal year, and certified by Ernst
& Young or another independent certified public accountants of recognized
national standing reasonably acceptable to the Administrative Agent, accompanied
by an opinion of such accounting firm (which opinion shall be without a “going
concern” or like qualification or exception and without any qualification or
exception as to scope of audit) and (ii) management’s discussion and analysis of
the important operational and financial developments during such fiscal year.

 

83

--------------------------------------------------------------------------------

 

 

(b)     Quarterly Financial Statements.  Within 45 days after the close of each
of the first three quarterly accounting periods in each fiscal year of Holdings,
(i) the consolidated balance sheet of Holdings as at the end of such quarterly
accounting period and the related consolidated statements of income and retained
earnings and statement of cash flows for such quarterly accounting period and
for the elapsed portion of the fiscal year ended with the last day of such
quarterly accounting period, in each case setting forth comparative figures for
all such financial information for the corresponding quarterly accounting period
in the prior fiscal year, and (ii) management’s discussion and analysis of the
important operational and financial developments during such quarterly
accounting period.  All of the foregoing financial statements shall be certified
by a Financial Officer of Holdings that they fairly present in all material
respects in accordance with GAAP the consolidated financial condition of
Holdings as of the dates indicated and the consolidated results of operations
for the periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes.

 

(c)     Reserve Report.  Prior to or concurrently with any delivery of financial
statements under clause (a) of this Section 5.01 and, solely as to each quarter
ending on June 30, under clause (b) of this Section 5.01 (or more frequently at
Holdings’ option) (i) a Reserve Report (which shall be (A) an annual Reserve
Report (as described in the definition of such term) in the case of a Reserve
Report delivered in connection with annual financial statements or (B) a
semi-annual Reserve Report (as so described) in the case of a Reserve Report
delivered in connection with quarterly financial statements for any fiscal
quarter ending June 30) and (ii) a certificate of a Responsible Officer showing
any additions to or deletions from the Oil and Gas Properties made by Holdings
and each of its Restricted Subsidiaries and in Proved Reserves and Probable
Reserves attributable to such Oil and Gas Properties since the date of the most
recently delivered previous Reserve Report.

 

(d)     Management Letters.  Promptly after Holdings’ or any of its
Subsidiaries’ receipt thereof, a copy of any “management letter” received from
its certified public accountants and management’s response thereto.

 

(e)     Compliance Certificate.  At the time of the delivery of the financial
statements provided for in Sections 5.01(a) and (b), a compliance certificate
from a Financial Officer of Holdings in the form of Exhibit C certifying on
behalf of Holdings that, to such officer’s knowledge after due inquiry, no
Default or Event of Default has occurred and is continuing or, if any Default or
Event of Default has occurred and is continuing, specifying the nature and
extent thereof, which certificate shall (i) set forth in reasonable detail the
calculations required to establish whether Holdings and its Subsidiaries were in
compliance with the provisions of Sections 6.10, 6.11 and 6.12 at the end of
such fiscal quarter or year, as the case may be, (ii) for the compliance
certificate delivered at the time of delivery of the financial statements
provided for in Section 5.01(a) only, set forth the Borrowers’ calculation of
Excess Cash Flow for the applicable fiscal year, and (iii) certify that there
have been no changes to Schedule VI of the U.S. Security Agreement, in each case
since the Closing Date or, if later, since the date of the most recent
certificate delivered pursuant to this Section 5.01(e), or if there have been
any such changes, a list in reasonable detail of such changes (but, in each case
with respect to this clause (e), only to the extent that such changes are
required to be reported to the Collateral Agent pursuant to the terms of the
U.S. Security Agreement) and whether Holdings and the other Credit Parties have
otherwise taken all actions required to be taken by them pursuant to the U.S.
Security Agreement in connection with any such changes.

 

(f)     Notice of Default, Litigation and Material Adverse Effect.  Promptly,
and in any event within three Business Days after any Responsible Officer of
Holdings or any of its

84

--------------------------------------------------------------------------------

 

 

Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default, (ii) any litigation or
governmental investigation or proceeding pending against Holdings or any of its
Subsidiaries (A) which, either individually or in the aggregate, has had, or
could reasonably be expected to have, a Material Adverse Effect or (B) with
respect to any Credit Document or (iii) any other event, change or circumstance
that has had, or could reasonably be expected to have, a Material Adverse
Effect.

 

(g)     Other Reports and Filings.  Promptly after the filing or delivery
thereof, copies of all financial information, proxy materials and reports, if
any, which Holdings or any of its Subsidiaries shall publicly file with the SEC.

 

(h)     Environmental Matters.  Promptly after any officer of Holdings or any of
its Subsidiaries obtains knowledge thereof, notice of one or more of the
following environmental matters, but only to the extent that such environmental
matters, either individually or when aggregated with all other such
environmental matters, could reasonably be expected to have a Material Adverse
Effect:

 

(i)     any pending or threatened claim, proceeding, investigation or notice of
violation issued under or pursuant to any Environmental Law against Holdings or
any of its Subsidiaries or any Real Property, facility or Oil and Gas Property
owned, leased or operated by Holdings or any of its Subsidiaries;

 

(ii)     any condition or occurrence on or arising from any Real Property,
facility or Oil and Gas Property owned, leased or operated by Holdings or any of
its Subsidiaries that could reasonably be expected to form the basis of a claim,
proceeding, investigation, action or notice of violation against Holdings or any
of its Subsidiaries or any such Real Property or facility under any
Environmental Law;

 

(iii)    issuance under any Environmental Law of any liens or restrictions on
the ownership, lease, occupancy, use or transferability by Holdings or any of
its Subsidiaries of any Real Property, facility or Oil and Gas Property owned,
operated or leased by Holdings or any of its Subsidiaries; and

 

(iv)     the taking of any removal or remedial action as required by any
Environmental Law or any Governmental Authority in response to the actual or
alleged presence, Release or threatened Release of any Hazardous Material on any
Real Property, facility or Oil and Gas Property owned, leased, used or operated
by Holdings or any of its Subsidiaries.

 

All such notices shall describe in reasonable detail the nature of the claim,
proceeding, investigation, notice, condition, occurrence, incurrence or removal
or remedial action and Holdings’ or such Subsidiary’s response thereto.

 

(i)     Production and Hedging Reports.  Concurrently with any delivery of
financial statements under clause (a) or (b) of this Section 5.01, (i)
production and operating reports (the same to include information as to volumes
produced and sold and the amount received by the Loan Parties) in respect of the
Oil and Gas Properties of the Credit Parties, and (ii) a certificate of a
Financial Officer of Holdings in form and substance reasonably satisfactory to
the Administrative Agent setting forth as of a recent date, a true and complete
list of all Hedging Agreements of Holdings and each Restricted Subsidiary, the
material terms thereof (including the type, term, effective date, termination
date and notional amounts or volumes), any new credit

85

--------------------------------------------------------------------------------

 

 

support agreements relating thereto (other than Credit Documents), any margin
required or supplied under any credit support document, and the counterparty to
each such agreement; provided, that unless and until Holdings makes such reports
and information provided under this Section 5.01(i) publicly available, such
information and reports shall be considered MNPI and, absent the consent of such
Lender, shall not be delivered to any Public Lender.

 

(j)     Other Information.  From time to time, such other information or
documents (financial or otherwise) with respect to Holdings or any of its
Subsidiaries as the Administrative Agent or any Lender (through the
Administrative Agent) may reasonably request.

 

Notwithstanding the foregoing, the obligations in clauses (a), (b), (j) and (g)
of this Section 5.01 may be satisfied with respect to financial information (or,
in the case of such clause (j), other information) of Holdings and the
Subsidiaries by filing Holdings’ Form l0‑K or 10‑Q, as applicable (or, in the
case of such clause (j), such other applicable filing), with the SEC or by
making such information available on Holdings’ website, in each case to the
extent Holdings has notified the Administrative Agent and the Lenders of such
filing or that such information is available on such website.

 

Each of Holdings and the Borrowers hereby acknowledges that the Administrative
Agent and each Lender may have personnel who do not wish to receive material
non-public information with respect to Holdings, the Borrowers or their
respective Subsidiaries, or the respective securities of any of the foregoing
(“MNPI”), and who may be engaged in investment and other market-related
activities with respect to such Persons’ securities.  Prior to the delivery of
any information to any Agent or Lender pursuant to this Agreement, a Responsible
Officer of Holdings will certify on behalf of Holdings and the Borrowers as to
whether such information contains any MNPI.  In the case any such information
contains any MNPI, any Agent or Lender may decline to receive such information
in which case neither Holdings nor either Borrower shall deliver such
information to such declining Agent or Lender.

 

SECTION 5.02     Books, Records and Inspections; Annual Meetings. 

 

(a)     Holdings will, and will cause each of its Subsidiaries to, keep proper
books of record and accounts in which full, true and correct entries in
conformity with GAAP and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities.  Holdings will, and
will cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent (i) to visit and inspect, under
guidance of officers of the Borrowers or such Subsidiary, any of the properties
of the Borrowers or such Subsidiary and (ii) to examine the books of account of
the Borrowers or such Subsidiary and discuss the affairs, finances and accounts
of the Borrowers or such Subsidiary with, and be advised as to the same by, its
and their officers and independent accountants, all upon reasonable prior notice
and at such reasonable times and intervals and to such reasonable extent as the
Administrative Agent may reasonably request.

 

(b)     At the request of the Administrative Agent, Holdings will within 120
days after the close of each fiscal year of Holdings, hold a meeting (which may
be by conference call or teleconference), at a time and place selected by
Holdings and reasonably acceptable to the Administrative Agent, with all of the
Lenders that choose to participate, to review the financial results of the
previous fiscal year and the financial condition of Holdings and its
Subsidiaries and the budgets presented for the current fiscal year of Holdings
and its Subsidiaries.

 

SECTION 5.03     Maintenance of Property; Insurance.

86

--------------------------------------------------------------------------------

 

 

 

(a)     Holdings will, and will cause each of its Subsidiaries to, (i) keep all
property necessary to the business of Holdings and its Subsidiaries in good
working order and condition, ordinary wear and tear excepted and subject to the
occurrence of casualty events, (ii) maintain with financially sound and
reputable insurance companies insurance on all such property and against all
such risks as is consistent and in accordance with industry practice for
companies similarly situated owning similar properties and engaged in similar
businesses as Holdings and its Subsidiaries, and (iii) furnish to the
Administrative Agent, upon its request therefor, full information as to the
insurance carried.  Such insurance shall include physical damage insurance on
all real and personal property, including, without limitation, on Oil and Gas
Properties (whether now owned or hereafter acquired) on an all risk basis.  The
provisions of this Section 5.03 shall be deemed supplemental to, but not
duplicative of, the provisions of any Security Documents that require the
maintenance of insurance.

 

(b)     Holdings will, and will cause each of its Subsidiaries to, at all times
keep its property insured in favor of the Collateral Agent, and all policies or
certificates (or certified copies thereof) with respect to such insurance (and
any other insurance maintained by Holdings and/or such Subsidiaries) (i) shall
be endorsed to the Collateral Agent’s satisfaction for the benefit of the
Collateral Agent (including, without limitation, by naming the Collateral Agent
as loss payee and/or additional insured), (ii) shall state that such insurance
policies shall not be canceled without at least 30 days’ prior written notice
thereof by the respective insurer to the Collateral Agent, (iii) shall provide
that the respective insurers irrevocably waive any and all rights of subrogation
with respect to the Collateral Agent and the other Secured Parties, and
(iv) shall be deposited with the Collateral Agent.

 

(c)     If Holdings or any of its Subsidiaries shall fail to maintain insurance
in accordance with this Section 5.03, or if Holdings or any of its Subsidiaries
shall fail to so endorse and deposit all policies or certificates with respect
thereto, the Administrative Agent shall have the right (but shall be under no
obligation) to procure such insurance, and Holdings and the Borrowers jointly
and severally agree to reimburse the Administrative Agent for all costs and
expenses of procuring such insurance.

 

SECTION 5.04     Existence; Franchises; Oil and Gas Properties.

 

(a)     Holdings will, and will cause each of its Subsidiaries to, do or cause
to be done, all things necessary to preserve and keep in full force and effect
its existence and its material rights, franchises, licenses, permits,
copyrights, trademarks and patents and pay all royalties when due; provided that
nothing in this Section 5.04 shall prevent (i) sales of assets and other
transactions by Holdings or any of its Subsidiaries in accordance with Section
6.04, (ii) the termination of the existence of an Immaterial Subsidiary, (iii)
other than in connection with the foregoing clause (ii), the withdrawal by
Holdings or any of its Subsidiaries of its qualification as a Business in any
jurisdiction other than the United States or any State thereof or the United
Kingdom if such withdrawal could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(b)     Holdings will, and will cause each of its Subsidiaries to, (i) comply in
all material respects with the terms and provisions of all oil and gas leases
and licenses relating to the Oil and Gas Properties of Holdings and each of its
Subsidiaries and all contracts and agreements relating thereto or to the
production and sale of Hydrocarbons therefrom; provided that Holdings and its
Subsidiaries shall have the right to abandon Oil and Gas Properties in the
exercise of Holdings’ or such Subsidiaries’ reasonable judgment, in each case in
compliance with the relevant Oil and

87

--------------------------------------------------------------------------------

 

 

Gas Contracts governing such Oil and Gas Properties, and (ii) with respect to
any such Oil and Gas Properties or oil and gas gathering assets that are
operated by operators other than Holdings or any of its Subsidiary, use all
commercially reasonable efforts to enforce in a manner consistent with industry
practice the operator’s contractual obligations to maintain, develop, and
operate such Oil and Gas Properties and oil and gas gathering assets in
accordance with the applicable operating agreements.

 

SECTION 5.05     Compliance with Statutes, etc.

 

(a)     Holdings will, and will cause each of its Subsidiaries to, comply with
all applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all Governmental Authorities in respect of the conduct
of its business and the ownership of its property (including applicable
statutes, regulations, orders and restrictions relating to environmental
standards and controls other than such statutes, regulations, orders and
restrictions that are expressly addressed in Section 5.06), except such
non-compliances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(b)     Holdings shall, and shall cause each of its Subsidiaries to, maintain
and comply with the terms and conditions of any material Authorization required
under any law or regulation (including Environmental Law) (i) to enable it to
perform its obligations and/or exercise its rights under, or the validity or
enforceability of, each Credit Document and Oil and Gas Contract and (ii) to
enable it to conduct the Oil and Gas Business in which it has an interest
except, in the case of preceding clause (ii) only, such failure to maintain or
non-compliance as could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

SECTION 5.06     Compliance with Environmental Laws.

 

(a)     Holdings will comply, and will cause each of its Subsidiaries to comply,
with all Environmental Laws and permits applicable to, or required by, the
ownership, lease or operation of Real Property, facilities and Oil and Gas
Property now or hereafter owned, leased or operated by Holdings or any of its
Subsidiaries, except such noncompliance as could not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, and
will promptly pay or cause to be paid all costs and expenses for which Holdings
or its Subsidiaries are legally obligated that are incurred in connection with
such compliance, and will keep or cause to be kept all such Real Property,
facilities and Oil and Gas Properties free and clear of any Liens imposed
pursuant to such Environmental Laws.  Holdings and its Subsidiaries will
generate, use, treat, store, Release and dispose of, and will cause the
generation, use, treatment, storage, Release and disposal of Hazardous Materials
on any Real Property, facilities or Oil and Gas Properties now or hereafter
owned, leased or operated by Holdings or any of its Subsidiaries, and transport
or cause the transportation of Hazardous Materials to or from any such Real
Property, facilities or Oil and Gas Properties in compliance with all applicable
Environmental Laws, except for such Hazardous Materials generated, used,
treated, stored, Released and disposed of at any such Real Properties,
facilities or Oil and Gas Properties in connection with or arising out of the
business or operations of Holdings or any of its Subsidiaries as would not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(b)     Upon (i) the receipt by the Administrative Agent or any Lender of any
notice from Holdings or either Borrower of the type described in Section
5.01(h), (ii) a reasonable determination that Holdings or any of its
Subsidiaries are not in compliance with Section 5.06(a) or (iii) the exercise by
the Administrative Agent or the Lenders of any of the remedies pursuant

88

--------------------------------------------------------------------------------

 

 

to Section 7.01, each of Holdings and the Borrowers will (in each case)
collectively, or if either Holdings or the Borrowers so desire, individually,
provide, upon the request of the Administrative Agent at the sole expense of
Holdings and the Borrowers, as applicable, an environmental site assessment
report concerning any Real Property or facilities owned, leased or operated by
Holdings or any of its Subsidiaries, prepared by an environmental consulting
firm reasonably acceptable to by the Administrative Agent, indicating, as the
circumstances may dictate, the presence or absence of Hazardous Materials and
the potential cost of any removal or remedial action in connection with such
Hazardous Materials on such Real Property or facilities.  If either Holdings or
the Borrowers fails to provide the same within 30 days after such request was
made, the Administrative Agent may order the same, the cost of which shall be
borne by the non-responsive Credit Party; and each of Holdings and the Borrowers
shall grant and hereby grants to the Administrative Agent and the Lenders and
their respective agents access to such Real Property or facilities and
specifically grant the Administrative Agent and the Lenders an irrevocable
non-exclusive license, subject to the rights of tenants, to undertake such an
assessment at any reasonable time upon reasonable notice to Holdings and the
Borrowers, all at the sole expense of each of Holdings and the Borrowers.

 

SECTION 5.07     ERISA.

 

(a)     As soon as reasonably practicable and, in any event, within ten
(10) days after Holdings, any of its Subsidiaries or any ERISA Affiliate knows
or has reason to know of the occurrence of any of the following, Holdings will
deliver to each of the Lenders a certificate of any Responsible Officer of
Holdings setting forth the full details as to such occurrence and the action, if
any, that Holdings, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given or
filed by Holdings, such Subsidiary, the Plan administrator or such ERISA
Affiliate to or with the PBGC or any other Governmental Authority, or a Plan
participant with respect thereto, and any notices received by Holdings, such
Subsidiary or ERISA Affiliate from the PBGC or any other Governmental Authority,
or a Plan participant with respect thereto:  an ERISA Event (except to the
extent that Holdings has previously delivered to the Lenders a certificate and
notices (if any) concerning such event pursuant to the next clause of this
Section 5.07); a contributing sponsor (as defined in Section 4001(a)(13) of
ERISA) of a Plan subject to Title IV of ERISA becoming subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur with respect to such Plan within the following 30 days (except to the
extent that a waiver to the advance reporting requirement of PBGC Regulation
Section 4043.61 applies with respect to such event); a failure of Holdings, any
of its Subsidiaries, or an ERISA Affiliate to timely make any material
contribution required to be made with respect to a Plan or Non‑U.S. Pension
Plan; the existence of potential withdrawal liability under Section 4201 of
ERISA if Holdings, any of its Subsidiaries and any ERISA Affiliate were to
withdraw completely from any and all Multiemployer Plans if such withdrawal is
reasonably expected to occur and such liability to Holdings or any of its
Subsidiaries could reasonably be expected to result in a material liability to
Holdings or any of its Subsidiaries; the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by Holdings, any
of its Subsidiaries or any ERISA Affiliate; the adoption of any amendment to a
Plan subject to Section 412 of the Code that results in a material increase in
the contribution obligations of Holdings, any of its Subsidiaries or any ERISA
Affiliate; a Plan has an Unfunded Current Liability that could reasonably be
expected to result in a material liability; with respect to group health plans
(as defined in Section 607(1) of ERISA, or Section 4980B(g)(2) of the Code), a
violation of the provisions of Part 6 of subtitle B of Title 1 of ERISA and
Section 4980B of the Code that is reasonably expected to result in a

89

--------------------------------------------------------------------------------

 

 

material liability to Holdings or any of its Subsidiaries; with respect to group
health plans (as defined in 45 Code of Federal Regulations Section 160.103), a
violation of the Health Insurance Portability and Accountability Act of 1996 and
the regulations promulgated thereunder that could reasonably be expected to
result in a material liability to Holdings or any of its Subsidiaries; or the
incurrence of any material liability by Holdings or any of its Subsidiaries
pursuant to any portion of an employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA).  Holdings
will deliver to each of the Lenders (i) a copy of each funding waiver request
filed with the Internal Revenue Service or any other Governmental Authority with
respect to any Plan pursuant to Section 412(d) of the Code or Section 302(c) of
ERISA and all communications received by Holdings, any of its Subsidiaries or
any ERISA Affiliate from the Internal Revenue Service or any other Governmental
Authority regarding such funding waiver request, (ii) copies of any records,
documents or other information that must be furnished to the PBGC with respect
to any Plan pursuant to Section 4010 of ERISA and (iii) a complete copy of the
annual report (on Internal Revenue Service Form 5500-series) of each Plan
(including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information) required to be filed with the U.S. Department of
Labor.  In addition to any certificates or notices delivered to the Lenders
pursuant to the first sentence of this Section 5.07(a), copies of annual reports
and any records, documents or other information required to be furnished to the
PBGC or any other Governmental Authority, and any material notices received by
Holdings or any of its Subsidiaries or any ERISA Affiliate, with respect to any
Plan or Non‑U.S. Pension Plan, shall be delivered to the Lenders no later than
ten (10) days after the date such annual reports have been filed or such
records, documents and/or information have been furnished to the PBGC or other
Governmental Authority or such notice has been received by Holdings, any of its
Subsidiaries, or any ERISA Affiliate, as applicable.

 

(b)     If, at any time after the date of this Agreement, Holdings or any of its
Subsidiaries or any ERISA Affiliate maintains, or contributes to (or incurs an
obligation to contribute to), a pension plan as defined in Section 3(2) of ERISA
that is subject to Section 412 of the Code or Section 302 or Title IV of ERISA
(including, without limitation, a Multiemployer Plan) which is not set forth in
Schedule 3.10(a) hereto as may be updated from time to time, then Holdings shall
deliver to the Agent an updated Schedule 3.10(a) as soon as reasonably
practicable and, in any event, within ten days after Holdings, such Subsidiary
or such ERISA Affiliate first maintains, or contributes to (or incurs an
obligation to contribute to), such pension plan.  Such updated Schedule 3.10(a)
shall supersede and replace the existing Schedule 3.10(a).

 

(c)     Holdings and each of its applicable Subsidiaries shall ensure that all
Non‑U.S. Pension Plans administered by it or to which it contributes obtains or
retains (as applicable) registered status under and as required by applicable
law and is administered in a timely manner in all respects in compliance with
all applicable laws, except where the failure to do any of the foregoing, either
individually or in the aggregate, would not be reasonably likely to result in a
Material Adverse Effect.

 

(d)     Holdings and its Subsidiaries shall ensure that none of Holdings or any
of its Subsidiaries is or has at any time been, within the United Kingdom, an
employer (for the purposes of sections 38 through 51 of the United Kingdom’s
Pensions Act 2004) of an occupational pension scheme which is not a money
purchase scheme (both terms as defined in the United Kingdom’s Pension Schemes
Act 1993) or “connected” with or an “associate” of (as those terms are used in
sections 38 or 43 of the United Kingdom’s Pensions Act 2004) such an employer.

90

--------------------------------------------------------------------------------

 

 

 

SECTION 5.08     End of Fiscal Years; Fiscal Quarters.  Holdings will cause
(a) its and each of its Subsidiaries’ fiscal years to end on December 31 of each
calendar year and (b) its and each of its Subsidiaries’ fiscal quarters to end
on March 31, June 30, September 30 and December 31; provided that nothing in
this Section 5.08 shall prohibit any Subsidiary of Holdings from maintaining a
tax year that does not end on December 31.

 

SECTION 5.09     Performance of Obligations.  Holdings will, and will cause each
of its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement, loan agreement or credit agreement and
each other agreement, contract or instrument by which it is bound, except such
non-performances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.10     Payment of Taxes, etc..  Holdings will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, would
become a Lien or charge upon any properties of Holdings or any of its
Subsidiaries not otherwise permitted under Section 6.06; provided that neither
Holdings nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested in good faith and by
proper proceedings if it has maintained adequate reserves with respect thereto
in accordance with GAAP.  EIH will not change its tax residency. The DE Borrower
will continue to be a “disregarded entity” for U.S. federal income tax purposes
and will not carry out any business activities in the United States.

 

SECTION 5.11     Use of Proceeds.  The Borrowers will use the proceeds of the
Loans only as provided in Section 3.08.

 

SECTION 5.12     Additional Security; Further Assurances; etc.

 

(a)     Holdings will, and will cause each other Credit Party to, grant to the
Collateral Agent for the benefit of the Secured Parties security interests in
such Oil and Gas Assets and other assets of Holdings and such other Credit Party
(including, without limitation properties of Holdings and such other Credit
Party acquired subsequent to the Closing Date) as are not covered by the
original Security Documents (including, without limitation, with respect to any
such property, pursuant to grants pursuant to the laws of Scotland) and as may
be reasonably requested from time to time by the Administrative Agent or the
Required Lenders (collectively, the “Additional Security Documents”); provided
that no Credit Party shall be required to take any action to grant or perfect a
security interest on any Excluded Asset for so long as, and to the extent that,
such Oil and Gas Properties constitute Excluded Assets; provided, further, that
within 60 days following the date of the first Reserve Report reflecting that
any Credit Party owns Oil and Gas Properties in North America that are not
Excluded Assets, the applicable Credit Party shall cause such Oil and Gas
Properties to become Collateral subject to the Liens of the Security Documents.
In addition, at such time as any deposit account of Holdings or any Credit Party
ceases to be an Excluded Account, Holdings or the applicable Credit Party,
shall, within 60 days thereafter, cause such deposit account to become
Collateral subject to the Liens of the Security Documents. All such security
interests shall be granted pursuant to documentation satisfactory in form and
substance to the Collateral Agent and shall constitute valid and enforceable
perfected security interests, hypothecations and mortgages superior to and prior
to the rights of all third Persons and enforceable against third parties and
subject to no other Liens except for Permitted Liens. The Additional Security
Documents or instruments related thereto

91

--------------------------------------------------------------------------------

 

 

shall have been duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent required to be granted pursuant to the Additional
Security Documents and all taxes, fees and other charges payable in connection
therewith shall have been paid in full.”

 

(b)     Holdings will, and will cause each of the other Credit Parties to, at
the expense of Holdings and the Borrowers, make, execute, endorse, acknowledge,
file and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports, landlord lien waivers, collateral access agreements,
bailee agreements, control agreements and other assurances or instruments and
take such further steps relating to the Collateral covered by any of the
Security Documents as the Collateral Agent may reasonably require.  Furthermore,
Holdings will, and will cause the other Credit Parties to, deliver to the
Collateral Agent such opinions of counsel, title insurance and other related
documents as may be reasonably requested by the Collateral Agent to assure
itself that this Section 5.12 has been complied with.

 

(c)     Holdings will cause (i) each Subsidiary (other than any Immaterial
Subsidiary or Unrestricted Subsidiary) that is established, created or acquired
after the Closing Date and (ii) each Non-Guarantor Subsidiary (other than an
Unrestricted Subsidiary) that ceases to be an Immaterial Subsidiary, in each
case, to become a Guarantor and a party (in such capacity, a “Grantor”) to the
U.S. Security Agreement, the English Security Documents and/or such other
Security Documents as may be required by the Collateral Agent such that the
Collateral Agent, for the benefit of the Secured Parties, has a first priority
security interest in all assets (other than Excluded Assets) of such Subsidiary
or Non-Guarantor Subsidiary (as applicable).  In addition, if, after the date
hereof, any Restricted Subsidiary of Holdings that is not already a Guarantor
and a Grantor (including any Immaterial Subsidiary) guarantees any other
Indebtedness of Holdings or any Guarantor in excess of the De Minimis Guaranteed
Amount, then that Subsidiary shall become a Guarantor and a Grantor.  Any such
Subsidiary shall become a Guarantor and a Grantor pursuant to this clause (c) by
executing joinders to the Credit Party Guaranty and the applicable Security
Documents in form and substance satisfactory to the Administrative Agent whereby
such Subsidiary shall guarantee the Obligations and grant a security interest to
the Collateral Agent, for the benefit of the Secured Parties, in the assets
(other than Excluded Assets) of such Subsidiary and, in each case, delivering
such documents to the Administrative Agent within 60 days after the date on
which it was established, created or acquired or ceased to be an Immaterial
Subsidiary, as applicable (or such later date as may be agreed by the
Administrative Agent in its sole discretion), or within 15 days of the date on
which it guaranteed such other Indebtedness (or such later date as may be agreed
by the Administrative Agent in its sole discretion), as the case may be,
together with any officer’s certificate and opinion which may be reasonably
requested by the Administrative Agent.  In connection with the execution of such
Security Documents, such Subsidiary shall take or cause to be taken such other
actions (including delivering properly completed UCC financing statements) as
may be necessary or advisable in the opinion of the Collateral Agent to vest in
the Collateral Agent, for the benefit of the Secured Parties, a first-priority
perfected security interest in such assets and to have such assets added to the
Collateral and thereupon all provisions of this Agreement and the Security
Documents relating to the Collateral shall be deemed to relate to such assets to
the same extent and with the same force and effect.  The requirements set forth
above in this clause (c) are collectively referred to herein as the “Additional
Guarantor Requirement”.

 

(d)     Each of Holdings and the Borrowers agrees that each action required by
clauses (a) through (c) of this Section 5.12 shall be completed as soon as
possible, but in no event later than

92

--------------------------------------------------------------------------------

 

 

60 days after such action is requested to be taken by the Administrative Agent
or the Required Lenders or such later date as may be otherwise provided in such
clauses.

 

SECTION 5.13     Maintenance of Company Separateness.  Holdings will, and will
cause each of its Subsidiaries to, satisfy customary Business formalities,
including the holding of regular Board of Directors’ and members’ meetings or
action by managers or members without a meeting and the maintenance of Business
records.  Neither Holdings nor any other Credit Party shall make any payment to
a creditor of any Non-Guarantor Subsidiary in respect of any liability of any
Non-Guarantor Subsidiary (other than (x) pursuant to Holdings’ guarantee of
Endeavour Energy Luxembourg S.à.r.l.’s obligations under the 11.5% Convertible
Bonds and (y) any guarantee by Holdings or such other Credit Party of
intercompany Indebtedness of any such Non-Guarantor Subsidiary owing to Holdings
or any of its Subsidiaries), and no bank account of any Non-Guarantor Subsidiary
shall be commingled with any bank account of Holdings or any other Credit
Party.  Any financial statements distributed to any creditors of any
Non-Guarantor Subsidiary shall clearly establish or indicate the corporate
separateness of such Non-Guarantor Subsidiary from Holdings and its other
Subsidiaries.  Finally, neither Holdings nor any of its Subsidiaries shall take
any action, or conduct its affairs in a manner, which is likely to result in the
Business existence of Holdings, any other Credit Party or any Non-Guarantor
Subsidiaries being ignored, or in the assets and liabilities of Holdings or any
other Credit Party being substantively consolidated with those of any other such
Person or any Non-Guarantor Subsidiary in a bankruptcy, reorganization or other
insolvency proceeding.

 

SECTION 5.14     Oil and Gas Properties.  Each Credit Party shall (i) exercise
such votes and other rights as it may have under each Oil and Gas Contract to
which it is a party with a view to ensuring (so far as able) that each Oil and
Gas Property in which Holding or any of its Subsidiaries has an interest is at
all times exploited and operated in a reasonable and prudent manner and in
accordance with good industry practice, all applicable laws and regulations and
the provisions of each such Oil and Gas Contract, (ii) not concur in, and shall
vote against, any proposal or decision to abandon all or any material part of
any of Oil and Gas Properties in which Holdings or any of its Subsidiaries has
an interest unless the Administrative Agent has granted its prior written
consent, (iii) not exercise its rights on any operating or similar committee in
a manner that would be materially prejudicial to the interests of any Credit
Party, the Administrative Agent or the Lenders and (iv) maintain full and proper
technical and financial records in relation to each Oil and Gas Property in
which Holdings or any of its Subsidiaries has an interest and ensure (so far as
it is able) that the Administrative Agent (and/or any Person nominated by it) is
afforded reasonable access to each Oil and Gas Property in which it has an
interest and all such records during normal business hours on reasonable notice.

 

SECTION 5.15     Center of Main Interest.  EIH shall maintain its center of main
interests in the Netherlands for purposes of the Insolvency Regulation.

 

SECTION 5.16     Post-Closing Obligations.  Holdings shall (or shall procure
that the relevant Credit Party shall), except as otherwise stated below, as soon
as reasonably practicable but not later than 10 Business Days (or such later
date as may be permitted by the Collateral Agent in its sole discretion) after
the Closing Date, deliver to the Collateral Agent:

 

(a)     evidence of making of all recordings and filings and all action
necessary or desirable in connection with the registration of the security
interests intended to be created by the English Debenture in accordance with the
Companies Act 2006 in form and substance satisfactory to the Collateral Agent
not later than 21 days after the date of the English Debenture;

 

93

--------------------------------------------------------------------------------

 

 

(b)     evidence that the Secretary of State has been notified of the creation
of the security interests intended to be created by the English Debenture in
respect of each Project Licence (as such term is defined in the English
Debenture) in form and substance satisfactory to the Collateral Agent not later
than 10 days after the date of the English Debenture;

 

(c)     evidence of the making of all recordings and filings (or arrangements
therefor satisfactory to the Collateral Agent) and all action necessary or, in
the reasonable opinion of the Collateral Agent, desirable, in connection with,
the English Debenture as may be necessary to perfect and protect the security
interests intended to be created by the English Debenture;

 

(d)     evidence that all other actions necessary or, in the reasonable opinion
of the Collateral Agent, desirable, to perfect and protect the security
interests purported to be created by the English Debenture have been taken (or
arrangements therefor satisfactory to the Collateral Agent);

 

(e)     all of the Collateral consisting of certificated securities referred to
in the English Charge Over Shares and then owned by the relevant Credit Party,
together with executed and undated endorsements for transfer; and all other
Collateral consisting of certificated securities and promissory notes, if any,
owned by each Credit Party, (i) endorsed in blank in the case of any such
promissory notes and (ii) together with executed and undated endorsements for
transfer in the case of any such certificated securities.

 

(f)     evidence of the completion (or arrangements therefor satisfactory to the
Collateral Agent) of all other recordings and filings of, or with respect to,
and all action necessary or, in the reasonable opinion of the Collateral Agent,
desirable, in connection with, the English Charge Over Shares as may be
necessary to perfect and protect the security interests intended to be created
by the English Charge Over Shares;

 

(g)     evidence that all other actions necessary to perfect and protect the
security interests purported to be created by the English Charge Over Shares
have been taken (or arrangements therefor satisfactory to the Collateral Agent);

 

(h)     a share pledge agreement, in form and substance satisfactory to the
Collateral Agent, duly authorized, executed and delivered by EIH, as pledgor, in
favor of the Collateral Agent, pledging the shares in the capital of Endeavour
Energy Luxembourg S.à.r.l. (the “Luxembourg Share Pledge Agreement”);

 

(i)     a notarial deed of disclosed pledge over registered shares in the
capital of Endeavour Energy Netherlands B.V., among EIH as pledgor, the
Collateral Agent as pledgee and Endeavour Energy Netherlands B.V. as company in
which the shares are being pledged (the “Dutch Deed of Pledge of Shares”), in
form and substance satisfactory to the Collateral Agent; and

 

(j)     a favorable written opinion addressed to the Administrative Agent, on
behalf of itself, the Collateral Agent, the Arranger and the Lenders of (i)
Allen & Overy, Luxembourg counsel to the Credit Parties, in connection with the
entering into Luxembourg Share Pledge Agreement and (ii) Allen & Overy, Dutch
counsel to EIH, in connection with the entering into the Dutch Deed of Pledge of
Shares.

 

Article VI
Negative Covenants

94

--------------------------------------------------------------------------------

 

 

 

Each of Holdings and the Borrowers hereby covenants and agrees with each Lender
that until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other Obligations (other than
indemnities described in Section 9.05 which are not then due and payable and for
which no claim has been made) shall have been paid in full, unless waived in
accordance with Section 9.08:

SECTION 6.01     Restricted Payments.  Holdings will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly:

 

(a)     declare or pay any dividend or make any other payment or distribution on
account of Holdings’ or any of its Restricted Subsidiaries’ Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving Holdings or any of its Restricted Subsidiaries) or to
the direct or indirect holders of Holdings’ or any of its Restricted
Subsidiaries’ Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
Holdings or payable to Holdings or, subject to compliance with the Additional
Guarantor Requirement at the time of such dividend, payment or distribution, a
Restricted Subsidiary of Holdings);

(b)     purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving
Holdings) any Equity Interests of Holdings or any direct or indirect parent of
Holdings;

(c)     make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value, any Indebtedness that is subordinated in
right of payment to the Obligations (excluding (i) the purchase, redemption,
defeasance or other acquisition or retirement for value of any other
Indebtedness (other than intercompany Indebtedness) that is subordinated in
right of payment to the Obligations in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of purchase, redemption, defeasance or other acquisition or
retirement for value, (ii) any payment of principal or interest at the Stated
Maturity thereof and (iii) any payment, purchase, redemption, defeasance or
other acquisition or retirement for value made with the prior written consent of
the Administrative Agent; provided that the aggregate amount of any payments,
purchases, redemptions, defeasances or other acquisitions or retirements made in
reliance on the exclusions from the restrictions contained in this
clause (c)(iii), when aggregated with the aggregate amount of all payments,
purchases, redemptions, defeasances or other acquisitions or retirements for
value made in reliance on clause (e)(iii) below, shall not exceed $35,000,000);
or

(d)     make any Restricted Investment; or

(e)     make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indenture Notes (other than (i) at the
Stated Maturity thereof, (ii) pursuant to any covenant contained in either
Indenture (in each case as in effect as of the date hereof) requiring Holdings
to make an offer to holders of Indenture Notes to purchase Indenture Notes in
connection with a Change of Control or an Asset Sale in respect of Indenture
Collateral or (iii) with the prior written consent of the Administrative Agent)
or Unsecured Notes (other than at the Stated Maturity thereof; provided that the
aggregate amount of any payments, purchases, redemptions, defeasances or other
acquisitions or retirements for value made in reliance on this clause (iii),
when aggregated with the aggregate amount of all payments, purchases,
redemptions, defeasances or other acquisitions or retirements for value made in
reliance on the exclusions from the restrictions contained in clause (c)(iii)
above, shall not

95

--------------------------------------------------------------------------------

 

 

exceed $35,000,000) (all such payments and other actions set forth in these
clauses (a) through (e) being collectively referred to as “Restricted
Payments”);

unless, at the time of and after giving effect to such Restricted Payment, no
Default or Event of Default has occurred and is continuing or would occur as a
consequence of such Restricted Payment and:

(I)     Holdings would, at the time of such Restricted Payment immediately after
giving pro forma effect thereto as if the same had occurred at the beginning of
the applicable four-quarter period, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 6.03; and

(II)     such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Holdings and its Restricted Subsidiaries
(excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (8),
(9), (11) and (12) of the next succeeding paragraph) since the date of this
Agreement, is less than the sum, without duplication, of:

(a)     50% of the Consolidated Net Income of Holdings for the period (taken as
one accounting period) from January 1, 2014 to the last day of Holdings’ last
fiscal quarter ending prior to the date of the Restricted Payment for which
internal financial statements are in existence at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period shall be a loss,
minus 100% of such loss); plus

(b)     100% of the aggregate net cash proceeds and the Fair Market Value of any
Capital Stock of Persons (other than Holdings or an Affiliate of Holdings)
engaged primarily in the Oil and Gas Business or any other assets that are used
or useful in the Oil and Gas Business, in each case received by Holdings after
the date of this Agreement as a contribution to its common equity capital or
from the issue or sale after the date of this Agreement of Equity Interests of
Holdings (other than Disqualified Stock) or from the issue or sale after the
date of this Agreement of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of Holdings that have been converted
into or exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of Holdings) or
received upon the exercise of any options, warrants or rights to purchase Equity
Interests (other than Disqualified Stock) of Holdings, plus

(c)     the amount equal to the net reduction in Restricted Investments made by
Holdings or any of its Restricted Subsidiaries in any Person since the date of
this Agreement resulting from:

(i)     repurchases or redemptions of such Restricted Investments by such
Person, proceeds realized upon the sale of such Restricted Investment to a
purchaser other than Holdings or a Subsidiary of Holdings, repayments of loans
or advances or other transfers of assets (including by way of interest payments,
dividend or distribution) by such Person to Holdings or any Restricted
Subsidiary of Holdings; plus

(ii)     the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries or the merger or consolidation of an Unrestricted Subsidiary with
and into Holdings or any Restricted Subsidiary (valued in each case as provided
in the definition of “Investment”) not to exceed, in the case of any
Unrestricted

96

--------------------------------------------------------------------------------

 

 

Subsidiary, the amount of Investments previously made by Holdings or any
Restricted Subsidiary of Holdings in such Unrestricted Subsidiary; plus

(iii)    an amount equal to any amount included as a Restricted Payment pursuant
to clause (II) above on account of any guarantee entered into by Holdings or any
Restricted Subsidiary; to the extent that such guarantee has not been called
upon and the obligation arising under such guarantee no longer exists or has
been reduced; plus

(iv)     in the event Holdings or any Restricted Subsidiary makes any Investment
in a Person that, as a result of or in connection with such Investment, becomes
a Restricted Subsidiary or is merged or consolidated with Holdings or a
Restricted Subsidiary, an amount equal to the amount included as a Restricted
Payment pursuant to clause (II) above on account of Holdings’ or any Restricted
Subsidiary’s Investment in such Person prior to the time it became a Restricted
Subsidiary or the time of such merger or consolidation; plus

(d)     the amount by which Indebtedness of Holdings or its Restricted
Subsidiaries is reduced on Holdings’ balance sheet upon the conversion or
exchange (other than by a Subsidiary of Holdings) subsequent to the date of this
Agreement of any Indebtedness of Holdings or its Restricted Subsidiaries
convertible into or exchangeable for Equity Interests of Holdings (other than
Disqualified Stock) (less the amount of cash, or the Fair Market Value of any
other property, distributed by Holdings upon such conversion or exchange),

in the case of clauses (b) through (d) above, to the extent such amounts have
not been included in Consolidated Net Income for the applicable period.

The preceding provisions will not prohibit:

(1)     the payment of any dividend or distribution within 60 days after the
date of its declaration, if at the date of declaration the payment would have
complied with the provisions of this Agreement;

(2)     the purchase, redemption, defeasance or other acquisition or retirement
for value of any subordinated Indebtedness, Indenture Notes or Unsecured Notes
of Holdings or any other Credit Party or of any Equity Interests of Holdings in
exchange for, or out of the net cash proceeds of the substantially concurrent
(a) contribution (other than from a Restricted Subsidiary of Holdings) to the
equity capital of Holdings or (b) sale (other than to a Restricted Subsidiary of
Holdings) of, Equity Interests of Holdings (other than Disqualified Stock), with
a sale being deemed substantially concurrent if such purchase, redemption,
defeasance or other acquisition or retirement for value occurs not more than
120 days after such sale; provided, that the amount of any such net cash
proceeds that are utilized for any such purchase, redemption, defeasance or
other acquisition or retirement for value will be excluded or deducted from
clause (II) above;

(3)     the purchase, redemption, defeasance or other acquisition or retirement
for value of subordinated Indebtedness, Indenture Notes or Unsecured Notes or
Disqualified Stock of Holdings or any other Credit Party with the net cash
proceeds from a substantially concurrent incurrence of, or in exchange for,
Permitted Refinancing Indebtedness, with an incurrence of Permitted Refinancing
Indebtedness being deemed substantially concurrent if such purchase, redemption,
defeasance or other acquisition or retirement for value occurs not more than
120 days after such incurrence;

97

--------------------------------------------------------------------------------

 

 

(4)     the payment of any dividend or distribution by a Restricted Subsidiary
of Holdings to the holders of such Restricted Subsidiary’s Equity Interests
(other than Disqualified Stock) on a pro rata basis or on a basis more favorable
to Holdings or a Restricted Subsidiary;  provided, that distributions or
dividends by EIH shall be promptly applied to fund any Capital Expenditure, the
payment of any expense, any Investment or other use, in each case, permitted
under this Agreement, and not permitted to accumulate other than on a temporary
basis in the deposit or other account of the payee of such Indebtedness or any
Affiliate thereof;

(5)     so long as no Default (other than a Reporting Default) or Event of
Default shall have occurred and be continuing or would be caused thereby, the
purchase, redemption or other acquisition or retirement for value (other than
for any Equity Interest) of any Equity Interests of Holdings or any Restricted
Subsidiary of Holdings pursuant to any director, employee or consultant equity
subscription agreement or equity option agreement or other employee benefit plan
or to satisfy obligations under any Equity Interests option plan or similar
arrangement; provided that the aggregate price paid for all such purchased,
redeemed, acquired or retired Equity Interests may not exceed $5,000,000 in the
2014 calendar year and $2,500,000 in any calendar year thereafter (with any
portion of such amount that is unused in any calendar year to be carried forward
to successive calendar years and added to such amount) plus, to the extent not
previously applied or included,

(a)     the cash proceeds received by Holdings or any of its Restricted
Subsidiaries from sales of Equity Interests of Holdings to employees,
consultants or directors of Holdings or its Affiliates that occur after the date
of this Agreement (to the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of Restricted Payments
by virtue of clause (II)(b) of the first paragraph of this Section 6.01); and

(b)     the cash proceeds of key man life insurance policies received by
Holdings or any of its Restricted Subsidiaries after the date of this Agreement.

(6)     any purchase, redemption, defeasance or other acquisition or retirement
for value of Indebtedness (other than any intercompany Indebtedness) that is
subordinated in right of payment to the Obligations pursuant to the provisions
of such Indebtedness in the event of a Change of Control or an Asset Sale, in
each case plus accrued and unpaid interest thereon, but only if:

(a)     in the case of a Change of Control, the purchase price therefor is not
greater than 101% of the principal amount of such Indebtedness and accrued and
unpaid interest thereon; or

(b)     in the case of an Asset Sale, the purchase price therefor is not greater
than 100% of the principal amount of such Indebtedness and accrued and unpaid
interest thereon, and Holdings has complied with and fully satisfied its
obligations in accordance with Section 2.13(a);

(7)     the purchase, redemption or other acquisition or retirement for value of
Equity Interests of Holdings or any Restricted Subsidiary of Holdings
representing fractional shares of such Equity Interests in connection with a
merger or consolidation involving Holdings or such Restricted Subsidiary or any
other transaction permitted by this Agreement;

98

--------------------------------------------------------------------------------

 

 

(8)     the purchase, redemption or other acquisition or retirement for value of
Equity Interests deemed to occur upon the exercise or conversion of stock
options, warrants or other convertible securities if such Equity Interests
represent a portion of the exercise or conversion price thereof;

(9)     the purchase, redemption or other acquisition or retirement for value of
any Equity Interests of Holdings or any Restricted Subsidiary of Holdings held
by any current or former officers, directors or employees of Holdings or any of
its Restricted Subsidiaries in connection with the exercise or vesting of any
equity compensation (including, without limitation, stock options, restricted
stock and phantom stock) in order to satisfy any tax withholding obligation with
respect to such exercise or vesting;

(10)    payments to dissenting stockholders pursuant to Applicable Law in
connection with a consolidation, merger or transfer of assets in connection with
a transaction that is not prohibited by this Agreement not to exceed $5,000,000
in the aggregate since the date of this Agreement;

(11)    any payment with respect to, purchase, redemption, defeasance or other
acquisition or retirement for value of any Permitted Intercompany Debt,
including, without limitation, that certain Inter-Company Loan Agreement, dated
as of May 31, 2012, between EOC and EEUK (the “Intercompany Loan Agreement”);
provided (a) no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (b) such payment, purchase, redemption,
defeasance or other acquisition or retirement for value does not obligate
Holdings or any Restricted Subsidiary of Holdings to make or offer to make any
payment on, or purchase or redeem any other Indebtedness and (c) solely with
respect to any payment with respect to, purchase, redemption, defeasance or
other acquisition or retirement for value in respect of any Indebtedness under
the Intercompany Loan Agreement, the proceeds of such purchase, redemption or
other acquisition or retirement for value are promptly applied to fund any
Capital Expenditure, the payment of any expense, any Investment or other use, in
each case, permitted under this Agreement, and not permitted to accumulate other
than on a temporary basis in the deposit or other account of the payee of such
Indebtedness or any Affiliate thereof;

(12)    the declaration and payment of dividends payable pursuant to the terms
(as of the date of this Agreement) of Holdings’ Class C Convertible Preferred
Stock outstanding on the date of this Agreement; and

(13)    so long as no Default (other than a Reporting Default) or Event of
Default shall have occurred and be continuing or would be caused thereby, other
Restricted Payments in an aggregate amount not to exceed $25,000,000 at any time
outstanding since the date of this Agreement (after giving effect to any
dividends, interest payments, return of capital and subsequent reduction in the
amount of any Investments made pursuant to this clause (13) as a result of the
repayment or other disposition thereof, in an amount not to exceed the amount of
such Investments previously made pursuant to in this clause (13)); provided that
if any Investment pursuant to this clause (13) is made in any Person that is not
a Restricted Subsidiary of Holdings at the date of the making of such Investment
and such Person becomes a Restricted Subsidiary of Holdings after such date,
such Investment shall, subject to compliance with such clause (1), thereafter be
deemed to have been made pursuant to clause (1) of the definition of “Permitted
Investments” and shall cease to have been made pursuant to this clause (13) for
so long as such Person continues to be a Restricted Subsidiary.

The amount of all Restricted Payments (other than cash) will be the Fair Market
Value, on the date of the Restricted Payment, of the Restricted Investment
proposed to be made or

99

--------------------------------------------------------------------------------

 

 

asset(s) or securities proposed to be paid, transferred or issued by Holdings or
such Restricted Subsidiary, as the case may be, pursuant to such Restricted
Payment, except that the amount of any non-cash Restricted Payment referred to
in the preceding clause (1) will be the Fair Market Value on the date of
declaration.  The Fair Market Value of any assets or securities that are
required to be valued by this covenant will be determined by the method
prescribed in the definition of such term, except that the Fair Market Value of
any non-cash consideration received from an Affiliate as a capital contribution
for Equity Interests of Holdings shall be determined in good faith by the Board
of Directors of Holdings in the case of amounts of $10,000,000 or more, such
determination to be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing.  For purposes of
determining compliance with this Section 6.01, in the event that a Restricted
Payment meets the criteria of more than one of the categories of Restricted
Payments described in the preceding clauses (1) through (13) or as a Permitted
Investment, Holdings will be permitted to divide or classify (or later divide,
classify or reclassify in whole or in part in its sole discretion) such
Restricted Payment in any manner that complies with this Section 6.01.

SECTION 6.02     Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.  Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary of Holdings to:

 

(a)     pay dividends or make any other distributions on its Capital Stock to
Holdings or any of its Restricted Subsidiaries, or pay any Indebtedness or other
obligations owed to Holdings or any of its Restricted Subsidiaries;

(b)     make loans or advances to Holdings or any of its Restricted
Subsidiaries; or

(c)     sell, lease or transfer any of its properties or assets to Holdings or
any of its Restricted Subsidiaries;

provided, that the preceding restrictions of this Section 6.02 will not apply to
encumbrances or restrictions existing under or by reason of:

(1)     agreements (including those governing Existing Indebtedness) as in
effect on the date of this Agreement and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof; provided that the amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings are
no more restrictive, taken as a whole, with respect to such dividend,
distribution and other payment restrictions than those contained in those
agreements on the date of this Agreement, as determined by the Board of
Directors of Holdings in its reasonable and good faith judgment;

(2)     this Agreement, the Existing LC Procurement Agreements, the Existing
Credit Agreement, the other Credit Documents and the Indenture Documents;

(3)     Applicable Law or similar restriction;

(4)     any agreement or instrument with respect to a Restricted Subsidiary that
is not a Restricted Subsidiary of Holdings on the date of this Agreement, in
existence at the time such Person becomes a Restricted Subsidiary of Holdings
and not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary; provided that such encumbrances and
restrictions are not applicable to Holdings or any Restricted Subsidiary or the

100

--------------------------------------------------------------------------------

 

 

properties or assets of Holdings or any Restricted Subsidiary other than such
Subsidiary which is becoming a Restricted Subsidiary;

(5)     any agreement or instrument governing any Permitted Acquisition
Indebtedness, so long as such agreement or instrument (a) was not entered into
in contemplation of the acquisition, merger or consolidation transaction related
thereto, and (b) is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the properties or assets or Subsidiaries
of the Person, subject to such acquisition, merger or consolidation, so long as
the agreement containing such restriction does not violate any other provision
of this Agreement;

(6)     instruments or agreements governing Indebtedness of Holdings or any of
the Restricted Subsidiaries permitted to be incurred pursuant to an instrument
or agreement entered into subsequent to the date of this Agreement in accordance
with Section 6.03; provided that either (a) the encumbrance or restriction
contained in the instrument or agreement governing such Indebtedness applies
only in the event of a payment default or a default with respect to a financial
covenant in such Indebtedness or agreement or (b) the Board of Directors of
Holdings determines in good faith that any such encumbrance or restriction will
not materially affect Holdings’ ability to make principal or interest payments
on the Obligations;

(7)      (a) customary non-assignment provisions in Hydrocarbon purchase and
sale or exchange agreements, joint operating agreements, or similar operational
agreements or in licenses or leases entered into in the ordinary course of
business, or (b) in the case of clause (c) of the preceding paragraph, other
encumbrances or restrictions in agreements or instruments (including joint
venture agreements, asset sale agreements, stock sale agreements and agreements
of the type described in the definition of “Permitted Business Investments”)
relating to specific assets or property (and not to Indebtedness) that restrict
generally the transfers of such assets or property; provided that such other
encumbrances or restrictions do not materially impair the ability of Holdings to
make scheduled payments on the Obligations when due and in each case entered
into in the ordinary course of business or customary in the Oil and Gas
Business;

(8)     Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case for property acquired in the ordinary course of
business or which is customary in the Oil and Gas Business that impose
restrictions on that property purchased or leased of the nature described in
clause (c) of the preceding paragraph;

(9)     any agreement for the sale or other disposition of a Restricted
Subsidiary of Holdings that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;

(10)    Permitted Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are not materially more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced, as determined by the
Board of Directors of Holdings in its reasonable and good faith judgment;

(11)    Liens securing Indebtedness otherwise permitted to be incurred under the
provisions of Section 6.06 that limit the right of the debtor to dispose of the
assets subject to such Liens;

101

--------------------------------------------------------------------------------

 

 

(12)    restrictions on cash, Cash Equivalents or other deposits or net worth
imposed by customers or lessors under contracts or leases entered into in the
ordinary course of business or which are customary in the Oil and Gas Business;

(13)    Hedging Agreements permitted from time to time under this Agreement;

(14)    any subordination of intercompany Indebtedness or other intercompany
obligations (including any intercompany revolving credit) to the claims or Liens
(otherwise permitted by this Agreement) of any other creditor of the obligor or
obligors of such intercompany Indebtedness or other obligations, including to
the claims or Liens (otherwise permitted by this Agreement) of any lender or
other party to any Credit Facility (as a lender, letter of credit issuer or in
any other capacity); and

(15)    the issuance of preferred securities by any Restricted Subsidiary of
Holdings or the payment of dividends thereon in accordance with the terms
thereof; provided that issuance of such preferred securities is permitted
pursuant to Section 6.03 and the terms of such preferred securities do not
expressly restrict the ability of a Restricted Subsidiary of Holdings to pay
dividends or make any other distributions on its Equity Interests (other than
requirements to pay dividends or liquidation preferences on such preferred
securities prior to paying any dividends or making any other distributions on
such other Equity Interests).

SECTION 6.03     Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock.  Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, “incur”) any Indebtedness, Holdings will not
issue any Disqualified Stock, and Holdings will not permit any of its Restricted
Subsidiaries to issue any Disqualified Stock or preferred securities; provided,
that Holdings and any other Credit Party may incur Indebtedness, Holdings may
issue Disqualified Stock and any other Credit Party may issue Disqualified Stock
or preferred securities, if the Fixed Charge Coverage Ratio for Holdings’ most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such preferred securities or Disqualified Stock is
issued, as the case may be, would have been at least 2.25 to 1.0, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or such
preferred securities or Disqualified Stock had been issued, as the case may be,
at the beginning of such four-quarter period.

 

The first paragraph of this Section 6.03 will not prohibit the incurrence of any
of the following items of Indebtedness or the issuance of any Disqualified Stock
or any preferred securities described below (collectively, “Permitted Debt”):

(1)     Indebtedness incurred pursuant to this Agreement, the Existing Credit
Agreement and the other Credit Documents and the unsecured intercompany loan
made by EIH to EEUK with the proceeds of the Initial Loans;

(2)     the incurrence by Holdings or any of the Restricted Subsidiaries of
additional unsecured Indebtedness under one or more Credit Facilities, provided
that, after giving effect to any such incurrence, the aggregate principal amount
of all Indebtedness outstanding under Holdings and its Restricted Subsidiaries’
Credit Facilities incurred under this clause (2) does not exceed:

102

--------------------------------------------------------------------------------

 

 

(a)     if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of
the date of such incurrence are $2,000,000,000 or less, the greater of
(i) $100,000,000 and (ii) 7.5% of Holdings’ Adjusted Consolidated Net Tangible
Assets determined as of such date;

(b)     if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of
the date of such incurrence are $3,000,000,000 or less, but exceed
$2,000,000,000, the greater of (i) $100,000,000 and (ii) 10% of Holdings’
Adjusted Consolidated Net Tangible Assets determined as of such date; and

(c)     if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of
the date of such incurrence exceed $3,000,000,000, the greater of
(i) $100,000,000 and (ii) 15% of Holdings’ Adjusted Consolidated Net Tangible
Assets determined as of such date;

(3)     the incurrence by Holdings or its Restricted Subsidiaries of the
Existing Indebtedness not otherwise referred to in this definition of “Permitted
Debt”;

(4)     the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of design, installation, repair,
replacement, construction or improvement of property, plant or equipment used in
the business of Holdings or such Restricted Subsidiary (whether through the
direct purchase of such assets or the Capital Stock of any Person owning such
assets (but no other material assets)) and related financing costs, and
Attributable Debt in respect of Sale Leaseback Transactions, including all
Permitted Refinancing Indebtedness incurred to extend, refinance, renew,
replace, defease, discharge, refund or otherwise retire for value any
Indebtedness incurred pursuant to this clause (4), provided that after giving
effect to any such incurrence, the aggregate principal amount of all
Indebtedness incurred pursuant to this clause (4) and then outstanding does not
exceed the greater of (a) $25,000,000 and (b) 2.0% of Holdings’ Adjusted
Consolidated Net Tangible Assets determined as of the date of such incurrence;

(5)     the incurrence by Holdings or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
shall be used to extend, refinance, renew, replace, defease, discharge, refund
or otherwise retire for value, in whole or in part, Indebtedness of Holdings or
any of its Restricted Subsidiaries (other than intercompany Indebtedness) or
Disqualified Stock of Holdings, in each case that was permitted by this
Agreement to be incurred pursuant to the first paragraph of this Section 6.03 or
clauses (3) (other than in respect of Indebtedness under the Existing Credit
Agreement), and (12) of this paragraph or this clause (5);

(6)     the incurrence by Holdings or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among any of Holdings and any of its
Restricted Subsidiaries (“Permitted Intercompany Debt”);  provided that: 

(a)     such Indebtedness must be expressly subordinated in all respects to the
prior payment in full in cash of all Obligations pursuant to a written
subordination agreement satisfactory in form and substance to the Administrative
Agent; and

(b)      (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than Holdings or a
Restricted Subsidiary

103

--------------------------------------------------------------------------------

 

 

of Holdings and (ii) any sale or other transfer of any such Indebtedness to a
Person that is neither Holdings nor a Restricted Subsidiary of Holdings shall be
deemed, in each case, to constitute an incurrence (as of the date of such
issuance, sale or transfer) of such Indebtedness by Holdings or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause (6);

(7)     the incurrence by Holdings or any of its Restricted Subsidiaries of
obligations under Hedging Agreements entered into not for speculative purposes;

(8)      (A) the guarantee by Holdings or any other Credit Party of Indebtedness
of Holdings or any other Credit Party that was permitted to be incurred by the
first paragraph of this Section 6.03; provided that if the Indebtedness being
guaranteed is subordinated to the Obligations, then the guarantee of Holdings or
such other Credit Party (or, (i) in the case of a guarantee made by a Borrower,
such Borrower’s Obligations hereunder and (ii) in the case of a guarantee made
by the Payer, the Payer’s Obligations (as defined in the LC Procurement
Agreement))  made pursuant to the Payer Party Guaranty (as defined in the LC
Procurement Agreement) shall be senior to its guarantee of such subordinated
Indebtedness; and (B) the guarantee by Holdings or any of its Restricted
Subsidiaries of Indebtedness of Holdings or any of its Restricted Subsidiaries
that was permitted to be incurred by another provision of this Section 6.03
other than the first paragraph hereof; provided that if the Indebtedness being
guaranteed is subordinated to the Obligations, then the guarantee of Holdings or
such other Credit Party (or, in the case of a guarantee made by a Borrower, such
Borrower’s Obligations hereunder), if it is a Guarantor, made pursuant to the
Credit Party Guaranty, shall be senior to its guarantee of such subordinated
Indebtedness;

(9)     the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness relating to net gas balancing positions arising in the ordinary
course of business and consistent with past practice;

(10)    the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness in respect of bid, performance, surety, appeal and similar bonds
issued for the account of Holdings and any of its Restricted Subsidiaries, or
obligations in respect of letters of credit posted in lieu of, or to secure, any
such bonds, in the ordinary course of business or which are customary in the Oil
and Gas Business;

(11)    the issuance by any of Holdings’ Restricted Subsidiaries to Holdings or
to any of its Restricted Subsidiaries of any preferred securities; provided,
that:

(a)     any subsequent issuance or transfer of Equity Interests that results in
any such preferred securities being held by a Person other than Holdings or a
Restricted Subsidiary of Holdings; and

(b)     any sale or other transfer of any such preferred securities to a Person
that is not either Holdings or a Restricted Subsidiary of Holdings shall be
deemed, in each case, to constitute an issuance (as of the date of such
issuance, sale or transfer) of such preferred securities by such Restricted
Subsidiary that was not permitted by this clause (11);

(12)    Permitted Acquisition Indebtedness;

(13)    the incurrence by Holdings or its Restricted Subsidiaries of
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar

104

--------------------------------------------------------------------------------

 

 

instrument inadvertently drawn against insufficient funds in the ordinary course
of business, so long as such Indebtedness is covered within five Business Days;

(14)    the incurrence by Holdings or its Restricted Subsidiaries of
Indebtedness consisting of the financing of insurance premiums in customary
amounts consistent with the operations and business of Holdings and the
Restricted Subsidiaries; and

(15)    the incurrence by Holdings or any other Credit Party of additional
Indebtedness or the issuance by Holdings of additional Disqualified Stock,
provided that, after giving effect to any such incurrence or issuance, the
aggregate principal amount of all Indebtedness and Disqualified Stock incurred
or issued under this clause (15) and then outstanding does not exceed the
greater of (a) $75,000,000 and (b) 5.0% of Holdings’ Adjusted Consolidated Net
Tangible Assets determined as of the date of such incurrence or issuance.

Notwithstanding any of the foregoing, Holdings shall not, and shall not permit
any of its Restricted Subsidiaries to (and the provisions of this Section 6.03
shall not permit Holdings or any of its Restricted Subsidiaries to), incur any
Indebtedness for borrowed money having a maturity date occurring on or prior to
the later to occur of the Maturity Date and the Incremental Term Loan Maturity
Date.

For purposes of determining compliance with this Section 6.03, in the event that
an item of Indebtedness or Disqualified Stock or preferred securities meets the
criteria of more than one of the categories of Permitted Debt described in
clauses (1) through (15) above, or is entitled to be incurred or issued pursuant
to the first paragraph of this Section 6.03, Holdings will be permitted to
divide and classify (or later classify, reclassify or re‑divide in whole or in
part in its sole discretion) such item of Indebtedness or Disqualified Stock or
preferred securities in any manner that complies with this Section 6.03;
provided that Indebtedness under this Agreement and the other Credit Documents
shall be considered to have been incurred under clause (1) above.  For purposes
of determining any particular amount of Indebtedness under this covenant,
guarantees of Indebtedness otherwise included in the determination of such
amount shall not also be included except to the extent that such Indebtedness
exceeds such guarantee.

The accrual of interest, accrual of dividends, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness and the payment of dividends on Disqualified Stock or
preferred securities in the form of additional shares of Disqualified Stock or
preferred securities will not be deemed to be an incurrence of Indebtedness or
an issuance of Disqualified Stock or preferred securities for purposes of this
Section 6.03.

For purposes of determining compliance with any U.S. dollar-denominated
restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency will be
calculated based on the relevant currency exchange rate in effect on the date
the Indebtedness was incurred, in the case of term Indebtedness, or first
committed, in the case of revolving credit Indebtedness; provided that if such
Indebtedness is incurred to refinance other Indebtedness denominated in a
foreign currency, and the refinancing would cause the applicable U.S.
dollar-dominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of the refinancing, such U.S.
dollar-dominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced (plus all accrued and
unpaid interest on such Indebtedness, and the amount of all fees, expenses and
premiums incurred in connection therewith).  Notwithstanding any other provision
of this covenant, the maximum amount of Indebtedness that Holdings or any
Restricted

105

--------------------------------------------------------------------------------

 

 

Subsidiary may incur pursuant to this covenant shall not be deemed to be
exceeded solely as a result of fluctuations in the exchange rate of
currencies.  The principal amount of any Permitted Refinancing Indebtedness
incurred to refinance other Indebtedness, if incurred in a different currency
from the Indebtedness being refinanced, will be calculated based on the currency
exchange rate applicable to the currencies in which the Permitted Refinancing
Indebtedness is denominated that is in effect on the date of such refinancing.

SECTION 6.04     Limitation on Asset Sales.  Holdings will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(a)     Holdings (or the Restricted Subsidiary, as the case may be) receives
consideration at least equal to the Fair Market Value of the assets or Equity
Interest issued or sold or otherwise disposed of;

(b)     in the case of any Asset Sale constituting the grant, sale, assignment
or other conveyance of any Production Payment, such Production Payment
constitutes a Refinancing Production Payment; and

(c)     at least 75% of the aggregate consideration to be received by Holdings
and its Restricted Subsidiaries in such Asset Sale (determined on the date of
contractually agreeing to such Asset Sale) and any other Asset Sale since the
date of this Agreement, on a cumulative basis, is in the form of cash or Cash
Equivalents.  For purposes of this provision, each of the following will be
deemed to be cash:

(i)     any liabilities, as shown on Holdings’ or any Restricted Subsidiary’s
most recent balance sheet, of Holdings or such Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated in
right of payment to the Obligations) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases Holdings or
such Restricted Subsidiary from further liability; and

(ii)     any securities, notes or other obligations received by Holdings or any
Restricted Subsidiary from such transferee that are, within 90 days after the
Asset Sale, converted by Holdings or such Restricted Subsidiary into cash or
Cash Equivalents, to the extent of the cash received in that conversion;

provided that in the case of any Asset Sale pursuant to a condemnation,
appropriation or similar governmental taking, including by deed in lieu of
condemnation, such Asset Sale shall not be required to satisfy the requirements
of clauses (a) and (b) above.  Notwithstanding the preceding, the 75% limitation
referred to above shall be deemed satisfied with respect to any Asset Sale to
which such limitation applies in which the cash or Cash Equivalents portion of
the consideration received therefrom, determined in accordance with the
preceding provision on an after-tax basis, is equal to or greater than what the
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 75% limitation.

SECTION 6.05     Limitation on Transactions with Affiliates.  Holdings will not,
and will not permit any of its Restricted Subsidiaries to, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any properties or assets from, or enter into or make or amend
any transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of Holdings (each, an “Affiliate
Transaction”), unless:

 

106

--------------------------------------------------------------------------------

 

 

(1)     the Affiliate Transaction is on terms that are not less favorable to
Holdings or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Holdings or such Restricted Subsidiary
with an unrelated Person or, if in the good faith judgment of Holdings’ Board of
Directors, no comparable transaction is available with which to compare such
Affiliate Transaction, such Affiliate Transaction is otherwise fair to Holdings
or the relevant Restricted Subsidiary from a financial point of view; and

(2)     Holdings delivers to the Administrative Agent:

(a)     with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration to or from an Affiliate in excess
of $10,000,000, a resolution of the Board of Directors of Holdings set forth in
a certificate of a Financial Officer of Holdings certifying that such Affiliate
Transaction or series of related Affiliate Transactions complies with this
Section 6.05 and that such Affiliate Transaction or series of related Affiliate
Transactions has been approved by a majority of the disinterested members of the
Board of Directors of Holdings; and

(b)     with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration to or from an Affiliate in excess
of $20,000,000, an opinion as to the fairness to Holdings or such Restricted
Subsidiary of such Affiliate Transaction or series of related Affiliate
Transactions from a financial point of view issued by an accounting, appraisal
or investment banking firm of national standing.

The following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph of this
Section 6.05:

(1)     any employment agreement or arrangement, equity award, equity option or
cash or equity settled equity appreciation agreement or plan, employee benefit
plan, officer or director indemnification agreement, severance agreement,
consulting agreement or other compensation plan or arrangement entered into by
Holdings or any of its Restricted Subsidiaries in the ordinary course of
business or which is customary in the Oil and Gas Business, and payments,
awards, grants or issuances of securities pursuant thereto;

(2)     transactions between or among any of Holdings and its Restricted
Subsidiaries;

(3)     transactions with a Person (other than an Unrestricted Subsidiary of
Holdings) that is an Affiliate of Holdings solely because Holdings owns,
directly or indirectly, an Equity Interest in, or otherwise controls, such
Person or has nominated or appointed a person to the Board of Directors of that
Person;

(4)     customary compensation, indemnification and other benefits made
available to officers, directors, employees or consultants of Holdings or a
Restricted Subsidiary of Holdings, including reimbursement or advancement of
out-of-pocket expenses and provisions of officers’ and directors’ liability
insurance;

(5)     issuances of Equity Interests (other than Disqualified Stock) of
Holdings to, or receipt of capital contributions from, Affiliates of Holdings
and any dividend or distribution payable in Equity Interests (other than
Disqualified Stock) of Holdings;

(6)     any Permitted Investments or Restricted Payments that are permitted by
Section 6.01;

107

--------------------------------------------------------------------------------

 

 

(7)     transactions between Holdings or any of its Restricted Subsidiaries and
any Person that would not otherwise constitute an Affiliate Transaction except
for the fact that one director of such other Person is also a director of
Holdings or such Restricted Subsidiary, as applicable; provided that such
director abstains from voting as a director of Holdings or such Restricted
Subsidiary, as applicable, on any matter involving such other Person;

(8)     the existence of, and the performance of obligations of Holdings or any
of its Restricted Subsidiaries under the terms of, any written agreement to
which Holdings or any of its Restricted Subsidiaries is a party on the date of
this Agreement, as such agreements may be amended, modified, supplemented or
replaced from time to time; provided, however, that any amendment, modification,
supplement or replacement entered into after the date of this Agreement will be
permitted to the extent that its terms are not materially more disadvantageous,
taken as a whole, to the Lenders than the terms of the agreements in effect on
the date of this Agreement (as conclusively evidenced by a Board Resolution of
Holdings or such Subsidiary);

(9)     any transaction in which Holdings or any of its Restricted Subsidiaries,
as the case may be, delivers to the Administrative Agent an opinion from an
accounting, appraisal or investment banking firm of national standing stating
that such transaction is fair to Holdings or such Restricted Subsidiary from a
financial point of view or that such transaction meets the requirements of
clause (1) of the preceding paragraph of this Section 6.05;

(10)     (a) guarantees by Holdings or any of its Restricted Subsidiaries of
performance of obligations of Holdings’ Unrestricted Subsidiaries in the
ordinary course of business or which are customary in the Oil and Gas Business
and (b) pledges by Holdings or any Restricted Subsidiary of Holdings of Equity
Interests in Unrestricted Subsidiaries for the benefit of lenders or other
creditors of Holdings’ Unrestricted Subsidiaries;

(11)    any Affiliate Transaction with a Person in its capacity as a holder of
Indebtedness or Capital Stock of Holdings or any Restricted Subsidiary of
Holdings if such Person is treated no more favorably than the other holders of
Indebtedness or Capital Stock of Holdings or such Restricted Subsidiary;

(12)    transactions with joint venture partners, customers, clients, suppliers
or purchasers or sellers of goods or services, or lessors or lessees of
property, in each case in the ordinary course of business or which are customary
in the Oil and Gas Business and otherwise in compliance with the terms of this
Agreement similar to those contained in similar contracts entered into by
Holdings or any Restricted Subsidiary and unrelated third parties, or if neither
Holdings nor any Restricted Subsidiary has entered into a similar contract with
an unrelated third party, which are, in the aggregate (taking into account all
the costs and benefits associated with such transactions), not materially less
favorable to Holdings and its Restricted Subsidiaries than those that would have
been obtained in a comparable transaction by Holdings or such Restricted
Subsidiary with an unrelated third party, in the good faith determination of
Holdings’ Board of Directors or any executive officer of Holdings involved in or
otherwise familiar with such transaction; and

(13)    dividends and distributions to Holdings and its Restricted Subsidiaries
by any Unrestricted Subsidiary.

SECTION 6.06     Limitation on Liens.  Holdings will not, and will not permit
any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause
or suffer to exist or become effective any Lien of any kind securing
Indebtedness upon any of their property or assets (whether now owned or
hereafter acquired) other than Permitted Liens.

108

--------------------------------------------------------------------------------

 

 

 

SECTION 6.07     Business Activities.  Holdings will not, and will not permit
any Restricted Subsidiary to, engage in any business other than the Oil and Gas
Business, except to such extent as would not be material to Holdings and its
Restricted Subsidiaries taken as a whole.

 

SECTION 6.08     Designation of Restricted and Unrestricted Subsidiaries.  The
Board of Directors of Holdings may designate any Restricted Subsidiary of
Holdings (other than the Borrowers) to be an Unrestricted Subsidiary if that
designation would not cause a Default or Event of Default and the other
requirements for such designation prescribed in the definition of “Unrestricted
Subsidiary” are satisfied.  If a Restricted Subsidiary of Holdings is designated
as an Unrestricted Subsidiary, the aggregate Fair Market Value of all
outstanding Investments owned by Holdings and its Restricted Subsidiaries in the
Subsidiary properly designated as an Unrestricted Subsidiary will be deemed to
be an Investment made as of the time of the designation and will reduce the
amount available for Restricted Payments under the first paragraph of Section
6.01 or represent Permitted Investments, as determined by Holdings.  That
designation shall only be permitted if the Investment would be permitted at that
time and if the Subsidiary so designated otherwise meets the definition of an
Unrestricted Subsidiary.

 

The Board of Directors of Holdings may at any time designate any Unrestricted
Subsidiary of Holdings to be a Restricted Subsidiary of Holdings, provided that
such designation will be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of Holdings of any outstanding Indebtedness of such
Unrestricted Subsidiary, and such designation will only be permitted if (1) such
Indebtedness is permitted under Section 6.03, calculated on a pro forma basis as
if such designation had occurred at the beginning of the four-quarter reference
period, and (2) no Default (other than a Reporting Default) or Event of Default
would be in existence following such designation.

SECTION 6.09     Merger, Consolidation, or Sale of Assets.  Neither Holdings nor
either Borrower may: (x) consolidate or merge with or into another Person
(whether or not Holdings or a Borrower (as applicable) is the survivor), convert
into another form of entity or continue in another jurisdiction; or (y) directly
or indirectly, sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets, in one or more related
transactions to another Person, unless:

 

(a)     either (1) Holdings or a Borrower (as applicable) is the survivor or
(2) the Person formed by or surviving any such consolidation or merger or
resulting from such conversion (if other than Holdings or a Borrower) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation, limited liability company or limited
partnership organized or existing under the laws of the United States, any state
of the United States or the District of Columbia or, in the case of any such
merger or consolidation involving the Borrowers, or any sale, assignment,
transfer, lease, conveyance or other disposition of assets of the Borrowers,
organized or existing under the laws of England and Wales or the Netherlands
(Holdings, the Borrowers or such other Person, as the case may be, being herein
called the “Successor Company”);

(b)     the Successor Company unconditionally assumes all the obligations of
Holdings or such Borrower (as applicable) under this Agreement, the Security
Documents and any and all other Credit Documents to which it is a party pursuant
to a joinder agreement or other agreement in a form reasonably satisfactory to
the Administrative Agent;

109

--------------------------------------------------------------------------------

 

 

(c)     immediately after such transaction or transactions, no Default (other
than a Reporting Default) or Event of Default exists;

(d)     either

(i)     the Successor Company would, on the date of such transaction immediately
after giving pro forma effect thereto and any related financing transactions as
if the same had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
6.03 hereof; or

(ii)     immediately after giving pro forma effect to such transaction and any
related financing transactions as if the same had occurred at the beginning of
the applicable four-quarter period, the Fixed Charge Coverage Ratio of the
Successor Company, will be equal to or greater than the Fixed Charge Coverage
Ratio of Holdings immediately prior to such transaction;

(e)     the Successor Company causes such amendments, supplements or other
instruments to be executed, delivered, filed and recorded, as applicable, in
such jurisdictions as may be required by applicable law or desired by the
Collateral Agent to preserve and protect the Lien of the Security Documents on
any Collateral owned by or transferred to the Successor Company;

(f)     any Collateral owned by or transferred to the Successor Company shall
(i) continue to constitute Collateral, (ii) be subject to a first-priority Lien
in favor of the Collateral Agent for the benefit of the Secured Parties and
(iii) not be subject to any Lien other than the Liens securing the Obligations
and other Permitted Liens; and

(g)     the property and assets of the Person which is merged or consolidated
with or into the Successor Company, to the extent that they are property or
assets of the types which would constitute Collateral, shall be treated as
after-acquired property and the Successor Company shall take such action as may
be reasonably necessary or desired by the Collateral Agent to cause such
property and assets to be made subject to a first-priority Lien in favor of the
Collateral Agent for the benefit of the Secured Parties.

Notwithstanding the restrictions described in the foregoing clause (d), (i) any
Restricted Subsidiary of Holdings (other than the Borrowers) may consolidate
with, merge into or dispose of all or part of its properties or assets to
Holdings or another Restricted Subsidiary, in each case, subject to compliance
with the Additional Guarantor Requirement as of the time of such merger or
disposition, and (ii) Holdings may merge with or into an Affiliate formed solely
for the purpose of reincorporating Holdings in another jurisdiction.

For purposes of the foregoing, the sale, assignment, transfer, lease, conveyance
or other disposition (in a single transaction or series of transactions) of all
or substantially all of the properties or assets of one or more Subsidiaries of
Holdings, which properties or assets, if held by Holdings instead of such
Subsidiaries, would constitute all or substantially all of the properties or
assets of Holdings on a consolidated basis, shall be deemed to be the transfer
of all or substantially all of the properties or assets of Holdings.

Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the properties or
assets of Holdings in accordance with this Section 6.09, in which Holdings is
not the surviving entity, the Successor Company

110

--------------------------------------------------------------------------------

 

 

shall succeed to, and be substituted for, and may exercise every right and power
of, Holdings under this Agreement and any other Credit Document to which it is a
party with the same effect as if such Successor Company had been named as
Holdings herein (so that from and after the date of such consolidation, merger,
sale, assignment, transfer, lease, conveyance or other disposition, the
provisions of this Agreement referring to “Holdings” shall refer instead to such
Successor Company and not to Holdings); and thereafter (except in the case of a
lease of all or substantially all of Holdings’ properties or assets), Holdings
shall be discharged and released from all obligations and covenants under this
Agreement and the other Credit Documents to which it is a party.

SECTION 6.10     Minimum Interest Coverage Ratio.  Holdings will not permit the
Interest Coverage Ratio as of the last day of each fiscal quarter for the period
of four consecutive fiscal quarters ending on such date, beginning with the
fiscal quarter ending June 30, 2014, to be less than 1.50:1.00.

 

SECTION 6.11     Maximum Leverage Ratio.  Holdings will not permit the
Consolidated Leverage Ratio, as of the last day of any period of four
consecutive fiscal quarters, beginning with the fiscal quarter ending June 30,
2014, to be greater than 5.00:1.00.

 

SECTION 6.12     Minimum Asset Coverage Ratios.   Holdings will not permit the
Proved Reserves Coverage Ratio, as of the last day of each fiscal quarter,
beginning with the fiscal quarter ending June 30, 2014, to be less than 2.0 to
1.0.

 

SECTION 6.13     Elections.  Without the prior written consent of the Required
Lenders, Holdings will not, and will not permit any of its Subsidiaries to, make
any election for U.S. federal income tax purposes that causes the Indebtedness
of the Borrowers to be treated as the Indebtedness of a “U.S. person” (as such
term is defined under Section 7701(a)(30) of the Code) for U.S. federal income
tax purposes.

SECTION 6.14     Amendments to Certain Documents.  Holdings will not, and will
not permit any of its Restricted Subsidiaries to amend, restate, supplement,
modify or otherwise change (pursuant to a waiver or otherwise) the Subordination
Agreement, any LC Procurement Document or the LC Issuance Agreement other than
(i) any such amendment, restatement, supplement, modification or other change
which would not be adverse to any Credit Party, Agent, Arranger or any Lender
and which does not involve the payment of a consent fee or (ii) any such
amendment as may be necessary, if any, with respect to the Applicable Rate (as
defined in the LC Procurement Agreement) and related provisions and definitions
thereunder in order to provide for the payment of a LC Fee (as defined in the LC
Procurement Agreement) equal to the sum of the weighted average Applicable
Margin (as defined in the Term B Credit Agreement), the Alternate Base Rate
(with respect to the ABR Tranches (as defined in the LC Procurement Agreement)
of ABR Borrowings), and the Adjusted LIBO Rate (with respect to the Eurodollar
Tranches (as defined in the LC Procurement Agreement) of Eurodollar Borrowings),
in each case, in effect under the Term B Credit Agreement after giving effect to
the incurrence of Other Term Loans (as defined in the Term B Credit Agreement)
in accordance with Section 2.22 of the Term B Credit Agreement; provided that no
such amendment, modification, change, waiver, discharge or termination shall,
without the consent of each Lender, (a) extend the LC Release Date (as defined
in the LC Procurement Agreement), or reduce the Fees (as defined in the LC
Procurement Agreement) or extend the time of payment of any LC Procurement
Agreement Obligations (as defined in the Term B Credit Agreement) (except in
connection with the waiver of applicability of any post-default increase in
interest rates), or reduce (or forgive) the outstanding amount of Reimbursement
Obligations (as defined in the Term B Credit

111

--------------------------------------------------------------------------------

 

 

Agreement), (b) release any Collateral (as defined in the LC Procurement
Agreement), (c) amend, modify or waive any provision of Section 10.05 of the LC
Procurement Agreement, or (d) consent to the assignment or transfer by LuxCo of
any of its rights thereunder.

 

Article VII
Events of Default

 

SECTION 7.01     Events of Default.  In case of the happening of any of the
following events (“Events of Default”):

 

(a)     The Borrowers shall (i) default in the payment when due of any principal
due under any Loan or any Note, or (ii) default, and such default shall continue
unremedied for three or more Business Days, in the payment when due of any
interest, premium, fees or other amounts on any Loan or any Note or any Fees or
any other amounts owing hereunder or under any other Credit Document; or

(b)     Any representation, warranty or statement made or deemed made by any
Credit Party herein or in any other Credit Document or in any certificate
delivered to the Administrative Agent or any Lender pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or

(c)     Holdings or any of its Restricted Subsidiaries shall (i) default in the
due performance or observance by it of any term, covenant or agreement contained
in Section 5.01(f)(i), 5.11, 5.12(c), 5.13, 5.16 or Article VI or (ii) default
in the due performance or observance by it of any other term, covenant or
agreement contained in this Agreement (other than those set forth in Section
7.01(a), (b) and (c)(i)) and such default shall continue unremedied for a period
of 30 days following the earlier of (A) Holdings’ or the Borrowers’ actual
knowledge of such default and (B) written notice from the Administrative Agent
or the Required Lenders specifying such default; or 

(d)      (i) Holdings or any of its Restricted Subsidiaries shall (A) default in
any payment of any Indebtedness (other than the Obligations under the Credit
Documents) beyond the period of grace, if any, provided in an instrument or
agreement under which such Indebtedness was created or (B) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations under the Credit Documents) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause any such Indebtedness to become
due prior to its stated maturity, or (ii) any Indebtedness (other than the
Obligations under the Credit Documents) of Holdings or any of its Restricted
Subsidiaries shall be declared to be (or shall become) due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment,
prior to the Stated Maturity thereof; provided that, it shall not be a Default
or an Event of Default under this Section 7.01(d) unless the principal amount of
all Indebtedness as described in preceding clauses (i) and (ii) is at least
$25,000,000; or

(e)     Holdings or any of the other Credit Parties, other than EIH, shall
commence a voluntary case concerning itself under any Debtor Relief Law; or an
involuntary case is commenced against Holdings or any of the other Credit
Parties, other than EIH, and the petition is not controverted within 10 days, or
is not dismissed within 60 days after the filing thereof; or a custodian (as
defined in a Debtor Relief Law) is appointed for, or takes charge of, all or
substantially all of the property of Holdings or any of the other Credit
Parties,  other than EIH, to operate all or any substantial portion of the
business of Holdings or any of the other Credit

112

--------------------------------------------------------------------------------

 

 

Parties,  other than EIH, or Holdings or any of the other Credit Parties, other
than EIH, commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
Holdings or any of the other Credit Parties,  other than EIH, or there is
commenced against Holdings or any of the other Credit Parties any such
proceeding which remains undismissed for a period of 60 days after the filing
thereof, or Holdings or any of the other Credit Parties, other than EIH, is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or Holdings or any of the
other Credit Parties, other than EIH, makes a general assignment for the benefit
of creditors; or any Business action is taken by Holdings or any of the other
Credit Parties, other than EIH, for the purpose of effecting any of the
foregoing; or

(f)     A Dutch Insolvency Event shall have occurred with respect to EIH;  or

(g)      ((i) An ERISA Event shall have occurred; a contributing sponsor (as
defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA
shall be subject to the advance reporting requirement of PBGC Regulation
Section 4043.61 (without regard to subparagraph (b)(1) thereof) and an event
described in Subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation
Section 4043 shall be reasonably expected to occur with respect to such Plan
within the following 30 days (except to the extent that a waiver to the advance
reporting requirement of PBGC Regulation 4043.61 applies with respect to such
event); any Plan shall have an Unfunded Current Liability; there is or arises
any potential withdrawal liability under Section 4201 of ERISA, if Holdings, any
of its Subsidiaries, or any ERISA Affiliate were to withdraw completely from any
and all Multiemployer Plans; a contribution required to be made by Holdings, any
of its Subsidiaries or any ERISA Affiliate with respect to a Plan or Non-U.S.
Plan has not been timely made, Holdings, any of its Subsidiaries or any ERISA
Affiliate has incurred or is likely to incur any liability on account of a group
health plan (as defined in Section 607(1) of ERISA, Section 4980B(g)(2) of the
Code or 45 Code of Federal Regulations Section 160.103) under Section 4980B of
the Code and/or the Health Insurance Portability and Accountability Act of 1996;
Holdings or any of its Subsidiaries has incurred or is likely to incur
liabilities pursuant to any portion of any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA); any
Change in Law occurs, or, as a result of a Change in Law, an event occurs
following a Change in Law, with respect to or otherwise affecting any Plan;
(ii) there shall result from any of the events set forth in clause (i) above the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (iii) such lien, security interest
or liability described in clause (i) or (ii) above, either individually or in
the aggregate, in the opinion of the Required Lenders has had, or could
reasonably be expected to have, a Material Adverse Effect; or

(h)     Any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Parties the Liens, rights, powers and privileges purported to be created
thereby (including, without limitation, a perfected security interest in, and
Lien on, all of the Collateral (other than any immaterial portion thereof), in
favor of the Collateral Agent, subject to no other Liens (except Permitted
Liens), or any Credit Party shall default in the due performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to any such Security Document and such default shall continue beyond
the period of grace, if any, specifically applicable thereto pursuant to the
terms of such Security Document; or

(i)     The Credit Party Guaranty or any provision thereof shall cease to be in
full force or effect as to any Guarantor (except as a result of a release of any
Guarantor in accordance with the

113

--------------------------------------------------------------------------------

 

 

terms thereof), or any Guarantor or any Person acting for or on behalf of such
Guarantor shall deny or disaffirm such Guarantor’s obligations under the Credit
Party Guaranty to which it is a party or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Credit Party Guaranty; or

(j)     One or more judgments or decrees shall be entered against Holdings or
any of the other Credit Parties involving in the aggregate for Holdings and the
other Credit Parties a liability that equals or exceeds $25,000,000 (to the
extent not paid or not covered by a reputable and solvent insurance company
pursuant to which the insurer has accepted liability therefor in writing) and
such judgments and decrees either shall be final and non-appealable or shall not
be vacated, discharged or stayed or bonded pending appeal for any period of 30
consecutive days; or

(k)     All or any part of the interest of Holdings or any of the other Credit
Parties in any Oil and Gas Property (or any Hydrocarbons or revenues or other
monies arising in respect of it) is (a) nationalized, expropriated, compulsorily
acquired or seized by any Governmental Authority or (b) any such Governmental
Authority takes, or officially announces it will take, any step with a view to
any of the foregoing and in either case such action is reasonably likely to
result in a Material Adverse Effect; or

(l)     EEUK shall (i) default in any payment obligation under the LC
Procurement Agreement beyond the period of grace, if any, provided thereunder or
in the observance or performance of any agreement contained in the LC
Procurement Agreement or (ii) any of the LC Procurement Documents shall cease to
be in full force and effect, or shall cease to give the Collateral Agent for the
benefit of LuxCo and LC Finco US the Liens, rights, powers and privileges
purported to be created thereby, in favor of the Collateral Agent, or any Credit
Party shall default in the due performance or observance of any term, covenant
or agreement on its part to be performed or observed pursuant to any such LC
Procurement Document and such default shall continue beyond the period of grace,
if any, specifically applicable thereto pursuant to the terms of such LC
Procurement Document or any LC Procurement Guarantor or any Person acting for or
on behalf of such Guarantor shall deny or disaffirm such LC Procurement
Guarantor’s obligations under the LC Procurement Guaranty to which it is a
party; or

(m)     A Change of Control shall occur;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Lenders, shall by written notice to the Borrowers, take any or all
of the following actions, without prejudice to the rights of the Administrative
Agent, any Lender or the holder of any Note to enforce its claims against any
Credit Party (provided that, if an Event of Default respecting the covenant in
Section  9.05 shall occur with respect to the Borrowers, the result which would
occur upon the giving of written notice by the Administrative Agent as specified
in clauses (i) and (ii) below, shall occur automatically without the giving of
any such notice): (i) declare the Total Commitment terminated, whereupon all
Commitments of each Lender shall forthwith terminate immediately; (ii) declare
the principal of and any accrued interest in respect of all Loans and the
Notes, together with the Applicable Premium, and all Obligations owing hereunder
and thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; and (iii) enforce, as Collateral Agent,
all of the Liens and security interests created pursuant to the Security
Documents.

114

--------------------------------------------------------------------------------

 

 

After the exercise of remedies provided for in the immediately preceding
paragraph, any amounts received on account of the Obligations shall be applied
by the Administrative Agent in the following order (to the fullest extent
permitted by mandatory provisions of applicable law); provided that, the
Administrative Agent (in its sole discretion) may elect to deposit all or any
portion of any such amounts into any one or more escrow accounts maintained by
any escrow agent designated by it, for the benefit of the Agents and the
Lenders, for periods and otherwise on terms and conditions to be determined by
the Administrative Agent, with the amounts deposited into any such escrow
accounts to be released and applied at the direction of the Administrative Agent
to meet any contingent claims or other Obligations which would, when due and
payable, constitute Obligations specified in the clauses below entitled “First”
and “Second”:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (other than principal and interest, but
including attorneys’ and consultant fees and other out-of-pocket expenses
payable under Section 9.05) payable to the Administrative Agent, the Collateral
Agent or the Arranger in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including reasonable attorneys’ and consultants’ fees and other
out-of-pocket expenses payable under Section 9.05), ratably among them in
proportion to the amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of (i) the Obligations constituting unpaid
principal of the Loans and (ii) the Obligations described in clause (b) of the
definition of Obligations, ratably among the Lenders and the Approved Hedge
Counterparties in proportion to the respective amounts described in this clause
Fourth held by them;

Fifth, to the payment of all other Obligations that are due and payable to the
Administrative Agent, Collateral Agent and the other Lenders on such date,
ratably based upon the respective aggregate amounts of all such Obligations
owing to the Administrative Agent, Collateral Agent and the other Lenders on
such date; and

Last, the balance, if any, after all of the Obligations have been paid in full,
to the Borrowers or other Credit Party as otherwise required by applicable law.

Article VIII
The Administrative Agent and the Collateral Agent; Etc.

 

SECTION 8.01     Appointment and Authority.  Each Lender hereby irrevocably
appoints the Administrative Agent and the Collateral Agent its agent and
authorizes the Agents to take such actions on its behalf and to exercise such
powers as are delegated to such Agent by the terms of the Credit Documents,
together with such actions and powers as are reasonably incidental
thereto.  Without limiting the generality of the foregoing, the Agents are
hereby expressly authorized to (i) execute any and all documents (including
releases) with respect to the Collateral or any Guarantor and the rights of the
Lenders with respect thereto, as contemplated by and in accordance with the
provisions of this Agreement and the Security Documents,

115

--------------------------------------------------------------------------------

 

 

including the Dutch law governed Security Documents and in relation thereto
agree with the creation of the parallel debt as will described in the Dutch law
governed Security Documents (the “Parallel Debt”), including that any payment
received by the Collateral Agent in respect of the Parallel Debt will be deemed
a satisfaction of a pro rata portion of the corresponding amounts of the
Obligations and (ii) negotiate, enforce or the settle any claim, action or
proceeding affecting the Lenders in their capacity as such, at the direction of
the Required Lenders, which negotiation, enforcement or settlement will be
binding upon each Lender.

 

SECTION 8.02     Rights as a Lender.  The institution serving as the
Administrative Agent and/or the Collateral Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with Holdings, the Borrowers or any Subsidiary or other
Affiliate thereof as if it were not an Agent hereunder.

 

SECTION 8.03     Exculpatory Provisions.  (a) Neither Agent shall have any
duties, obligations or responsibilities except those expressly set forth in the
Credit Documents.  Without limiting the generality of the foregoing, (i) neither
Agent shall be subject to any agency, trustee, fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing,
(ii) neither Agent shall have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that such Agent is instructed in writing to
exercise by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.08), and (iii) except as expressly set forth in the Credit Documents, neither
Agent shall have any duty to disclose, nor shall it be liable for the failure to
disclose, any information relating to Holdings, the Borrowers or any of the
Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent and/or Collateral Agent or any of its Affiliates in any
capacity.

 

(a)     Neither Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.08) or in the absence of its own gross negligence or
willful misconduct.  Neither Agent shall be deemed to have knowledge of any
Default unless and until written notice thereof is given to such Agent by
Holdings, the Borrowers or a Lender.

(b)     Neither Agent shall be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with any Credit Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith,
(iii) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth in any Credit Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Credit Document or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere in any Credit Document, other than to confirm
receipt of items expressly required to be delivered to such Agent.

(c)     Each of the Lenders and the Borrowers hereby acknowledges and agrees
that (i) the Administrative Agent and the Collateral Agent are acting as
administrative agent and collateral agent under the Term B Credit Agreement, and
as collateral agent under the LC Procurement Agreement and each of the other
agreements and documents executed or made in connection therewith, (ii) the
Collateral Agent is acting as agent for each, and as a, secured party under each

116

--------------------------------------------------------------------------------

 

 

of the security agreements and documents executed or made pursuant to any of the
foregoing agreements, for the benefit of secured parties under each of this
Agreement, the Term B Credit Agreement and the LC Procurement Agreement, (iii)
the LC Bank is acting as letter of credit issuing bank under the LC Issuance
Agreement and (iv) none of the Agents nor the LC Bank shall be liable under this
Agreement or any Security Document for any actual or deemed conflict of interest
as a result thereof, or as a result of any actions which either Agent or the LC
Bank shall take or fail to take under any such other document.

SECTION 8.04     Reliance by Agent.  Each Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed or sent by
the proper Person.  Each Agent may also rely upon any statement made to it
orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon.  Each Agent may
consult with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

SECTION 8.05     Delegation of Duties.  Each Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by it.  Each Agent and any such sub-agent may perform any
and all its duties and exercise its rights and powers by or through their
respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of each
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the Term Loan Facility as well as activities
as Agent.  Neither Agent shall be responsible for the negligence or misconduct
of any sub-agents except to the extent that a court of competent jurisdiction
determines in a final and non-appealable judgment that the applicable Agent
acted with gross negligence or willful misconduct in the selection of such sub
agents.

 

SECTION 8.06     Resignation of Agent.  Subject to the appointment and
acceptance of a successor Agent as provided below, any Agent may resign at any
time by notifying the Lenders and the Borrowers.  Upon any such resignation of
the Administrative Agent, the Required Lenders shall have the right, with the
consent of the Borrowers so long as no Event of Default has occurred and is
continuing, to appoint a successor.  If no successor Administrative Agent shall
have been so appointed by the Required Lenders (and the Borrowers, as
applicable) and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank.  If no successor Administrative Agent has been
appointed pursuant to the immediately preceding sentence by the 30th day after
the date such notice of resignation was given by such Administrative Agent, such
Administrative Agent’s resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of such Administrative Agent
hereunder and/or under any other Credit Document until such time, if any, as the
Required Lenders, with the consent of the Borrowers so long as no Event of
Default has occurred and is continuing, appoint a successor Administrative
Agent.  Unless a retiring Collateral Agent’s resignation would not, in the
judgment of legal counsel, adversely affect the validity, perfection,
enforceability or priority of the Liens securing the Obligations, the Collateral
Agent’s resignation notice shall only take effect upon: (i) the appointment of a
successor Collateral Agent; and (ii) the transfer of all the Collateral to that
successor Collateral Agent.  Upon the acceptance of its appointment as an Agent
hereunder by a

117

--------------------------------------------------------------------------------

 

 

successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder.  The fees
payable by the Borrowers to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrowers and such
successor.  After an Agent’s resignation hereunder, the provisions of this
Article VIII and Section 9.05 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while acting as
Agent.  The parties hereto acknowledge and agree that any resignation by the
Collateral Agent is not effective with respect to its rights and obligations
under the Parallel Debt until such rights and obligations have been assumed by
the successor Collateral Agent.

 

SECTION 8.07     Non-Reliance on Agent and Other Lenders.  Each Lender
acknowledges that it has, independently and without reliance upon the Agents or
any other Lender and based on such 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 Agents or any other Lender and based on such documents
and information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement or any other Credit Document, any related agreement or any document
furnished hereunder or thereunder.

 

SECTION 8.08     No Other Duties.  Notwithstanding any other provision of this
Agreement or any provision of any other Credit Document, the Arranger, is named
as such for recognition purposes only, and in its respective capacities as such
shall have no duties, responsibilities or liabilities with respect to this
Agreement or any other Credit Document; it being understood and agreed that the
Arranger, shall be entitled to all indemnification and reimbursement rights in
favor of the Agents provided herein and in the other Credit Documents.  Without
limitation of the foregoing, the Arranger, in its capacity as such shall not, by
reason of this Agreement or any other Credit Document, have any fiduciary
relationship in respect of any Lender, Credit Party or any other Person.

 

Article IX
Miscellaneous

 

SECTION 9.01     Notices; Electronic Communications.  Notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by fax, as follows:

 

(a)     if to the Borrowers or Holdings, to it at 811 Main Street, Suite 2100
Houston, TX, 77002, Attention: Chief Financial Officer, Fax No. 713-583-1256,
Email: cathy.stubbs@endeavourcorp.com;

(b)     if to the Administrative Agent, to Credit Suisse, Agency Manager, Eleven
Madison Avenue, New York, NY  10010, Fax No. 212-322‑2291, Email: 
agency.loanops@credit-suisse.com;

(c)     if to the Collateral Agent, to it at Credit Suisse, Eleven Madison
Avenue, 23rd Floor, New York, NY  10010, Attn:  Loan Operations – Boutique
Management, Telephone No.:  (212) 538‑3525,
Email:  Ops-collateral@credit-suisse.com; and

118

--------------------------------------------------------------------------------

 

 

(d)     if to a Lender, to it at its address (or fax number) set forth on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender
shall have become a party hereto.

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
(or other electronic communications pursuant to procedures approved by the
Administrative Agent) or on the date five Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 9.01 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.01.  As agreed to among Holdings, the Borrowers,
the Administrative Agent and the applicable Lenders from time to time, notices
and other communications may also be delivered by e‑mail to the e‑mail address
of a representative of the applicable Person provided from time to time by such
Person and shall be deemed to have been given as of the date of receipt thereof.

The Borrowers hereby agree, unless directed otherwise by the Administrative
Agent or unless the electronic mail address referred to below has not been
provided by the Administrative Agent to the Borrowers, that they will, or will
cause their Subsidiaries to, provide to the Administrative Agent all
information, documents and other materials that it is obligated to furnish to
the Administrative Agent pursuant to the Credit Documents or to the Lenders
under Article V, including all notices, requests, financial statements,
financial and other reports, certificates and other information materials, but
excluding any such communication that (i) is or relates to a Borrowing Request
or a notice pursuant to Section 2.10, (ii) relates to the payment of any
principal or other amount due under this Agreement prior to the scheduled date
therefor, (iii) provides notice of any Default or Event of Default under this
Agreement or any other Credit Document or (iv) is required to be delivered to
satisfy any condition precedent to the effectiveness of this Agreement and/or
any Borrowing or other extension of credit hereunder (all such non-excluded
communications being referred to herein collectively as “Communications”), by
transmitting the Communications in an electronic/soft medium that is properly
identified in a format acceptable to the Administrative Agent to an electronic
mail address as directed by the Administrative Agent.  In addition, the
Borrowers agrees, and agrees to cause its Subsidiaries, to continue to provide
the Communications to the Administrative Agent or the Lenders, as the case may
be, in the manner specified in the Credit Documents but only to the extent
requested by the Administrative Agent.

The Borrowers hereby acknowledge that (a) the Administrative Agent will make
available to the Lenders materials and/or information provided by or on behalf
of the Borrowers hereunder (collectively, the “Borrower Materials”) by posting
the Borrower Materials on Intralinks or another similar electronic system (the
“Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Borrowers or their securities) (each, a “Public Lender”).  The Borrowers
hereby agree that (w) all Borrower Materials that are to be made available to
Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the first
page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be
deemed to have authorized the Administrative Agent and the Lenders to treat such
Borrower Materials as not containing any material non-public information with
respect to the Borrowers or their securities for purposes of United States
federal and state securities laws (provided, however, that to the extent such
Borrower Materials constitute Information, they shall be treated as set forth in
Section 9.16); (y) all Borrower Materials marked “PUBLIC” are permitted to be
made available through a portion of the Platform designated as “Public
Investor;” and (z) the Administrative Agent shall

119

--------------------------------------------------------------------------------

 

 

be entitled to treat any Borrower Materials that are not marked “PUBLIC” as
being suitable only for posting on a portion of the Platform not marked as
“Public Investor.” Notwithstanding the foregoing, the following Borrower
Materials shall be deemed to be marked “PUBLIC”, unless the Borrowers notify the
Administrative Agent promptly that any such document contains material
non-public information:  (1) the Credit Documents, (2) notification of changes
in the terms of the Term Loan Facility and (3) all information delivered
pursuant to Sections 5.01(a) and (b).

Each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information”
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such
Public Lender’s compliance procedures and applicable law, including United
States Federal and state securities laws, to make reference to Communications
that are not made available through the “Public Side Information” portion of the
Platform and that may contain material non-public information with respect to
the Borrowers or their securities for purposes of United States Federal or state
securities laws.

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  NONE OF THE ADMINISTRATIVE
AGENT, THE BORROWERS, HOLDINGS, ITS SUBSIDIARIES OR ANY OF THEIR RELATED PARTIES
WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF
THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN
THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN
CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT, THE BORROWERS, HOLDINGS, ITS SUBSIDIARIES OR ANY OF THEIR
RELATED PARTIES HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY LENDER OR ANY OTHER
PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND
INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY
CREDIT PARTY’S OR THE ADMINISTRATIVE AGENT’S, THE BORROWERS’, HOLDINGS’, ITS
SUBSIDIARIES’ OR ANY OF THEIR RELATED PARTIES’ TRANSMISSION OF COMMUNICATIONS
THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS
FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of the Communications by the
Administrative Agent at its e‑mail address set forth above shall constitute
effective delivery of the Communications to the Administrative Agent for
purposes of the Credit Documents.  Each Lender agrees that receipt of notice to
it (as provided in the next sentence) specifying that the Communications have
been posted to the Platform shall constitute effective delivery of the
Communications to such Lender for purposes of the Credit Documents.  Each Lender
agrees to notify the Administrative Agent in writing (including by electronic
communication) from time to time of such Lender’s e‑mail address to which the
foregoing notice may be sent by electronic transmission and that the foregoing
notice may be sent to such e‑mail address.

120

--------------------------------------------------------------------------------

 

 

Nothing herein shall prejudice the right of the Administrative Agent or any
Lender to give any notice or other communication pursuant to any Credit Document
in any other manner specified in such Credit Document.

SECTION 9.02     Survival of Agreement.  All covenants, agreements,
representations and warranties made by the Borrowers or Holdings herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Credit Document shall be considered
to have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Credit Document is outstanding and
unpaid and so long as the Commitments have not been terminated.  The provisions
of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the invalidity or unenforceability
of any term or provision of this Agreement or any other Credit Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent or any Lender.

 

SECTION 9.03     Binding Effect.  This Agreement shall become effective when it
shall have been executed by Holdings, the Borrowers and the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto.

 

SECTION 9.04     Successors and Assigns. 

 

(a)     Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the permitted successors and assigns
of such party; and all covenants, promises and agreements by or on behalf of the
Borrowers, Holdings, the Administrative Agent, the Collateral Agent or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.

(b)     Each Lender may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it), with
the prior written consent of:

(i)     Holdings (not to be unreasonably withheld, conditioned or delayed);
provided that (A) no consent of Holdings shall be required if (1) such
assignment is made in connection with the primary syndication of the Commitments
and Loans, (2) such assignment is made by a Lender to a Lender or an Affiliate
of such Lender or a Related Fund of such Lender or (3) a Default or Event of
Default has occurred and is continuing, and (B) if Holdings has not responded
within five Business Days after the delivery of any request for a consent, such
consent shall be deemed to have been given; and

(ii)     the Administrative Agent (not to be unreasonably withheld, conditioned
or delayed); provided that no consent of the Administrative Agent shall be
required if such assignment is made by a Lender to a Lender or an Affiliate of
such Lender or a Related Fund of such Lender;

provided,  further, that (i) no assignment of a Loan shall be permitted unless
such Lender effects a corresponding and concurrent assignment of a pro rata
amount of its loans under the Term B Facility (it being understood that the
Loans and Term B Loans shall trade in “strips” and that

121

--------------------------------------------------------------------------------

 

 

Lenders shall hold equal percentages of Loans and Term B Loans); (ii) the amount
of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall be in an
integral multiple of, and not less than, $1,000,000 (or, if less, the entire
remaining amount of such Lender’s Commitment or Loans); provided that
simultaneous assignments by two or more Related Funds shall be combined for
purposes of determining whether the minimum assignment requirement is met,
 provided, further, that an assignment to any assignee of Loans with respect to
EIH shall only be permitted if the assignee to whom the Loans are assigned is a
Non-Public Lender at all times, (iii) the parties to each assignment shall
(A) execute and deliver to the Administrative Agent an Assignment and Acceptance
via an electronic settlement system acceptable to the Administrative Agent or
(B) if previously agreed with the Administrative Agent, manually execute and
deliver to the Administrative Agent an Assignment and Acceptance, and, in each
case, shall pay to the Administrative Agent a processing and recordation fee of
$3,500 (which fee may be waived or reduced in the sole discretion of the
Administrative Agent), and (iv) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire (in which
the assignee shall designate one or more credit contacts to whom all
syndicate-level information (which may contain material non-public information
about the Credit Parties and their Related Parties or their respective
securities) will be made available and who may receive such information in
accordance with the assignee’s compliance procedures and applicable laws,
including federal and state securities laws) and all applicable tax forms.  Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment and Acceptance,
(A) the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued
for its account and not yet paid). 

(c)     By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows:  (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Credit Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrowers or the performance or
observance by the Borrowers or any Subsidiary of any of its obligations under
this Agreement, any other Credit Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee represents and warrants that it
is an Eligible Assignee legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.01(a) or (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;
(v) such assignee will

122

--------------------------------------------------------------------------------

 

 

independently and without reliance upon the Administrative Agent, the Collateral
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; (vi) such
assignee appoints and authorizes the Administrative Agent and the Collateral
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent and the
Collateral Agent, respectively, by the terms hereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.

(d)     The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices in The City of New York a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount (and stated interest) of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in
the Register shall be conclusive and the Borrowers, the Administrative Agent,
the Collateral Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrowers, the Collateral
Agent and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

(e)     Upon its receipt of, and consent to, a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above, if applicable, and the written consent of the
Administrative Agent and, if required, the Borrowers to such assignment and any
applicable tax forms, the Administrative Agent shall (i) accept such Assignment
and Acceptance and (ii) record the information contained therein in the
Register.  No assignment shall be effective unless it has been recorded in the
Register as provided in this paragraph (e).

(f)     Each Lender may without the consent of the Borrowers or the
Administrative Agent sell participations to one or more banks or other Persons
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided,  however, that (i) such Lender’s obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other Persons shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same
extent as if they were Lenders (but, with respect to any particular participant,
to no greater extent than the Lender that sold the participation to such
participant) and (iv) the Borrowers, the Administrative Agent and the Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Borrowers relating to
the Loans and to approve any amendment, modification or waiver of any provision
of this Agreement (other than amendments, modifications or waivers decreasing
any fees payable to such participating bank or Person hereunder or the amount of
principal of or the rate at which interest is payable on the Loans in which such
participating bank or Person has an interest, extending any scheduled principal
payment date or date fixed for the payment of interest on the Loans in which
such participating bank or Person has an interest, increasing or extending the
Commitments in which such participating bank or Person has an interest or
releasing all or substantially all of the value of the Contingent Obligations
under the Credit Party Guaranty or all or substantially all of the
Collateral).  To the extent permitted by law, each participating bank or other
Person also shall be entitled to the benefits of Section 9.06 as though it were
a Lender, provided such participating

123

--------------------------------------------------------------------------------

 

 

bank or other Person agrees to be subject to Section 2.18 as though it were a
Lender.  Each Lender that sells a participation shall, acting solely for this
purpose as an agent of the Borrowers, maintain a register on which it enters the
name and address of each participant and the principal amounts (and stated
interest) of each participant’s interest in the Loans or other obligations under
the Credit Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any participant or any information relating to a
participant’s interest in any commitments, loans, letters of credit or its other
obligations under any Credit Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 4f.103‑1(c) of
the United States Treasury Regulations.  The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary.  For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

(g)     Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; provided that, prior to any such disclosure of
information designated by the Borrowers as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.

(h)     Any Lender may at any time assign all or any portion of its rights under
this Agreement to secure extensions of credit to such Lender or in support of
obligations owed by such Lender; provided that no such assignment shall release
a Lender from any of its obligations hereunder or substitute any such assignee
for such Lender as a party hereto.

(i)     Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle (an “SPV”),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrowers, the option to provide to the Borrowers
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrowers pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPV to make any
Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Lender shall be obligated to
make such Loan pursuant to the terms hereof.  The making of a Loan by an SPV
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by such Granting Lender.  Each party
hereto hereby agrees that no SPV shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender).  In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPV, it
will not institute against, or join any other Person in instituting against,
such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof.  In
addition, notwithstanding anything to the contrary contained in this Section
9.04, any SPV may (i) with notice to, but without the prior written consent of,
the Borrowers and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions

124

--------------------------------------------------------------------------------

 

 

(consented to by the Borrowers and Administrative Agent) providing liquidity
and/or credit support to or for the account of such SPV to support the funding
or maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPV.

(j)     Neither Holdings nor the Borrowers shall assign or delegate any of its
rights or duties hereunder without the prior written consent of the
Administrative Agent and each Lender, and any attempted assignment without such
consent shall be null and void.

SECTION 9.05     Expenses; Indemnity. 

 

(a)     The Borrowers and Holdings agree, jointly and severally, to pay (i) all
reasonable out-of-pocket expenses incurred by the Arranger, the Administrative
Agent and the Collateral Agent, in connection with the syndication of the Term
Loan Facility and the preparation and administration of this Agreement and the
other Credit Documents or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) including the reasonable
and documented fees, charges and disbursements of Latham & Watkins LLP and
NautaDutilh, counsel for the Arranger, the Administrative Agent and the
Collateral Agent (and, if necessary, by a firm of local counsel in each
appropriate jurisdiction and in the case of an actual conflict of interest, one
additional firm of counsel to the affected Lenders), and (ii) all out-of-pocket
expenses incurred by the Arranger, the Administrative Agent, the Collateral
Agent or any Lender in connection with the enforcement or protection of its
rights in connection with this Agreement and the other Credit Documents or in
connection with the Loans made hereunder, and, in connection with any such
enforcement or protection, the reasonable fees, charges and disbursements of any
other counsel for the Arranger, the Administrative Agent, the Collateral Agent
or any Lender.

(b)     The Borrowers and Holdings agree, jointly and severally, to indemnify
the Arranger, the Administrative Agent, the Collateral Agent, each Lender and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution or delivery of this Agreement or any other Credit Document
or any agreement or instrument contemplated thereby, the performance by the
parties thereto of their respective obligations thereunder or the consummation
of the Transactions and the other transactions contemplated thereby (including
the syndication of the Term Loan Facility), (ii) the use of the proceeds of the
Loans, (iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto (and
regardless of whether such matter is initiated by a third party or by the
Borrowers, any other Credit Party or any of their respective Affiliates), or
(iv) any actual or alleged presence or Release of Hazardous Materials on any
property currently or formerly owned or operated by the Borrowers or any of the
Subsidiaries, or any Environmental Liability related in any way to the Borrowers
or the Subsidiaries; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted from the
willful misconduct, bad faith or gross negligence of such Indemnitee or any
proceeding not involving an act or omission by the Borrowers or its affiliates
that is brought by an Indemnitee against any other Indemnitee (other than
disputes involving claims against the Administrative Agent in its capacity as
such or the Collateral Agent in its capacity as such).

125

--------------------------------------------------------------------------------

 

 

(c)     To the extent that Holdings and the Borrowers fail to pay any amount
required to be paid by them to the Administrative Agent or the Collateral Agent
under paragraph (a) or (b) of this Section 9.05, each Lender severally agrees to
pay to the Administrative Agent or the Collateral Agent, as the case may be,
such Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent or the Collateral Agent in its capacity as
such.  For purposes hereof, a Lender’s “pro rata share” shall be determined
based upon its share of outstanding Loans (in each case, determined as if no
Lender were a Defaulting Lender).

(d)     To the extent permitted by applicable law, neither Holdings nor the
Borrowers shall assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions or any Loan or the use of the
proceeds thereof.

(e)     The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the invalidity or unenforceability
of any term or provision of this Agreement or any other Credit Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent or any Lender.  All amounts due under this Section 9.05 shall be payable
on written demand therefor.

SECTION 9.06     Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, except to the extent prohibited 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 to or for the
credit or the account of the Borrowers or Holdings against any of and all the
obligations of the Borrowers or Holdings now or hereafter existing under this
Agreement and other Credit Documents held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
such other Credit Document and although such obligations may be unmatured.  The
rights of each Lender under this Section 9.06 are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.07     Applicable Law.  THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT (INCLUDING ANY
CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT WHETHER
SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) (IN EACH CASE, OTHER THAN AS
EXPRESSLY SET FORTH IN OTHER CREDIT DOCUMENTS) SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT
IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

 

SECTION 9.08     Waivers; Amendment. 

 

(a)     No failure or delay of the Administrative Agent, the Collateral Agent or
any Lender in exercising any power or right hereunder or under any other Credit
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any

126

--------------------------------------------------------------------------------

 

 

abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of the Administrative Agent, the
Collateral Agent and the Lenders hereunder and under the other Credit Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of this Agreement or any other
Credit Document or consent to any departure by the Borrowers or any other Credit
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.  No
notice or demand on the Borrowers in any case shall entitle the Borrowers to any
other or further notice or demand in similar or other circumstances.

(b)     Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrowers and the Required Lenders; provided,  however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity of
or any scheduled principal payment date or date for the payment of any interest
on any Loan, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan, without the prior written consent of
each Lender directly affected thereby, (ii) increase or extend the Commitment or
decrease the amount of, or extend the date for, payment of any Fees or
Applicable Premium of any Lender without the prior written consent of such
Lender, (iii) amend or modify the pro rata requirements of Section 2.17, the
provisions of Section 9.04(j) or the provisions of this Section or release all
or substantially all of the value of the guarantees under the Credit Party
Guaranty or all or substantially all of the Collateral, without the prior
written consent of each Lender, (iv) modify the protections afforded to an SPV
pursuant to the provisions of Section 9.04(i) without the written consent of
such SPV, (v) reduce the percentage contained in the definition of the term
“Required Lenders” without the prior written consent of each Lender or (vi)
amend, modify or waive this Agreement or any Security Document so as to alter
the ratable treatment of Obligations arising under the Credit Documents and
Obligations arising under Secured Hedging Agreements or the definition of
“Approved Hedge Counterparty”, “Secured Hedging Agreement”, “Obligations” or
“Secured Obligations” (as defined in any applicable Security Document) in each
case in a manner adverse to any Approved Hedge Counterparty without the written
consent of any such Approved Hedge Counterparty;;  provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the Collateral Agent hereunder or under any other Credit
Document without the prior written consent of the Administrative Agent or the
Collateral Agent.

(c)     The Administrative Agent and the Borrowers may amend any Credit Document
to correct administrative errors or omissions, or to effect administrative
changes that are not adverse to any Lender.  Notwithstanding anything to the
contrary contained herein, such amendment shall become effective without any
further consent of any other party (other than the Administrative Agent and the
Borrowers) to such Credit Document.

SECTION 9.09     Interest Rate Limitation.  Notwithstanding any provision herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively, the “Charges”) shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 9.09 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be

127

--------------------------------------------------------------------------------

 

 

increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.

 

SECTION 9.10     Entire Agreement.  This Agreement, the other Credit Documents
and any written agreement regarding the payment of Fees constitute the entire
contract between the parties relative to the subject matter hereof.  Any other
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement and the other Credit Documents.  Nothing in this
Agreement or in the other Credit Documents, expressed or implied, is intended to
confer upon any Person (other than the parties hereto and thereto, their
respective successors and assigns permitted hereunder and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent, the Collateral Agent and the Lenders) any rights, remedies, obligations
or liabilities under or by reason of this Agreement or the other Credit
Documents.

 

SECTION 9.11     WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS.  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

 

SECTION 9.12     Severability.  In the event any one or more of the provisions
contained in this Agreement or in any other Credit Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other
jurisdiction).  The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

 

SECTION 9.13     Counterparts.  This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section
9.03.  Delivery of an executed signature page to this Agreement by facsimile
transmission or as a “.pdf” shall be as effective as delivery of a manually
signed counterpart of this Agreement.

 

SECTION 9.14     Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

 

SECTION 9.15     Jurisdiction; Consent to Service of Process.  (a) EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF

128

--------------------------------------------------------------------------------

 

 

AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY COMPETENT 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 THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS, 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 SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO 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.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT OR ANY LENDER MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE OTHER CREDIT
DOCUMENTS AGAINST THE BORROWERS OR THEIR PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(a)     EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS IN
ANY NEW YORK STATE OR FEDERAL COURT.  EACH OF THE PARTIES HERETO 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.

(b)     EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.01.  NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.

SECTION 9.16     Confidentiality.  Each of the Administrative Agent, the
Collateral Agent and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ officers, directors, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority or
quasi-regulatory authority (such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) in connection with the exercise of
any remedies hereunder or under the other Credit Documents or any suit, action
or proceeding relating to the enforcement of its rights hereunder or thereunder,
(e) subject to an agreement containing provisions substantially the same as
those of this Section 9.16, (i) any actual or prospective assignee of or
participant in any of its rights or obligations under this Agreement and the
other Credit Documents or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrowers or any
Subsidiary or any of their respective obligations as designated by the
Borrowers, (f) on a confidential basis to (i) any rating agency in connection
with rating Holdings, the Borrowers or any of their  respective Subsidiaries or
the facilities hereunder, (ii) the CUSIP Service Bureau or any similar agency in
connection

129

--------------------------------------------------------------------------------

 

 

with the issuance and monitoring of CUSIP numbers with respect to the facilities
or (iii) market data collectors, similar service providers to the lending
industry and service providers to the Administrative Agent in connection with
the administration, settlement and management of this Agreement and the Credit
Documents, (g) with the consent of the Borrowers or (h) to the extent such
Information becomes publicly available other than as a result of a breach of
this Section 9.16.  For the purposes of this Section 9.16, “Information” shall
mean all information received from the Borrowers and related to the Borrowers or
their business, other than any such information that was available to the
Administrative Agent, the Collateral Agent or any Lender on a nonconfidential
basis prior to its disclosure by the Borrowers; provided that, in the case of
Information received from the Borrowers after the date hereof, such information
is clearly identified at the time of delivery as confidential.  Any Person
required to maintain the confidentiality of Information as provided in this
Section 9.16 shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord its own
confidential information.

 

SECTION 9.17     Lender Action.  Each Lender agrees that it shall not take or
institute any actions or proceedings, judicial or otherwise, for any right or
remedy against any Credit Party or any other obligor under any of the Credit
Documents (including the exercise of any right of setoff, rights on account of
any banker’s lien or similar claim or other rights of self-help), or institute
any actions or proceedings, or otherwise commence any remedial procedures, with
respect to any Collateral or any other property of any such Credit Party, unless
expressly provided for herein or in any other Credit Document, without the prior
written consent of the Administrative Agent.  The provisions of this Section
9.17 are for the sole benefit of the Lenders and the Agents and shall not afford
any right to, or constitute a defense available to, any Credit Party.

 

SECTION 9.18     USA PATRIOT Act Notice.  Each Lender and the Administrative
Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers
that pursuant to the requirements of the USA PATRIOT Act, it is required to
obtain, verify and record information that identifies the Borrowers, which
information includes the name and address of the Borrowers and other information
that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrowers in accordance with the USA PATRIOT Act.

SECTION 9.19     Process Agent. 

 

(a)     Each Credit Party hereby irrevocably and unconditionally appoints CT
Corporation with an office on the date hereof at 111 Eighth Avenue, New York,
New York 10011, and its successors hereunder (the “Process Agent”), as its agent
to receive on behalf of such Credit Party and its property all writs, claims,
process, and summonses in any action or proceeding brought against such Credit
Party in the State of New York. Such service may be made by mailing or
delivering a copy of such process to any Credit Party in care of the Process
Agent at the address specified above for the Process Agent, and such Credit
Party irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. Failure by the Process Agent to give notice to the
applicable Credit Party, or failure of the applicable Credit Party, to receive
notice of such service of process shall not impair or affect the validity of
such service on the Process Agent or any such Credit Party, or of any judgment
based thereon. Each Credit Party hereto covenants and agrees that it shall take
any and all reasonable action, including the execution and filing of any and all
documents that may be necessary to continue the designation of the Process Agent
above in full force and effect, and to cause the Process Agent to act as such.
Each Credit Party hereto further covenants and agrees to maintain at all times
an agent with offices in New York City to act as its Process Agent. Nothing
herein shall in any way be deemed to limit the

130

--------------------------------------------------------------------------------

 

 

ability to serve any such writs, process or summonses in any other manner
permitted by applicable law.

(b)     Each Credit Party that is not incorporated in the Netherlands and that
has executed, or will on the Closing Date execute, any Credit Document governed
by the law of the Netherlands irrevocably and unconditionally appoints Endeavour
International Holding B.V., with an office on the date hereof at
Teleportboulevard 140, Amsterdam 1043 EJ, Netherlands, and its successors
hereunder (the “Dutch Process Agent”), as its agent to receive on behalf of such
Credit Party and its property all writs, claims, process, and summonses in any
action or proceeding brought against such Credit Party in the Netherlands. Such
service may be made by mailing or delivering a copy of such process to any
Credit Party in care of the Dutch Process Agent at the address specified above
for the Dutch Process Agent, and such Credit Party irrevocably authorizes and
directs the Dutch Process Agent to accept such service on its behalf. Failure by
the Dutch Process Agent to give notice to such Credit Party, or failure of such
Credit Party, to receive notice of such service of process shall not impair or
affect the validity of such service on the Dutch Process Agent or any such
Credit Party, or of any judgment based thereon. Each such Credit Party covenants
and agrees that it shall take any and all reasonable action, including the
execution and filing of any and all documents that may be necessary to continue
the designation of the Dutch Process Agent above in full force and effect, and
to cause the Dutch Process Agent to act as such. Each such Credit Party further
covenants and agrees to maintain at all times an agent with offices in England
to act as its Dutch Process Agent. Nothing herein shall in any way be deemed to
limit the ability to serve any such writs, process or summonses in any other
manner permitted by applicable law. If any person appointed as an agent for
service in the Netherlands is unable for any reason to act as agent for service
of process, Holdings (on behalf of all such Credit Parties) shall immediately
(and in any event within five days of such event taking place) appoint another
agent on terms acceptable to the Administrative Agent. In the event that
Holdings fails to appoint such agent on terms acceptable to the Administrative
Agent, the Administrative Agent shall have the right to appoint an agent for
service of process.

SECTION 9.20     Judgment Currency. If, for the purposes of obtaining judgment
in any court, it is necessary to convert a sum due hereunder or any other Credit
Document in one currency into another currency, the rate of exchange used shall
be that at which in accordance with normal banking procedures the Administrative
Agent could purchase the first currency with such other currency on the Business
Day preceding that on which final judgment is given. The obligation of the
Credit Parties in respect of any such sum due from it to the Administrative
Agent or the Lenders hereunder or under the other Credit Documents shall,
notwithstanding any judgment in a currency (the “Judgment Currency”) other than
that in which such sum is denominated in accordance with the applicable
provisions of this Agreement (the “Agreement Currency”), be discharged only to
the extent that on the Business Day following receipt by the Administrative
Agent of any sum adjudged to be so due in the Judgment Currency, the
Administrative Agent may in accordance with normal banking procedures purchase
the Agreement Currency with the Judgment Currency. If the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Administrative Agent from the Credit Parties in the Agreement Currency, the
Credit Parties agree, jointly and severally, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or the
Person to whom such obligation was owing against such loss.

 

SECTION 9.21     Representation of EIH. If EIH is represented by an attorney in
connection with the signing and/or execution of this Agreement or any other
Credit Document, it is hereby expressly acknowledged and accepted by the other
parties to this Agreement or any other Credit Document that the existence and
extent of the attorney’s authority and the effects of

131

--------------------------------------------------------------------------------

 

 

the attorney’s exercise or purported exercise of his authority shall be governed
by the laws of the Netherlands.

 

[Signature pages immediately follow]

132

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the day and year first
above written.

ENDEAVOUR INTERNATIONAL HOLDING B.V.

 

 

By:  /s/  Andrew Joe Sheu

Name:

Andrew Joe Sheu

Title:

Managing Director A

 

 

By:  /s/  Franciscus Jacobus Joannes Lucassen

Name:

Franciscus Jacobus Joannes Lucassen

Title:

Managing Director B

 

 

 

 

 

ENDEAVOUR INTERNATIONAL CORPORATION

By:   /s/  Catherine L. Stubbs 

Name:

Catherine L. Stubbs

Title:

Senior Vice President & Chief Financial

 

Officer

 

 

END FINCO LLC

By:  Endeavour International Holdings B.V., its sole member.

 

By:  /s/  Andrew Joe Sheu

Name:

Andrew Joe Sheu

Title:

Managing Director A

 

133

--------------------------------------------------------------------------------

 

 

 

 

 

 

By:  /s/  Franciscus Jacobus Joannes Lucassen

Name:

Franciscus Jacobus Joannes Lucassen

Title:

Managing Director B

 

CREDIT SUISSE AG, CAYMAN ISLANDS Branch, as Administrative Agent, Collateral
Agent and a Lender

 

 

By: /s/  Mikhail Faybusovich

Name:

Mikhail Faybusovich

Title:

Authorized Signatory

 

 

By: /s/  Tyler R. Smith

Name:

Tyler R. Smith

Title:

Authorized Signatory

 

CREDIT SUISSE AG, LONDON Branch, as a  Lender

 

 

By: /s/  Eduardo Trocha

Name:

Eduardo Trocha

Title:

Director

 

 

By: /s/  Abudy Taha

Name:

Abudy Taha

Title:

Managing Director

 

 

 

 

134

--------------------------------------------------------------------------------

 

 

 

 

 

 

Schedule 1.01(a)

-

Subsidiary Guarantors

Schedule 2.01

-

Lenders and Commitments

Schedule 3.10(a)

-

ERISA Plans

Schedule 3.12(a)

-

Real Property

Schedule 3.12(b)

-

Oil and Gas Property

Schedule 3.12(c)

-

Interests in Oil and Gas Properties

Schedule 3.14

-

Subsidiaries

Schedule 3.20

-

Existing Indebtedness

Schedule 3.21

-

Insurance

Schedule 3.24

-

Existing Liens

 

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 1.01(a)

Subsidiary Guarantors

 

1)

Endeavour Energy North Sea L.P. 

2)

Endeavour Operating Corporation

3)

Endeavour Energy UK Limited

4)

Endeavour Energy North Sea LLC

5)

Endeavour International Holding B.V.

6)

End Finco LLC

 

 

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 2.01

Lenders and Commitments

 

Name of Lender

Commitments

Credit Suisse AG, London Branch

$125,000,000

 

____________

Total

$125,000,000

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 3.10(a)

ERISA Plans

 

None.

 

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 3.12(a)

Real Property

 

Leased Real Property of the Credit Parties

1.19,479 sq. ft. of rentable area on Floor 21 of the BG Group Place Building,
811 Main Street, Houston, Texas  77002, leased through June 30, 2017;

2.The fourth floor south of the building known as Brettenham House, 2-19
Lancaster Place, London, WCE 7EN, England, leased through February 16, 2022;

3.40 Queens Land, Aberdeen, AB15 4YE, Scotland, leased through January 30, 2021;
and

4.7331 sq. ft. of rentable area at 1125 17th Street, Suite 1525, Denver,
Colorado 80202, leased through December 31, 2016.

 

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 3.12(b)

Oil and Gas Property

 

None.

(a)  

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 3.12(c)

Interests in Oil and Gas Properties

 

None.

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 3.14

Subsidiaries

 

Owner

Issuer

Class of Equity Interest

Par Value

Number of Shares

Certificate Number

Percentage of outstanding shares

Endeavour Energy North Sea L.P.

Endeavour Energy UK Limited

Original

£0.10

1,400

8, 9, 10

100

Endeavour International Corporation

Endeavour Operating Corporation

Common

$0.001

100

2

100

Endeavour International Corporation

Endeavour Colorado Corporation

Common

$0.01

1,000

1

100

Endeavour Operating Corporation

Endeavour Energy New Ventures Inc.

Common

$0.01

1,000

1

100

Endeavour Operating Corporation

END Management Company

Common

$0.01

1,000

1

100

Endeavour Energy North Sea LLC

Endeavour Energy North Sea, L.P.

General Partnership Interest

N/A

N/A

Un-certificated

0.1

Endeavour Energy Netherlands B.V.

Endeavour Energy North Sea LLC

Member Interest

N/A

N/A

Un-certificated

100

Endeavour International Holding, B.V.

Endeavour Energy North Sea L.P.

Limited Partnership  Interest

N/A

N/A

Un-certificated

99.9

Endeavour Operating Corporation

Endeavour International Holding B.V.

Ordinary

€ 100

180

Un-certificated

100

Endeavour International Holding B.V.

Endeavour Energy Netherlands B.V.

Ordinary

€ 100

180

Un-certificated

 

100

Endeavour International Holding B.V.

Endeavour Energy Luxembourg S.à.r.l.

Ordinary

N/A

500

Un-certificated

100

Endeavour Energy UK Limited

Endeavour North Sea Limited

Ordinary

£1

44,250,002

5

100

Endeavour International Holding B.V.

END Finco LLC

Limited Liability Company

N/A

N/A

Uncertificated

100

 

 

Schedule 3.20

Existing Indebtedness

 

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Holdings has Indebtedness pursuant to its 5.5% Convertible Senior Notes due
2016, in a principal amount of $135,000,000, which Indebtedness is guaranteed by
certain of U.S. Subsidiaries of Holdings.

Holdings has Indebtedness pursuant to its 12% First and Second Priority Notes
due 2018, in total principal amount of $554,000,000, which Indebtedness is
guaranteed by certain of U.S. Subsidiaries of Holdings.

Endeavour Energy Luxembourg S.à.r.l. has Indebtedness pursuant to its 11.50%
Convertible Bonds due 2016, in a principal amount of $78,436,704 , which
Indebtedness is guaranteed by Holdings.

EIH has Indebtedness pursuant to that certain revolving loan facility agreement
dated January 23, 2008 (as amended, supplemented or modified from time to time)
in a principal amount of $78,436,704 between EIH and Endeavour Energy Luxembourg
S.à r.l., which Indebtedness is guaranteed by Holdings.

Series C Preferred Stock, issued by Holdings, with the terms set forth in the
Certificate of Designation of Series C Preferred Stock originally filed with the
Nevada Secretary of State on October 30, 2006, as amended.

Series B Preferred Stock, issued by Holdings, which the terms set forth in the
Amended and Restated Certificate of Designation of Series B Preferred Stock
originally filed with the Nevada Secretary of State on February 26, 2004.

EEUK has Indebtedness pursuant to that certain Inter-Company Loan Agreement,
dated as of May 31, 2012, in a total principal amount of $554,000,000. 

EIH has Indebtedness pursuant to that certain revolving loan facility agreement
dated January 23, 2008 between EIH and Endeavour Energy Luxembourg S.à r.l., in
a total principal amount of 78,845,338.00.

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 3.21

Insurance

 

[See Attached.]

 

US 2243209v.5

--------------------------------------------------------------------------------

 

 

Schedule 3.24

Existing Liens

 

1.

The liens securing the DEED OF GRANT OF A PRODUCTION PAYMENT in respect of
United Kingdom Continental Shelf Seaward Production Licence P.213 (Block 16/26a
A-ALBA) (the Alba Field) and Seaward Production Licence P.255 (Blocks 22/6c A
and 22/6s A) (the Bacchus Field).

2.

The liens securing the DEED OF GRANT OF A PRODUCTION PAYMENT in respect of
United Kingdom Continental Shelf Seaward Production Licence P.1615 (Block
15/26c) and Seaward Production Licence P.226 (Block 15/27 Area E) (the Rochelle
Field).

 

 

 

 

US 2243209v.5

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

This Assignment and Acceptance Agreement (this “Assignment”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name
of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”).  Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
restated, supplemented and/or otherwise modified from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part
of this Assignment as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by
Administrative Agent as contemplated below, (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the facility identified below
(including participations in any Letters of Credit included in such facilities)
and (ii) to the extent permitted to be assigned under applicable law, all
claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including, but not
limited to, contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold
and assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as, the “Assigned Interest”).  Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment,
without representation or warranty by the Assignor.

 

 

 

 

1.

Assignor:

______________________________

2.

Assignee:

______________________________ is a[n] [Lender/Affiliate of a Lender/Related
Fund/Eligible Assignee]  1

3.

Borrowers:

ENDEAVOUR INTERNATIONAL HOLDING B.V. AND END FINCO LLC

4.

Administrative Agent:

CREDIT SUISSE AG, as Administrative Agent under the Credit Agreement

5.

Credit Agreement

Credit Agreement, dated as of January 24, 2014, among Endeavour International
Corporation, as guarantor, Endeavour International Holding B.V. and End Finco
LLC, as borrowers, the Lenders party thereto from time to time and Credit Suisse
AG, as Administrative Agent and as Collateral Agent.

_______________________

1  Select as applicable

 

 

1

 

--------------------------------------------------------------------------------

 

 

6.Assigned Interest:2

 

 

 

 

Aggregate Amount of Loans for all Lenders

Amount of Loans Assigned

Percentage Assigned of Loans3

CUSIP Number

 

$______________

 

$______________

 

____________%

 

 

$______________

 

$______________

 

____________%

 

 

$______________

 

$______________

 

____________%

 

 

7.Notice and Wire Instructions:

 

 

 

 

:

 

 

 

 

 

 

 

 

 

 

 

 

:

 

 

 

 

 

:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

:

 

 

 

 

 

[NAME OF ASSIGNOR]

 

Notices:

 

_________________________

_________________________

_________________________

Attention:

Telecopier:

 

with a copy to:

_________________________

_________________________

_________________________

Attention:

Telecopier:

 

 

Wire Instructions:

 

 

 

[NAME OF ASSIGNEE]

 

Notices:

 

_________________________

_________________________

_________________________

Attention:

Telecopier:

 

with a copy to:

_________________________

_________________________

_________________________

Attention:

Telecopier:

 

 

Wire Instructions:

 

[Remainder of page intentionally left blank]

 

________________________

2 Clause (i) of the first proviso in the last paragraph of Section 9.04(b)
requires that concurrently with this Assignment the Assignor must assign a
corresponding pro rata amount of the Assignor’s Loans under the Term B Credit
Agreement (it being understood that the Loans and Term B Loans shall trade in
“strips” and that Lenders shall hold equal percentages of Loans and Term B
Loans).

3 Set forth, to at least 9 decimals, as a percentage of the Commitment / Loans
of all Lenders thereunder.

 

 

 

2

 

--------------------------------------------------------------------------------

 

 

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The terms set forth in this Assignment are hereby agreed to:

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSIGNOR

 

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

 

 

 

By: ___________________________________________

 

 

   Name:

 

 

 

 

 

   Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSIGNEE

 

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

 

 

 

 

By: ___________________________________________

 

 

  Name:

 

 

 

 

 

  Title:

 

 

 

[Consented to:

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as Administrative Agent

 

 

 

By:______________________________________

 

     Name:

 

     Title:

 

 

 

 

By:______________________________________

 

     Name:

 

     Title:]4

 

 

[ENDEAVOUR INTERNATIONAL CORPORATION,

as Holdings

 

 

 

By:______________________________________

 

     Name:

 

     Title:]5

 

_________________________

4 No consent of the Administrative Agent shall be required if the Assignment is
made by a Lender to a Lender or an Affiliate of such Lender or a Related Fund of
such Lender

5  No consent of Holdings shall be required if (1) the Assignment is made in
connection with the primary syndication of the Commitments and Loans, (2) the
Assignment is made by a Lender to a Lender or an Affiliate of such Lender or a
Related Fund of such Lender or (3) a Default or Event of Default has occurred
and is continuing.

 

3

 

--------------------------------------------------------------------------------

 

Annex I

to Exhibit A

 

 

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT

AND ACCEPTANCE AGREEMENT

 

1.Representations and Warranties.

 

1.1Assignor.  The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim, (iii) its
Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in this Assignment, and (iv) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and to
consummate the transactions contemplated hereby; and (b)  assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement, any other Credit Document or any other instrument or document
delivered pursuant thereto, other than this Assignment, (iii) the financial
condition of any Borrower or (iv) the performance or observance by any Borrower
or any Subsidiary of any Borrower of its obligations under the Credit Agreement,
any other Credit Document or any other instrument or document furnished pursuant
thereto.

 

1.2Assignee.  The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and to consummate the transactions contemplated hereby and to
become a Lender under the Credit Agreement, (ii) it meets all requirements of an
Eligible Assignee under the Credit Agreement (subject to receipt of such
consents as may be required under the Credit Agreement), (iii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iv) it is sophisticated with respect to
decisions to acquire assets of the type represented by the Assigned Interest and
either it, or the Person exercising discretion in making its decision to acquire
the Assigned Interest, is experienced in acquiring assets of such type, (v) it
has received a copy of the Credit Agreement, and has received, or has been
accorded the opportunity to receive, copies of the most recent financial
statements delivered pursuant to the Credit Agreement and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and to purchase the Assigned Interest,
(vi) it has, independently and without reliance upon the Administrative Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Assignment and to purchase the Assigned Interest, (vii) concurrently with this
Assignment it is assuming a pro rata amount of the Assignor’s Term  B Loans
under the Term B Credit Agreement (it being understood that the Loans and Term B
Loans shall trade in “strips” and that Lenders shall hold equal percentages of
Loans and Term B Loans) and (vi) it agrees that (A) it will, independently and
without reliance on Administrative Agent,, (viii) the Administrative Agent has
received a processing and recordation fee of $3,500 as of the Effective Date
(unless such fee has been waived by the Administrative Agent), and (ix) if it is
a Foreign Lender, attached to the Assignment and

1

 

--------------------------------------------------------------------------------

 

Annex I

to Exhibit A

Assumption is any documentation required to be delivered by it pursuant to the
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor 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 the Credit Documents and
(ii) it will perform in accordance with their terms all of the obligations that
by the terms of the Credit Documents are required to be performed by it as a
Lender.

 

2.Payments.  From and after the Effective Date, Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

 

3.General Provisions.  This Assignment shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.  This Assignment may be executed in any number of counterparts, which
together shall constitute one instrument.  Delivery of an executed counterpart
of a signature page of this Assignment by telecopy shall be effective as
delivery of a manually executed counterpart of this Assignment.  This Assignment
shall be construed in accordance with and governed by, the law of the State of
New York without regard to conflicts of principles of law that would require the
application of the laws of another jurisdiction.

***

 

2

 

--------------------------------------------------------------------------------

 

EXHIBIT B

FORM OF BORROWING REQUEST

[Date]

Credit Suisse AG, as Administrative Agent
(the “Administrative Agent”) for the Lenders party to
the Credit Agreement referred to below

Eleven Madison Avenue, 23rd Floor
New York, NY 10010
Attention: [____________]

 

Ladies and Gentlemen:

 

The undersigned, Endeavour International Holding B.V. and End Finco LLC (the
“Borrowers”), refer to the Credit Agreement, dated as of January 24, 2014 (as
amended, restated, modified and/or supplemented from time to time, the “Credit
Agreement”, the capitalized terms defined therein being used herein as therein
defined), among Endeavour International Corporation, the Borrowers, the lenders
party thereto (each, a “Lender” and collectively, the “Lenders”), and you, as
Administrative Agent for such Lenders, and hereby gives you notice, irrevocably,
pursuant to Section 2.03 of the Credit Agreement, that the undersigned hereby
requests a Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such Borrowing (the “Proposed
Borrowing”) as required by Section 2.03 of the Credit Agreement:

 

1. The Proposed Borrowing is a[n] [Eurodollar] [ABR] Borrowing.

2. The Business Day of the Proposed Borrowing is [___________, _____].6

3. The number and location of the account to which funds are to be disbursed are
[__________].

4. The aggregate principal amount of the Proposed Borrowing is $[__________].

5. [The Interest Period with respect to the Proposed Borrowing is
[__________].]7

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:

__________________________

6 The Borrowing Request shall be delivered, in the case of a Eurodollar
Borrowing, not later than 12:00 (noon), New York City time, three Business Days
before a Proposed Borrowing, and in the case of an ABR Borrowing, not later than
12:00 (noon), New York City time, one Business Day before a proposed Borrowing.

7 To be included for Eurodollar Borrowings.

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

The representations and warranties set forth in Article III and in each other
Credit Document shall be true and correct in all material respects (other than
representations and warranties qualified as to materiality, which will be true
and correct in all respects) on and as of the date of such Proposed Borrowing
with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date in which
case they will be true and correct as of such earlier date; and

At the time of and immediately after such Proposed Borrowing, no Default or
Event of Default shall have occurred and be continuing.

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

 

 

Very truly yours,

 

 

 

ENDEAVOUR INTERNATIONAL HOLDING B.V.

 

 

 

 

 

 

 

By:______________________________________

 

     Name:

 

     Title:

 

 

 

 

 

END FINCO LLC

 

 

 

 

 

 

 

By:______________________________________

 

     Name:

 

     Title:

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

 

This Compliance Certificate is delivered to you pursuant to Section 5.01(e) of
the Credit Agreement, dated as of January 24, 2014, among Endeavour
International Corporation (“Holdings”), Endeavour International Holding B.V. and
End Finco LLC, as borrowers, the lenders party thereto from time to time, and
Credit Suisse AG, as Administrative Agent and as Collateral Agent (as amended,
restated, modified and/or supplemented from time to time, the “Credit
Agreement”). Terms defined in the Credit Agreement and not otherwise defined
herein are used herein as therein defined.

 

1. I am a duly elected, qualified and acting Financial Officer of Holdings.

2. I have reviewed and am familiar with the contents of this Compliance
Certificate.  I am providing this Compliance Certificate solely in my capacity
as a Financial Officer of Holdings. The matters set forth herein are true to the
best of my knowledge in my capacity as a Financial Officer of Holdings after due
inquiry.

3. As of the date of this Compliance Certificate, to my knowledge after due
inquiry, no Default or an Event of Default has occurred and is continuing [,
except as set forth below].

4. Attached hereto as ANNEX 1 are the calculations showing (in reasonable
detail) compliance with the covenants specified therein [and the amount of
Excess Cash Flow on the date specified therein.]8

1.  [I hereby certify that there have been no changes to Schedule VI of the U.S.
Security Agreement in each case since the Closing Date, or if later, since the
date of the most recent certificate delivered pursuant to Section 5.01(e) of the
Credit Agreement.][Attached hereto as ANNEX 2 is a list in reasonable detail of
any changes to Schedule VI of the U.S. Security Agreement to the extent required
to be reported to the Collateral Agent under the terms of the U.S. Security
Agreement and confirmation that Holdings and/or the other Credit Parties have
taken all actions necessary under the terms of the U.S. Security Agreement in
relation to such changes, or if not, details of what actions remain required to
be taken.]

 

 

 

 

_________________________

8 To be included in any Compliance Certificate delivered with financial
statements with respect to the end of each fiscal year under Section 5.01(a) of
the Credit Agreement.red to be taken.]

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C

IN WITNESS WHEREOF, I have executed this Compliance Certificate this ____ day of
_______.

ENDEAVOUR INTERNATIONAL CORPORATION

 

 

 

 

 

By:______________________________________

 

     Name:

 

     Title:

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

ANNEX 1

to EXHIBIT C

The information described herein is as of _________, ______1   (the “Calculation
Date”).2,3

 

1.       Section 6.10 – Minimum Interest Coverage Ratio.  For the four
consecutive fiscal quarters ended as of the Calculation Date, the Interest
Coverage Ratio of Holdings and its Restricted Subsidiaries is _____:1.00.

 

The Interest Coverage Ratio was computed as follows: 4,5

 

1.  Consolidated EBITDA for the period of four consecutive

Fiscal quarters most recently ended prior to

the Calculation Date:  (a) + (b) – (c)

$[___,___,___]

 

 

 

(a) Consolidated Net Income for such period; plus

$[___,___,___]

 

(b) To the extent deducted in computing Consolidated Net income for such period:

 

 

(1) provision for taxes based on income or profits:

$[___,___,___]

 

(2) Fixed Charges:

$[___,___,___]

 

(3) depreciation, depletion, amortization (including amortization of intangibles
but excluding amortization of prepaid cash expenses that were paid in a prior
period), impairment and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period):

 

 

 

 

$[___,___,___]

 

 

 

--------------------------------------------------------------------------------

 

ANNEX 1

to EXHIBIT C

(4) all fees, costs and expenses (other than depreciation, depletion or
amortization expense) incurred in connection with the Transactions, the
execution and delivery of the Term B Credit Agreement and the LC Procurement
Agreement and each other agreement or document executed and delivered in
connection therewith, and the borrowings and/or other transactions contemplated
under the Term B Credit Agreement and/or the LC Procurement Agreement,
including, without limitation, the LC Transactions and the Transactions (as
defined in the Term B Credit Agreement) and any amendment or other modification
of any such agreements, in each case, deducted (and not added back) in computing
Consolidated Net Income:

 

 

 

 

 

 

 

 

$[___,___,___]

 

(5) unrealized non-cash losses resulting from foreign currency balance sheet
adjustments required by GAAP:

$[___,___,___]

 

TOTAL of (b):

$[___,___,___]

 

(c)(1) non-cash items increasing Consolidated Net Income, other than items that
were accrued in the ordinary course of business:

$[___,___,___]

 

(2) to the extent increasing Consolidated Net Income, the sum of (a) the amount
of deferred revenues that are amortized and are attributable to reserves that
are subject to Volumetric Production Payments and (b) amounts recorded in
accordance with GAAP as repayments of principal and interest pursuant to
Dollar-Denominated Production Payments:

$[___,___,___]

 

TOTAL of (c):

$[___,___,___]

 

to

 

 

 

 

--------------------------------------------------------------------------------

 

ANNEX 1

to EXHIBIT C

 

2.  Cash Interest Expense:

 

$[___,___,___]

 

 

 

The minimum Interest Coverage Ratio is:

 

1.50:1.00

In compliance

 

[YES][NO]

________________________________________

1 Insert the last day of the respective fiscal quarter or year covered by the
financial statements which are required to be accompanied with this Compliance
Certificate.

2  Capitalized terms used but not defined herein shall have the meanings set
forth in the Credit Agreement.

3 All calculations on a consolidated basis for Holdings and its Restricted
Subsidiaries.

4  Interest Coverage Ratio to be calculated after giving effect to any
applicable Pro Forma Adjustments.

5 For purposes of calculating the Interest Coverage Ratio, in the event that
Holdings or a Restricted Subsidiary incurs, assumes, incurs a Contingent
Obligation for, repays, repurchases, redeems, defeases or otherwise discharges
any Indebtedness (other than ordinary working capital borrowings) subsequent to
the commencement of the period for which the Interest Coverage Ratio is being
calculated and on or prior to the applicable Calculation Date, then the Interest
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Contingent Obligation, repayment, repurchase, redemption, defeasance
or other discharge of Indebtedness, and the use of the proceeds therefrom, as if
the same had occurred at the beginning of the applicable four-quarter reference
period.

 

2.       Section 6.11 – Maximum Consolidated Leverage Ratio.  For the four
consecutive fiscal quarters ended as of the Calculation Date, the Consolidated
Leverage Ratio of Holdings and its Restricted Subsidiaries is _____:1.00.

 

The Consolidated Leverage Ratio was computed as follows: 6

 

 

 

1.  Sum of:  (a) + (b) – (c)

 

$[___,___,___]

(a) Total Funded Debt:

$[___,___,___]

 

(b) Maximum LC Procurement Obligation:

$[___,___,___]

 

(c) Aggregate amount of unrestricted cash on the consolidated balance sheet:7

$[___,___,___]

 

to

 

 

2. Consolidated EBITDA (see item 1 in Interest

Coverage Ratio calculation above):

 

$[___,___,___]

The maximum Consolidated Leverage Ratio is:

 

5.00:1.00

In compliance

 

[YES][NO]

 

3.       Section 6.12 – Minimum Proved Reserves Coverage Ratio.  For the four
consecutive fiscal quarters ended as of the Calculation Date, the Proved
Reserves Coverage Ratio of Holdings and its Restricted Subsidiaries is
_____:1.00.

 

 

--------------------------------------------------------------------------------

 

ANNEX 1

to EXHIBIT C

 

 

 

1. PV-10 Value:8

$[___,___,___]

to

2. Total Funded Secured Debt:9

$[___,___,___]

 

The minimum Proved Reserves Coverage Ratio is:

2.00:1.00

In compliance

[YES][NO]

 

6 Consolidated Leverage Ratio to be calculated after giving effect to any
applicable Pro Forma Adjustments.

7The maximum amount of unrestricted cash shall not exceed $25,000,000.

8As reflect on the most recently prepared Reserve Report which has been
delivered to the Administrative Agent (together with any supplements, revisions
or updates thereto after such date and to the date of such calculation).

9As shown in Holdings’ financial statement as of the end of the immediately
preceding fiscal quarter.

 

 

 

4.       [Excess Cash Flow.  For the fiscal year ended as of the Calculation
Date, the amount of Excess Cash Flow of Holdings is $______________________.

 

 

 

 

Consolidated EBITDA (see item 1 in Interest

Coverage Ratio calculation above):

 

$[___,___,___]

minus, without duplication:

 

plus, without duplication:

 

 

(1) Holdings’ Debt Service for such fiscal year,

$[___,___,___]

 

 

 

--------------------------------------------------------------------------------

 

ANNEX 1

to EXHIBIT C

(2) any optional prepayment of Loans and the amount of any release of the Payer
Deposit (as defined in the LC Procurement Agreement) pursuant to Section 3.04 of
the LC Procurement Agreement resulting from an optional reduction in the
“Maximum LC Amount” under Section 3.01 of the LC Procurement Agreement in each
case, that results in a prepayment of Term B Loans during such fiscal year or
prior to the date 100 days following such fiscal year so long as the amount of
such prepayment or release of the Payer Deposit is not already reflected in Debt
Service or otherwise deducted from Excess Cash Flow,

$[___,___,___]

 

(3) the aggregate Capital Expenditures made by Holdings during such fiscal year
that are paid in cash

$[___,___,___]

 

(4) Taxes paid in cash by Holdings and its Restricted Subsidiaries on a
consolidated basis during such fiscal year or that will be paid within six
months after the close of such fiscal year (provided that any amount so deducted
that will be paid after the close of such fiscal year shall not be deducted
again in a subsequent fiscal year) and for which reserves have been established,
including income tax expense

$[___,___,___]

 

(5) an amount equal to any increase in Net Working Capital for such fiscal year

$[___,___,___]

 

(6) amounts paid in cash during such fiscal year on account of (i) items that
were accounted for as noncash reductions of net income in determining the
Consolidated Net Income of Holdings or as noncash reductions in Consolidated Net
Income in determining Consolidated EBITDA of Holdings in a prior fiscal year and
(ii) reserves or accruals established in purchase accounting

$[___,___,___]

 

 

 

--------------------------------------------------------------------------------

 

ANNEX 1

to EXHIBIT C

(7) the amount related to items that were added to or not deducted from net
income in calculating Consolidated Net Income of Holdings or were added to or
not deducted from Consolidated Net Income of Holdings in calculating
Consolidated EBITDA of Holdings to the extent such items represented a cash
payment (which had not reduced Excess Cash Flow upon the accrual thereof in a
prior fiscal year), or an accrual for a cash payment, by Holdings and its
Restricted Subsidiaries or did not represent cash received by Holdings and its
Restricted Subsidiaries, in each case on a consolidated basis during such fiscal
year

$[___,___,___]

 

(8) amounts paid in cash with respect to an acquisition of assets (including
through mergers, consolidations or otherwise)

$[___,___,___]

 

(9) amounts paid in cash with respect to Hedging Agreements

$[___,___,___]

 

(10) to the extent added to net income in determining Consolidated Net Income of
Holdings or to Consolidated Net Income in determining Consolidated EBITDA of
Holdings, the aggregate amount of all fees, costs and expenses (other than
depreciation, depletion or amortization expense) incurred by Holdings or any
Restricted Subsidiary in connection with the Transactions, the execution and
delivery of the Term B Credit Agreement and the LC Procurement Agreement and
each other agreement or document executed and delivered in connection therewith,
and the borrowings and other transactions contemplated under the Term B Credit
Agreement and/or the LC Procurement Agreement, including, without limitation,
the LC Transactions and the Transactions (as defined in the Term B Credit
Agreement), and  any amendment or other modification of any such agreements

$[___,___,___]

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

ANNEX 2

to EXHIBIT C

[Changes to Schedule VI of the U.S. Security Agreement]

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

FORM OF NOTE

 

 

 

$ __________

New York, New York

 

_________ __, ___

FOR VALUE RECEIVED, Endeavour International Holding B.V., a besloten
vennootschap organized under the laws of the Netherlands (“EIH”), and End Finco
LLC, a Delaware limited liability company and a wholly-owned subsidiary of EIH
(“DE Borrower” and, together with EIH, the “Borrowers”, and each, a “Borrower”),
hereby promise to pay, on a joint and several basis, to [___________________] or
its successors and registered assigns (the “Lender”), in lawful money of the
United States of America in immediately available funds, on the Maturity Date
(as defined in the Credit Agreement) the principal sum of $ __________ DOLLARS
($___________) or, if less, the unpaid principal amount of all Term Loans made
by the Lender pursuant to the Credit Agreement, payable at such times and in
such amounts as are specified in the Credit Agreement. 

 

The Borrowers also promise to pay interest on the unpaid principal amount of
each Term Loan made by the Lender in like money at said office from the date
hereof until paid at the rate and at the times provided in Section 2.06 of the
Credit Agreement.

 

This Note is one of the promissory notes referred to in Section 2.04(e) the
Credit Agreement, dated as of January 24, 2014, among the Borrowers, Endeavour
International Corporation, a Nevada corporation, as Holdings, the lenders party
thereto from time to time (including the Lender), and Credit Suisse AG, as
Administrative Agent and Collateral Agent for such Lenders (as amended,
restated, modified and/or supplemented from time to time, the “Credit
Agreement”) and is entitled to the benefits of the Credit Agreement and of the
other Credit Documents.  This Note is secured by the Collateral Documents.  As
provided in the Credit Agreement, this Note is subject to voluntary prepayment
and mandatory repayment prior to the Maturity Date, in whole or in part. All
capitalized terms used but not defined herein shall have the meanings given to
such term in the Credit Agreement.

 

Interest payable under this shall be subject to the interest rate limitations
set forth in Section 9.09 of the Credit Agreement.

 

This Note may only be assigned by the Lender to any Person in compliance with
Section 9.04 of the Credit Agreement.

 

This Note shall be held in registered form, and transfers of this Note must be
registered pursuant to Section 9.04 of the Credit Agreement.  The Borrowers may
deem and treat the Person in whose name this Note is recorded on the register as
the absolute owner of this Note for the purpose of receiving payment of, or on
account of, the principal and interest due on this Note and for all other
purposes, notwithstanding notice to the contrary.

 

In case an Event of Default shall occur and be continuing, the principal of and
accrued interest on this Note may be declared to be due and payable in the
manner and with the effect provided in the Credit Agreement.

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

To the extent there are any inconsistencies between this Note and the Credit
Agreement the Credit Agreement shall govern.

 

The Borrowers hereby waive (to the extent permitted by applicable law)
presentment, demand, protest or notice of any kind in connection with this Note.

 

 

[Remainder of Page Intentionally Left Blank]

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PRINCIPLES.

 

 

 

 

 

ENDEAVOUR INTERNATIONAL HOLDING B.V.

 

 

 

 

 

 

 

By:______________________________________

 

     Name:

 

     Title:

 

 

 

 

 

END FINCO LLC

 

 

 

 

 

 

 

By:______________________________________

 

     Name:

 

     Title:

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT E

CREDIT PARTY GUARANTY

 

CREDIT PARTY GUARANTY (as amended, modified, restated and/or supplemented from
time to time, this “Guaranty”), dated as of January 24, 2014, made by and among
each of the undersigned guarantors (each, a “Guarantor” and, together with any
other entity that becomes a guarantor hereunder pursuant to Section 22 hereof,
collectively, the “Guarantors”) in favor of Credit Suisse AG, acting through one
or more of its branches and affiliates, as Collateral Agent (together with any
successor collateral agent, the “Collateral Agent”).  Unless otherwise defined
herein, capitalized terms used herein shall have the meanings assigned to such
terms in the LC Procurement Agreement (as defined below) or the Credit Agreement
(as defined below), as applicable.

 

W I T N E S S E T H :

 

WHEREAS, Endeavour International Corporation, a Nevada corporation, as holdings
(“Holdings”), Endeavour Energy UK Limited, a private limited company registered
in laws of England and Wales, as payer (“Payer”), LC Finco S.à r.l., a private
limited liability company (société à responsabilité limitée) incorporated and
existing under the laws of the Grand Duchy of Luxembourg, whose registered
office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of Luxembourg,
pending registration with the Luxembourg Register of Commerce and Companies and
having a share capital of USD 20,000 (“Payee”), and the Collateral Agent have
entered into that certain LC Procurement Agreement, dated as of January 24, 2014
(as amended, modified, restated and/or supplemented from time to time, the “LC
Procurement Agreement”), pursuant to which  Payer has instructed Payee to enter
into LC Issuance Documents with Credit Suisse AG, London Branch (“LC Bank”) and,
as applicable, the Collateral Agent, as of the Closing Date and will instruct
Payee to enter into LC Issuance Documents from time to time thereafter pursuant
to which Payee will instruct the LC Bank to issue Letters of Credit and (b)
Payer has agreed to reimburse Payee for certain payments made in connection with
such LC Issuance Documents and to pay Payee certain fees for the procurement of
the issuance of the Letters of Credit;

 

WHEREAS, Holdings, as holdings, Endeavour International Holding B.V., a besloten
vennootschap organized under the laws of the Netherlands (“EIH”), End Finco LLC,
a Delaware limited liability company (“DE Borrower” and, with EIH, each a
“Borrower” and collectively “Borrowers”), the lenders from time to time party
thereto (the “Lenders”), the Collateral Agent and the other Agents and parties
thereto have entered into a Credit Agreement, dated as of January 24, 2014 (as
amended, modified, restated and/or supplemented from time to time, the “Credit
Agreement”, and the Lenders, the Collateral Agent, the Arranger and each other
Agent  thereto being the “Lender Creditors”), providing for the making of Loans
to the Borrowers, all as contemplated therein;

 

WHEREAS, Holdings and its Restricted Subsidiaries may at any time and from time
to time enter into one or more Secured Hedging Agreements with one or more
Approved Hedge Counterparties (herein “Secured Hedge Counterparties” to the
extent, and for so long as, the obligations in respect of Secured Hedging
Agreements constitute “Obligations” under the Credit

 

--------------------------------------------------------------------------------

 

 

Agreement (the Payee, Secured Hedge Counterparties and Lender Creditors are
collectively referred to herein as the “Secured Creditors”));

 

WHEREAS, each Guarantor (other than Holdings) is a direct or indirect Subsidiary
of Holdings, which is the indirect parent company of the Payer and the
Borrowers;

 

WHEREAS, it is a condition precedent to the procurement by the Payee of the
issuance of the Letters of Credit pursuant to the LC Issuance Documents that the
Guarantors shall have executed and delivered to the Collateral Agent this
Guaranty;

 

WHEREAS, it is a condition precedent to the making of Loans to the Borrowers
under the Credit Agreement and to the entering into of Secured Hedging
Agreements by Approved Hedge Counterparties that each Guarantor shall have
executed and delivered to the Collateral Agent this Guaranty;

 

WHEREAS, each Guarantor will obtain benefits from the procurement by the Payee
of the issuance of the Letters of Credit pursuant to the LC Issuance Documents
from time to time and, accordingly, desires to execute this Guaranty in order to
satisfy the condition described above and to induce the Payee to procure the
issuance of the Letters of Credit; and

 

WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans by the
Borrowers under the Credit Agreement and the entering into by Holdings and/or
one or more of its Restricted Subsidiaries of Secured Hedging Agreements with
Approved Hedge Counterparties from time to time and, accordingly, desires to
execute this Guaranty in order to satisfy the condition described above and to
induce the Lenders to make Loans to the Borrowers and the Approved Hedge
Counterparties to enter into Secured Hedging Agreements.

 

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
each Guarantor, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with each other Guarantor and the Collateral Agent for the benefit of
the Secured Creditors as follows:

 

·

GUARANTY.

· (a)Each Guarantor, jointly and severally, irrevocably and unconditionally
guarantees as a primary obligor and not merely as surety (as shown on the
signature pages hereto):

(i)to the Collateral Agent, for the benefit itself and the Payee, the full and
prompt payment when due (whether at the stated maturity, by required prepayment,
acceleration or otherwise) of all obligations of the Payer and Holdings and all
other obligations (including, without limitation, all Obligations (as defined in
the LC Procurement Agreement) and all obligations which, but for the automatic
stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities
and indebtedness owing by the Payer and Holdings to the Payee and the Collateral
Agent under each LC Procurement Document to which the Payer or Holdings is a
party (including, without

 

 

--------------------------------------------------------------------------------

 

 

limitation, indemnities, fees and interest thereon (including, without
limitation, any interest accruing after the commencement of any bankruptcy,
insolvency, receivership or similar proceeding at the rate provided for in the
LC Procurement Agreement, whether or not such interest is an allowed claim in
any such proceeding)), whether now existing or hereafter incurred under, arising
out of or in connection with each such LC Procurement Document and the due
performance and compliance by the Payer and Holdings with all of the terms,
conditions, covenants and agreements contained in all such LC Procurement
Documents (all such principal, premium, interest, liabilities, indebtedness and
obligations under this clause (i) being herein collectively called the “LC
Procurement Document Obligations”);

 

(ii)to the Collateral Agent, for the ratable benefit of the Lender Creditors,
the full and prompt payment when due (whether at the stated maturity, by
required prepayment, acceleration or otherwise) of (x) the principal of,
premium, if any, and interest on the Notes issued by, and the Loans made to, the
Borrowers under the Credit Agreement, and (y) all other obligations (including,
without limitation, all Obligations described in clause (a) of the definition
thereof (as defined in the Credit Agreement) and all obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by the Credit Parties to the Lender
Creditors under each Credit Document to which such Credit Parties are a party
(including, without limitation, indemnities, fees and interest thereon
(including, without limitation, any interest accruing after the commencement of
any bankruptcy, insolvency, receivership or similar proceeding at the rate
provided for in the Credit Agreement, whether or not such interest is an allowed
claim in any such proceeding)), whether now existing or hereafter incurred
under, arising out of or in connection with each such Credit Document and the
due performance and compliance by the Credit Parties with all of the terms,
conditions, covenants and agreements contained in all such Credit Documents (all
such principal, premium, interest, liabilities, indebtedness and obligations
under this clause (ii) being herein collectively called the “Credit Document
Obligations”); and

 

(iii)to the Collateral Agent, for the ratable benefit of the Secured Hedge
Counterparties, the full and prompt payment when due (whether at the stated
maturity, by required prepayment, acceleration or otherwise) of all obligations
(including, without limitation, obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due), liabilities and
indebtedness (including, without limitation, any interest accruing after the
commencement of any bankruptcy, insolvency, receivership or similar proceeding
at the rate provided for in the respective Secured Hedging Agreements, whether
or not such interest is an allowed claim in any such proceeding) owing by
Holdings, the Borrowers and each other Guaranteed Party (as defined below) to
the Secured Hedge Counterparty under any Secured Hedging Agreements to which
Holdings, a Borrower or any other Guaranteed Party is a party, whether now in
existence or hereafter arising, and the due performance and compliance by
Holdings, the Borrowers and each other Guaranteed Party with all of the terms,
conditions, covenants and agreements contained therein (all such obligations,
liabilities and indebtedness contained in this clause (iii) being herein
collectively called the

 

 

--------------------------------------------------------------------------------

 

 

“Secured Hedge Obligations”, and, together with the LC Procurement Document
Obligations and the Credit Document Obligations, the “Guaranteed Obligations”).

 

(b) Each Guarantor, jointly and severally, unconditionally and irrevocably,
guarantees as a primary obligor and not merely as surety the payment of any and
all Guaranteed Obligations whether or not due or payable by the Payer or any
other Guaranteed Party upon the occurrence in respect of the Payer or any other
Guaranteed Party of any of the events specified in Section 9.05 or 9.06 of the
LC Procurement Agreement, and unconditionally and irrevocably, jointly and
severally, promises to pay such Guaranteed Obligations to the Collateral Agent
for the benefit of itself and the Payee, or order, on demand.

 

(c)Each Guarantor, jointly and severally, unconditionally and irrevocably,
guarantees as a primary obligor and not merely as surety the payment of any and
all Guaranteed Obligations whether or not due or payable by the Borrowers or any
other Guaranteed Party upon the occurrence in respect of a Borrower or any other
Guaranteed Party of any of the events specified in Section 7.01(e) or (f) of the
Credit Agreement, and unconditionally and irrevocably, jointly and severally,
promises to pay such Guaranteed Obligations to the Collateral Agent, for the
ratable benefit of the Lender Creditors and the Secured Hedge Counterparties, or
order, on demand.

· (d)As used herein, the term “Guaranteed Party” shall mean each of the Payer,
each Borrower, Holdings, and each other Subsidiary of Holdings that has executed
or delivered this Guaranty or has otherwise become a party hereto by means of
the execution of a joinder, accession or similar agreement, or is a party to any
other LC Procurement Document, any other Credit Document or any Secured Hedging
Agreement.  Each Guarantor understands, agrees and confirms that the Collateral
Agent, on behalf of the Secured Creditors, may enforce this Guaranty up to the
full amount of the Guaranteed Obligations against such Guarantor without
proceeding against any other Guarantor, the Payer, the Borrowers or any other
Guaranteed Party, or against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations.  This Guaranty is a guaranty of prompt payment and not of
collection; provided that notwithstanding anything in this Guaranty to the
contrary, in no event will any Guarantor be responsible for specific performance
of any Guaranteed Obligation then due if the performance of such Guaranteed
Obligation is specific to a Credit Party and it would be impossible or
reasonably impracticable after using all reasonable efforts for such other
Guarantor to perform the Guaranteed Obligation.

·

LIABILITY OF GUARANTORS ABSOLUTE. 

The liability of each Guarantor hereunder is primary, absolute, joint and
several, and unconditional and is exclusive and independent of any security for
or other guaranty of the indebtedness of the Payer, a Borrower or any other
Guaranteed Party whether executed by such Guarantor, any other Guarantor, any
other guarantor or by any other party, and the liability of each Guarantor
hereunder shall not be affected or impaired by any circumstance or occurrence
whatsoever, including, without limitation:  (a) any direction as to application
of payment by the Payer, the Borrowers, any other Guaranteed Party or any other
party, (b) any other continuing or other guaranty, undertaking or maximum
liability of a Guarantor or of any other party as to the Guaranteed Obligations,
(c) any payment on or in reduction of any such other guaranty or

 

 

--------------------------------------------------------------------------------

 

 

undertaking (other than any payment applied in satisfaction of the Guaranteed
Obligations), (d) any dissolution, termination or increase, decrease or change
in personnel by the Payer, a Borrower or any other Guaranteed Party, (e) the
failure of any Guarantor to receive any benefit from or as a result of its
execution, delivery and performance of this Guaranty, (f) any payment made to
any Secured Creditor on the indebtedness which any Secured Creditor repays the
Payer, a Borrower or any other Guaranteed Party pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Guarantor waives any right to the deferral or modification
of its obligations hereunder by reason of any such proceeding, (g) any action or
inaction by the Secured Creditors as contemplated in Section 5 hereof, (h) any
invalidity, rescission, irregularity or unenforceability of all or any part of
the Guaranteed Obligations or of any security therefore and (i) any legal or
equity defenses, including suretyship defenses.

·

OBLIGATIONS OF GUARANTORS INDEPENDENT.

The obligations of each Guarantor hereunder are independent of the obligations
of any other Guarantor, any other guarantor, the Payer, the Borrowers or any
other Guaranteed Party, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any other guarantor, the Payer, the Borrowers or any other
Guaranteed Party and whether or not any other Guarantor, any other guarantor,
the Payer, the Borrowers or any other Guaranteed Party be joined in any such
action or actions.  Each Guarantor waives (to the fullest extent permitted by
applicable law) the benefits of any statute of limitations affecting its
liability hereunder or the enforcement thereof.  Any payment by the Payer, the
Borrowers or any other Guaranteed Party or other circumstance which operates to
toll any statute of limitations as to the Payer, the Borrowers or such other
Guaranteed Party shall operate to toll the statute of limitations as to each
Guarantor.

·

WAIVERS BY GUARANTORS.

· (a)Each Guarantor hereby waives (to the fullest extent permitted by applicable
law) notice of acceptance of this Guaranty and notice of the existence, creation
or incurrence of any new or additional liability to which it may apply, and
waives promptness, diligence, presentment, demand of payment, demand for
performance, protest, notice of dishonor or nonpayment of any such liabilities,
suit or taking of other action by the Collateral Agent or any other Secured
Creditor against, and any other notice to, any party liable thereon (including
such Guarantor, any other Guarantor, any other guarantor, the Payer, a Borrower
or any other Guaranteed Party) and each Guarantor further hereby waives any and
all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice or proof of reliance by any Secured Creditor
upon this Guaranty, and the Guaranteed Obligations shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended,
modified, supplemented or waived, in reliance upon this Guaranty.

· (b)Each Guarantor waives any right to require the Secured Creditors to:  (i)
proceed against the Payer, the Borrowers, any other Guaranteed Party, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party;
(ii) proceed against or exhaust any security held from the Payer, the Borrowers,
any other Guaranteed Party, any other Guarantor, any other guarantor of the
Guaranteed

 

 

--------------------------------------------------------------------------------

 

 

Obligations or any other party; or (iii) pursue any other remedy in the Secured
Creditors’ power whatsoever.  Each Guarantor waives any defense based on or
arising out of any

defense of the Payer, the Borrowers, any other Guaranteed Party, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party
other than payment of the Guaranteed Obligations to the extent of such payment,
including, without limitation, any defense based on or arising out of the
disability of the Payer, the Borrowers, any other Guaranteed Party, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party,
or the unenforceability of the Guaranteed Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of the Payer, the
Borrowers or any other Guaranteed Party other than payment of the Guaranteed
Obligations to the extent of such payment.  The Secured Creditors may, at their
election, foreclose on any collateral serving as security held by the Collateral
Agent or the other Secured Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Secured Creditors may have against the Payer, the Borrowers,
any other Guaranteed Party or any other party, or any security, without
affecting or impairing in any way the liability of any Guarantor hereunder
except to the extent the Guaranteed Obligations have been paid.  Each Guarantor
waives any defense arising out of any such election by the Secured Creditors,
even though such election operates to impair or extinguish any right of
reimbursement, contribution, indemnification or subrogation or other right or
remedy of such Guarantor against the Payer, the Borrowers, any other Guaranteed
Party, any other guarantor of the Guaranteed Obligations or any other party or
any security.

 

· (c)Each Guarantor has knowledge and assumes all responsibility for being and
keeping itself informed of the Payer’s, the Borrowers’, each other Guaranteed
Party’s and each other Guarantor’s financial condition, affairs and assets, and
of all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and has adequate means to obtain from the Payer,
the Borrowers, each other Guaranteed Party and each other Guarantor on an
ongoing basis information relating thereto and the Payer’s, the Borrowers’, each
other Guaranteed Party’s and each other Guarantor’s ability to pay and perform
its respective Guaranteed Obligations, and agrees to assume the responsibility
for keeping, and to keep, so informed for so long as this Guaranty is in
effect.  Each Guarantor acknowledges and agrees that (x) the Secured Creditors
shall have no obligation to investigate the financial condition or affairs of
the Payer, the Borrowers, any other Guaranteed Party or any other Guarantor for
the benefit of such Guarantor nor to advise such Guarantor of any fact
respecting, or any change in, the financial condition, assets or affairs of the
Payer, the Borrowers, any other Guaranteed Party or any other Guarantor that
might become known to any Secured Creditor at any time, whether or not such
Secured Creditor knows or believes or has reason to know or believe that any
such fact or change is unknown to such Guarantor, or might (or does) increase
the risk of such Guarantor as guarantor hereunder, or might (or would) affect
the willingness of such Guarantor to continue as a guarantor of the Guaranteed
Obligations hereunder and (y) the Secured Creditors shall have no duty to

 

 

--------------------------------------------------------------------------------

 

 

advise any Guarantor of information known to them regarding any of the
aforementioned circumstances or risks.

· (d)Each Guarantor hereby acknowledges and agrees that no Secured Creditor nor
any other Person shall be under any obligation (i) to marshal any assets in
favor of such Guarantor or in payment of any or all of the liabilities of any
Guaranteed Party under the LC Procurement Documents, the Credit Documents, the
Secured Hedging Agreements or the obligation of such Guarantor hereunder or (ii)
to pursue any other remedy that such Guarantor may or may not be able to pursue
itself any right to which such Guarantor hereby waives.

· (e)Each Guarantor warrants and agrees that each of the waivers set forth in
Section 3 and in this Section 4 is made with full knowledge of its significance
and consequences and that if any of such waivers are determined to be contrary
to any applicable law or public policy, such waivers shall be effective only to
the maximum extent permitted by applicable law.

·

RIGHTS OF SECURED CREDITORS.

Subject to Section 4, any Secured Creditor may (except as shall be required by
applicable statute and cannot be waived) at any time and from time to time
without the consent of, or notice to, any Guarantor, without incurring
responsibility to any Guarantor, without impairing or releasing the obligations
or liabilities of any Guarantor hereunder, upon or without any terms or
conditions and in whole or in part:

· (a)change the manner, place or terms of payment of, and/or change, increase or
extend the time of payment of, renew, increase, accelerate or alter, any of the
Guaranteed Obligations (including, without limitation, any increase or decrease
in the rate of interest thereon or the principal amount thereof), any security
therefor, or any liability incurred directly or indirectly in respect thereof,
and the guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, increased, accelerated, renewed or altered;

· (b)take and hold security for the payment of the Guaranteed Obligations and
sell, exchange, release, surrender, impair, realize upon or otherwise deal with
in any manner and in any order any property or other collateral by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;

· (c)exercise or refrain from exercising any rights against the Payer, the
Borrowers, any other Guaranteed Party, any other Credit Party, any Subsidiary
thereof, any other guarantor of the foregoing or others or otherwise act or
refrain from acting;

· (d)release or substitute any one or more endorsers, Guarantors, other
guarantors, the Payer, the Borrowers, any other Guaranteed Party or other
obligors;

 

 

--------------------------------------------------------------------------------

 

 

· (e)settle or compromise any of the Guaranteed Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not) of
the Payer, the Borrowers or any other Guaranteed Party to creditors of the
Payer, the Borrowers or such other Guaranteed Party other than the Secured
Creditors;

· (f)apply any sums by whomsoever paid or howsoever realized to any liability or
liabilities of the Payer, the Borrowers or any other Guaranteed Party to the
Secured Creditors regardless of what liabilities of the Payer, the Borrowers or
such other Guaranteed Party remain unpaid;

· (g)consent to or waive any breach of, or any act, omission or default under,
any of the Secured Hedging Agreements, the Credit Documents, the LC Procurement
Documents or any of the instruments or agreements referred to therein, or
otherwise amend, modify or supplement any of the Secured Hedging Agreements, the
Credit Documents, the LC Procurement Documents or any of such other instruments
or agreements;

· (h)act or fail to act in any manner which may deprive such Guarantor of its
right to subrogation against the Payer, the Borrowers or any other Guaranteed
Party to recover full indemnity for any payments made pursuant to this Guaranty;
and/or

· (i)take any other action or omit to take any other action which would, under
otherwise applicable principles of common law, give rise to a legal or equitable
discharge of such Guarantor from its liabilities under this Guaranty (including,
without limitation, any action or omission whatsoever that might otherwise vary
the risk of such Guarantor or constitute a legal or equitable defense to or
discharge of the liabilities of a guarantor or surety or that might otherwise
limit recourse against such Guarantor).

No invalidity, illegality, irregularity or unenforceability of all or any part
of the Guaranteed Obligations, the LC Procurement Documents, the Credit
Documents, the Secured Hedging Agreements or any other agreement or instrument
relating to the Guaranteed Obligations or of any security or guarantee therefor
shall affect, impair or be a defense to this Guaranty, and this Guaranty shall
be primary, absolute and unconditional notwithstanding the occurrence of any
event or the existence of any other circumstances which might constitute a legal
or equitable discharge of a surety or guarantor except payment of the Guaranteed
Obligations to the extent of such payment.

·

CONTINUING GUARANTY.

This Guaranty is a continuing one and all liabilities to which it applies or may
apply under the terms hereof shall be conclusively presumed to have been created
in reliance hereon.  No failure or delay on the part of any Secured Creditor in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the

 

 

--------------------------------------------------------------------------------

 

 

exercise of any other right, power or privilege.  The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Secured Creditor would otherwise have.  No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Secured Creditor to any other or further action in any circumstances
without notice or demand.  It is not necessary for any Secured Creditor to
inquire into the capacity or powers of the Payer, the Borrowers, or any other
Guaranteed Party or the officers, directors, partners or agents acting or
purporting to act on its or their behalf, and any indebtedness made or created
under this Guaranty, the Credit Documents, the LC Procurement Documents, or the
Secured Hedging Agreements (being collectively the “Secured Debt Agreements”) in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

·

SUBORDINATION OF INDEBTEDNESS HELD BY GUARANTORS.

Any indebtedness of the Payer, the Borrowers or any other Guaranteed Party now
or hereafter held by any Guarantor is hereby subordinated to the indebtedness of
the Payer, the Borrowers or such other Guaranteed Party to the Secured
Creditors, and such indebtedness of the Payer, the Borrowers or such other
Guaranteed Party to any Guarantor, if the Collateral Agent, after an Event of
Default has occurred and is continuing, so requests, shall be collected,
enforced and received by such Guarantor as trustee for the Secured Creditors and
be paid over to the Collateral Agent, for the benefit of the Secured Creditors,
on account of the indebtedness of the Payer, the Borrowers or such other
Guaranteed Party to the Secured Creditors, but without affecting or impairing in
any manner the liability of such Guarantor under the other provisions of this
Guaranty except to the extent that Guaranteed Obligations have been paid.  Prior
to the transfer by any Guarantor of any note or negotiable instrument evidencing
any indebtedness of any Borrower or any other Guaranteed Party to such
Guarantor, such Guarantor shall mark such note or negotiable instrument with a
legend that the same is subject to this subordination. Without limiting the
generality of the foregoing, each Guarantor hereby agrees with the Secured
Creditors that it will not exercise any right of subrogation which it may at any
time otherwise have as a result of this Guaranty (whether contractual, under
Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash (other than unasserted
contingent indemnification obligations); provided, that if any amount shall be
paid to such Guarantor on account of such subrogation rights at any time prior
to the irrevocable payment in full in cash of all the Guaranteed Obligations,
such amount shall be held in trust for the benefit of the Secured Creditors and
shall forthwith be paid to the Collateral Agent, for the benefit of the Secured
Creditors, to be credited and applied upon the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the LC Procurement
Documents or Credit Documents or, if the LC Procurement Documents or Credit
Documents do not provide for the application of such amount, to be held by the
Collateral Agent, for the benefit of the Secured Creditors, as collateral
security for any Guaranteed Obligations thereafter existing. 

·

GUARANTY ENFORCEABLE BY COLLATERAL AGENT.

Notwithstanding anything to the contrary contained elsewhere in this Guaranty,
the Secured Creditors agree (by their acceptance of the benefits of this
Guaranty) that this Guaranty may be enforced only by the action of the
Collateral Agent, in each case acting upon the instructions of the Required
Lenders (or, after the date on which all Credit Document Obligations have been
paid in full, the holders of at least a majority of the outstanding LC

 

 

--------------------------------------------------------------------------------

 

 

Procurement Document Obligations and Secured Hedge Obligations) and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Guaranty or to realize upon the security to be granted by the
Security Documents, it being understood and agreed that such rights and remedies
may be exercised by the Collateral Agent or, after all the Credit Document
Obligations have been paid in full, by the holders of at least a majority of the
outstanding LC Procurement Document Obligations and Secured Hedge Obligations,
as the case may be, for the benefit of the Secured Creditors upon the terms of
this Guaranty and the Security Documents.  The Secured Creditors further agree
that this Guaranty may not be enforced against any director, officer, employee,
partner, member or stockholder of any Guarantor (except to the extent such
partner, member or stockholder is also a Guarantor hereunder).  It is understood
and agreed that the agreement in this Section 8 is among and solely for the
benefit of, and binding upon, the Secured Creditors and that, if the Required
Lenders (or, after the date on which all Credit Document Obligations have been
paid in full, the holders of at least a majority of the outstanding LC
Procurement Document Obligations and Secured Hedge Obligations) so agree
(without requiring the consent of any Guarantor), this Guaranty may be directly
enforced by any Secured Creditor.

·

REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUARANTORS.

In order to (a) induce the Payee to procure the issuance of the Letters of
Credit pursuant to the LC Issuance Documents, (b) induce the Lenders to make
Loans to the Borrowers pursuant to the Credit Agreement and (c) induce the
Secured Hedge Counterparties to execute, deliver and perform the Secured Hedging
Agreements to which they are a party, each Guarantor represents, warrants and
covenants that:

(i) such Guarantor (A) is a duly organized and validly existing Business in good
standing under the laws of the jurisdiction of its organization, (B) has the
Business, power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (C) is duly
qualified and is authorized to do business and, to the extent applicable, is in
good standing in each jurisdiction where the nature of its business requires
such qualification, authorization and good standing, except for failures to be
so qualified which, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect;

(ii) such Guarantor has the Business power and authority to execute, deliver and
perform the terms and provisions of this Guaranty and each other Secured Debt
Agreement to which it is a party and has taken all necessary Business action to
authorize the execution, delivery and performance by it of this Guaranty and
each such other Secured Debt Agreement;

(iii) such Guarantor has duly executed and delivered this Guaranty and each
other Secured Debt Agreement to which it is a party, and this Guaranty and each
such other Secured Debt Agreement constitutes the legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms, except to
the extent that the enforceability hereof or thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors’ rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);

 

 

--------------------------------------------------------------------------------

 

 

(iv) neither the execution, delivery or performance by such Guarantor of this
Guaranty or any other Secured Debt Agreement to which it is a party, nor
compliance by it with the terms and provisions hereof and thereof, will (A)
contravene any provision of any applicable law, statute, rule or regulation or
any applicable order, writ, injunction or decree of any court or Governmental
Authority, (B) conflict with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (except pursuant to the Security Documents) upon any of the property or
assets of such Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, credit agreement, or any
other material agreement, contract or instrument to which such Guarantor or any
of its Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (C) violate any provision of the
certificate or articles of incorporation, by-laws, partnership agreement or
limited liability company agreement (or equivalent organizational documents), as
the case may be, of such Guarantor or any of its Subsidiaries;

(v) no order, consent, approval, license, authorization or validation of, or
filing, recording or registration with (except as have been obtained or made
prior to the date when required and which remain in full force and effect), or
exemption by, any Governmental Authority is required to authorize, or is
required in connection with, (A) the execution, delivery and performance by such
Guarantor of this Guaranty or any other Secured Debt Agreement to which such
Guarantor is a party or (B) the legality, validity, binding effect or
enforceability of this Guaranty or any other Secured Debt Agreement to which
such Guarantor is a party;

(vi) there are no actions, suits or proceedings pending or, to such Guarantor’s
knowledge, threatened (A) with respect to this Guaranty or any other Secured
Debt Agreement to which such Guarantor is a party or (B) with respect to such
Guarantor or any of its Subsidiaries that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;

(vii) until the termination of the Commitment and all Secured Hedging Agreements
and until such time as no Note or Loan remains outstanding and all Guaranteed
Obligations have been paid in full (other than indemnities (A) described in
Section 11.05 of the LC Procurement Agreement and analogous provisions in the
Security Documents and (B) described in Section 9.05 of the Credit Agreement and
analogous provisions in the Security Documents which are not then due and
payable and for which no claim has been made), such Guarantor will comply, and
will cause each of its Subsidiaries  to comply, with all of the applicable
provisions, covenants and agreements contained in Articles VII and VIII of the
LC Procurement Agreement and Articles V and VI of the Credit Agreement, and will
take, or will refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken so that no violation of any provision,
covenant or agreement contained in Articles VII and VIII of the LC Procurement
Agreement and Articles V and VI of the Credit Agreement, and so that no Default
or Event of Default, is caused by the actions of such Guarantor; and

(viii) an executed copy of each of the LC Procurement Documents, Credit
Documents and each other Secured Debt Agreement has been made available to a
senior officer of such Guarantor and such officer is familiar with the contents
thereof.

 

 

--------------------------------------------------------------------------------

 

 

·

EXPENSES.

The Guarantors hereby jointly and severally agree to pay all out-of-pocket costs
and expenses of the Collateral Agent and each other Secured Creditor in
connection with the enforcement of this Guaranty and the protection of the
Secured Creditors’ rights hereunder and any amendment, waiver or consent
relating hereto (including, in each case, without limitation, the reasonable
fees and disbursements of counsel employed by the Collateral Agent and each
other Secured Creditor).

·

BENEFIT AND BINDING EFFECT.

This Guaranty shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of the Secured Creditors and their
successors and assigns.

·

AMENDMENTS; WAIVERS.

Neither this Guaranty nor any provision hereof may be changed, waived,
discharged or terminated except with the written consent of each Guarantor
directly affected thereby (it being understood that the addition or release of
any Guarantor hereunder shall not constitute a change, waiver, discharge or
termination affecting any Guarantor other than the Guarantor so added or
released) and with the written consent of the Collateral Agent at the direction
of either (x) the Required Lenders (or, to the extent an amendment of the type
requiring the consent of all Lenders under Section 9.08(b) of the Credit
Agreement, with the written consent of each Lender) at all times prior to the
time at which all Credit Document Obligations have been paid in full or (y) the
holders of at least a majority of the outstanding LC Procurement Document
Obligations and Secured Hedge Obligations at all times after the time at which
all Credit Document Obligations have been paid in full.    

·

SET OFF.

In addition to any rights now or hereafter granted under applicable law
(including, without limitation, Section 151 of the New York Debtor and Creditor
Law) and not by way of limitation of any such rights, upon the occurrence and
during the continuance of an Event of Default (such term to mean and include any
“Event of Default” as defined in the Credit Agreement or the LC Procurement
Agreement and any payment default under any Secured Hedging Agreement continuing
after any applicable grace period), each Secured Creditor is hereby authorized,
at any time or from time to time, without notice to any Guarantor or to any
other Person, any such notice being expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Secured Creditor to or for the
credit or the account of such Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Secured Creditor under
this Guaranty, irrespective of whether or not such Secured Creditor shall have
made any demand hereunder and although said obligations, liabilities, deposits
or claims, or any of them, shall be contingent or unmatured.  Each Secured
Creditor (by its acceptance of the benefits hereof) acknowledges and agrees that
the provisions of this Section 13 are subject to the sharing provisions set
forth in Section 2.18 of the Credit Agreement.

·

NOTICE.

 

 

--------------------------------------------------------------------------------

 

 

Notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by fax, as follows: (i) in the case of the Payer, to it
at 21-31 Woodfield Road, London, W9 2BA, England, Attention: Chief Financial
Officer, Fax No. 44 20 7451 2351, with a copy to Holdings at 811 Main Street,
Suite 2100 Houston, TX, Houston, TX 77002, Attention: Chief Financial Officer,
Fax No. (713) 307-8794; (ii) if to any Credit Party (other than the Payer), to
it at c/o Endeavour International Corporation, 811 Main Street, Suite 2100
Houston, TX, Houston, TX 77002, Attention: Chief Financial Officer;  (iii) if to
the Payee, to it at 40, avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, Attn: Mr. Sebastien Gaddini, Telephone No: +352.49.6767.9865, Email
Address: Sebastien.Gaddini@orangefield.com; (iv) if to the Collateral Agent, to
it at Credit Suisse, Eleven Madison Avenue, 23rd Floor, New York, NY  10010,
Attn:  Loan Operations – Boutique Management, Telephone No.:  (212) 538 3525,
Email:  Ops-collateral@credit-suisse.com; and (v) in the case of any Secured
Hedge Counterparty, at such address as such Secured Creditor shall have
specified in writing to the Guarantors; or in any case at such other address as
any of the Persons listed above may hereafter notify the others in writing.  All
notices and other communications given to any party hereto in accordance with
the provisions of this Guaranty shall be deemed to have been given on the date
of receipt if delivered by hand or overnight courier service or sent by fax (or
other electronic communications pursuant to procedures approved by the
Collateral Agent) or on the date five Business Days after dispatch by certified
or registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 14 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 14.  As agreed to among the Guarantors, the Secured Creditors and the
Collateral Agent from time to time, notices and other communications may also be
delivered by e mail to the e mail address of a representative of the applicable
Person provided from time to time by such Person and shall be deemed to have
been given as of the date of receipt thereof.

·

REINSTATEMENT.

If any claim is ever made upon any Secured Creditor for repayment or recovery of
any amount or amounts received in payment or on account of any of the Guaranteed
Obligations and any of the aforesaid payees repays all or part of said amount by
reason of (i) any judgment, decree or order of any court or administrative body
having jurisdiction over such payee or any of its property or (ii) any
settlement or compromise of any such claim effected by such payee with any such
claimant (including, without limitation, the Payer, the Borrowers or any other
Guaranteed Party), then and in such event each Guarantor agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon such
Guarantor, notwithstanding any revocation hereof or the cancellation of any
Credit Document, any Secured Hedging Agreement, any LC Procurement Document or
any other instrument evidencing any liability of the Payer, the Borrowers or any
other Guaranteed Party, and such Guarantor shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee. 

·

CONSENT TO JURISDICTION; SERVICE OF PROCESS; AND WAIVER OF TRIAL BY JURY. 

THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED CREDITORS AND OF THE
UNDERSIGNED HEREUNDER (INCLUDING ANY CLAIM

 

 

--------------------------------------------------------------------------------

 

 

OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS GUARANTY, any other Credit
Document or any other LC Procurement Document to which any Guarantor is a party
WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT
IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. 

EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR ITSELF AND
ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY COMPETENT NEW YORK STATE
COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS GUARANTY, any other Credit Document or any other LC
Procurement Document to which any Guarantor is a party, 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 SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO 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.  NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE
SECURED CREDITORS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING
TO THIS GUARANTY AGAINST THE GRANTORS OR THEIR PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS GUARANTY IN ANY NEW YORK STATE OR FEDERAL
COURT.  EACH OF THE PARTIES HERETO 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.

 

EACH PARTY TO THIS GUARANTY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 14.  NOTHING IN THIS GUARANTY, any other
Credit Document or any other LC Procurement Document to which any Guarantor is a
party WILL AFFECT THE RIGHT OF ANY PARTY TO THIS GUARANTY TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW.

 

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY

 

 

--------------------------------------------------------------------------------

 

 

IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS GUARANTY, any other Credit Document or any other LC
Procurement Document to which any Guarantor is a party.  EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 16.

 

·

RELEASE OF LIABILITY OF GUARANTOR UPON SALE OR DISSOLUTION.

·

 

In the event that all of the capital stock or other equity interests of one or
more Guarantors is sold or otherwise disposed of or liquidated in compliance
with the requirements of (a) Sections 8.04 and 8.09 of the LC Procurement
Agreement and (b) Sections 6.04 or 6.09 of the Credit Agreement (or any such
sale, other disposition or liquidation has been approved in writing by the
Required Lenders (or all the Lenders if required by Section 9.08 of the Credit
Agreement)) and the proceeds of such sale, disposition or liquidation are
applied in accordance with the provisions of the LC Procurement Agreement and
the Credit Agreement, to the extent applicable, such Guarantor shall, upon
consummation of such sale or other disposition (except to the extent that such
sale or disposition is to Holdings or another Subsidiary thereof), be released
from this Guaranty automatically and without further action and this Guaranty
shall, as to each such Guarantor or Guarantors, terminate, and have no further
force or effect (it being understood and agreed that the sale of one or more
Persons that own, directly or indirectly, all of the capital stock or other
equity interests of any Guarantor shall be deemed to be a sale of such Guarantor
for the purposes of this Section 17).

 

·

CONTRIBUTION.

At any time a payment in respect of the Guaranteed Obligations is made under
this Guaranty, the right of contribution of each Guarantor against each other
Guarantor shall be determined as provided in the immediately following sentence,
with the right of contribution of each Guarantor to be revised and restated as
of each date on which a payment (a “Relevant Payment”) is made on the Guaranteed
Obligations under this Guaranty.  At any time that a Relevant Payment is made by
a Guarantor that results in the aggregate payments made by such Guarantor in
respect of the Guaranteed Obligations to and including the date of the Relevant
Payment exceeding such Guarantor’s Contribution Percentage (as defined below) of
the aggregate payments made by all Guarantors in respect of the Guaranteed
Obligations to and including the date of the Relevant Payment (such excess, the
“Aggregate Excess Amount”), each such Guarantor shall have a right of
contribution against each other Guarantor who has made payments in respect of
the Guaranteed Obligations to and including the date of the Relevant Payment in
an aggregate amount less than such other Guarantor’s Contribution Percentage of
the aggregate payments made to and including the date of the Relevant Payment by
all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of
such deficit, the “Aggregate Deficit Amount”) in an amount equal to (x) a
fraction the numerator of which is the Aggregate

 

 

--------------------------------------------------------------------------------

 

 

Excess Amount of such Guarantor and the denominator of which is the Aggregate
Excess Amount of all Guarantors multiplied by (y) the Aggregate Deficit Amount
of such other Guarantor.  A Guarantor’s right of contribution pursuant to the
preceding sentences shall arise at the time of each computation, subject to
adjustment to the time of each computation; provided that no Guarantor may take
any action to enforce such right until the Guaranteed Obligations have been
irrevocably paid in full in cash and the Commitments  and all Secured Hedging
Agreements have been terminated, it being expressly recognized and agreed by all
parties hereto that any Guarantor’s right of contribution arising pursuant to
this Section 18 against any other Guarantor shall be expressly junior and
subordinate to such other Guarantor’s obligations and liabilities in respect of
the Guaranteed Obligations and any other obligations owing under this
Guaranty.  As used in this Section 18:  (i) each Guarantor’s “Contribution
Percentage” shall mean the percentage obtained by dividing (x) the Adjusted Net
Worth (as defined below) of such Guarantor by (y) the aggregate Adjusted Net
Worth of all Guarantors; (ii) the “Adjusted Net Worth” of each Guarantor shall
mean the greater of (x) the Net Worth (as defined below) of such Guarantor and
(y) zero; and (iii) the “Net Worth” of each Guarantor shall mean the amount by
which the fair saleable value of such Guarantor’s assets on the date of any
Relevant Payment exceeds its existing debts and other liabilities (including
contingent liabilities, but without giving effect to any Guaranteed Obligations
arising under this Guaranty) or any guaranteed obligations arising under any
guaranty of subordinated indebtedness of Holdings or any of its Subsidiaries
(“Subordinated Indebtedness”) on such date.  Notwithstanding anything to the
contrary contained above, any Guarantor that is released from this Guaranty
pursuant to Section 17 hereof shall thereafter have no contribution obligations,
or rights, pursuant to this Section 18, and at the time of any such release, if
the released Guarantor had an Aggregate Excess Amount or an Aggregate Deficit
Amount, same shall be deemed reduced to $0, and the contribution rights and
obligations of the remaining Guarantors shall be recalculated on the respective
date of release (as otherwise provided above) based on the payments made
hereunder by the remaining Guarantors.  All parties hereto recognize and agree
that, except for any right of contribution arising pursuant to this Section 18,
each Guarantor who makes any payment in respect of the Guaranteed Obligations
shall have no right of contribution or subrogation against any other Guarantor
in respect of such payment until all of the Guaranteed Obligations have been
irrevocably paid in full in cash.  Each of the Guarantors recognizes and
acknowledges that the rights to contribution arising hereunder shall constitute
an asset in favor of the party entitled to such contribution.  In this
connection, each Guarantor has the right to waive its contribution right against
any Guarantor to the extent that after giving effect to such waiver such
Guarantor would remain solvent, in the determination of the Required Lenders.

·

LIMITATION ON GUARANTEED OBLIGATIONS.

Each Guarantor and each Secured Creditor (by its acceptance of the benefits of
this Guaranty) hereby confirms that it is its intention that this Guaranty not
constitute a fraudulent transfer or conveyance for purposes of any Debtor Relief
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law.  To effectuate the foregoing intention,
each Guarantor and each Secured Creditor (by its acceptance of the benefits of
this Guaranty) hereby irrevocably agrees that the Guaranteed Obligations
guaranteed by such Guarantor shall be limited to such amount as will, after
giving effect to such maximum amount and all other (contingent or otherwise)
liabilities of such Guarantor that are relevant under such laws and after giving
effect to any rights to contribution pursuant to any

 

 

--------------------------------------------------------------------------------

 

 

agreement providing for an equitable contribution among such Guarantor and the
other Guarantors, result in the Guaranteed Obligations of such Guarantor in
respect of such maximum amount not constituting a fraudulent transfer or
conveyance.

·

COUNTERPARTS.

This Guaranty may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.  A set of counterparts executed by all the parties
hereto shall be lodged with the Collateral Agent.  Delivery of an executed
signature page to this Guaranty by facsimile transmission or as a “.pdf” shall
be as effective as delivery of a manually signed counterpart of this Guaranty.

·

PAYMENTS.

All payments made by any Guarantor hereunder will be made without setoff,
counterclaim or other defense, and shall be made in immediately available funds
to the office of the Collateral Agent specified in Section 2.19 of the Credit
Agreement or at such other address as the Collateral Agent may designate in
writing to the Guarantors.

·

ADDITIONAL GUARANTORS.

It is understood and agreed that any Subsidiary of Holdings that is required to
execute a counterpart of this Guaranty after the date hereof pursuant to the LC
Procurement Agreement or the Credit Agreement shall become a Guarantor hereunder
by (x) executing and delivering a counterpart hereof to the Collateral Agent or
executing a joinder agreement and delivering same to the Collateral Agent, in
each case as may be requested by (and in form and substance satisfactory to) the
Collateral Agent and (y) taking all actions as specified in this Guaranty as
would have been taken by such Guarantor had it been an original party to this
Guaranty, in each case with all documents and actions required to be taken above
to be taken to the reasonable satisfaction of the Collateral Agent.

·

HEADINGS DESCRIPTIVE.

The headings of the several Sections of this Guaranty are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Guaranty.

·

JUDGMENT CURRENCY.

If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due hereunder or any other Secured Debt Agreement in one currency
into another currency, the rate of exchange used shall be that at which in
accordance with normal banking procedures the Collateral Agent could purchase
the first currency with such other currency on the Business Day preceding that
on which final judgment is given.  The obligation of any Guarantor in respect of
any such sum due from it to the Collateral Agent or any other Secured Creditor
hereunder or under the other Secured Debt Agreements shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than that in which such
sum is denominated in accordance with the

 

 

--------------------------------------------------------------------------------

 

 

applicable provisions of the Secured Debt Agreements (the “Agreement Currency”),
be discharged only to the extent that on the Business Day following receipt by
the Collateral Agent of any sum adjudged to be so due in the Judgment Currency,
the Collateral Agent may in accordance with normal banking procedures purchase
the Agreement Currency with the Judgment Currency.  If the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Collateral Agent or any other Secured Creditor from the Guarantors in the
Agreement Currency, the Guarantors agree, jointly and severally, as a separate
obligation and notwithstanding any such judgment, to indemnify the Collateral
Agent or such other Secured Creditor to whom such obligation was owing against
such loss.   

*  *  *

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT E

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and
delivered as of the date first above written.

 

 

 

ENDEAVOUR INTERNATIONAL CORPORATION

 

as a Guarantor of the Guaranteed Obligations

 

 

 

By:______________________________________

 

Name:

 

Title:

 

 

 

 

 

ENDEAVOUR INTERNATIONAL HOLDING B.V.

 

as a Guarantor of the LC Procurement

 

Document Obligations and the Secured

 

Hedging Obligations

 

 

 

By:______________________________________

 

Name:

 

Title:

 

 

 

ENDEAVOUR OPERATING CORPORATION,

 

as a Guarantor of the Guaranteed Obligations

 

 

 

By:______________________________________

 

Name:

 

Title:

 

 

 

ENDEAVOUR ENERGY NORTH SEA L.P.,

 

as a Guarantor of the Guaranteed Obligations

 

 

 

By:______________________________________

 

Name:

 

Title:

 

 

Signature Page to Credit Party Guaranty

 

 

 

--------------------------------------------------------------------------------

 

 

 

ENDEAVOUR IENERGY UK LIMITED.

 

as a Guarantor of the Secured Hedge

 

Obligations and Credit Document Obligations

 

 

 

 

 

By:______________________________________

 

Name:

 

Title:

 

 

 

 

 

END FINCO LLC,

 

as a Guarantor of the  Secured Hedge

 

Obligations and LC Procurement Document

 

Obligations

 

 

 

 

 

By:______________________________________

 

Name:

 

Title:

 

 

 

ENDEAVOUR ENERGY NORTH SEA LLC,

 

as a Guarantor of the Guaranteed Obligations

 

 

 

 

 

By:______________________________________

 

Name:

 

Title:

 

 

 

Signature Page to Credit Party Guaranty

--------------------------------------------------------------------------------

 

 

Accepted and Agreed to:

 

Credit Suisse AG, Cayman Islands Branch,

as Collateral Agent

 

 

 

By:______________________________________

 

     Name:

 

     Title:] 5

 

 

 

 

 

 

 

By:______________________________________

 

     Name:

 

     Title:] 5

 

 

 

 

 

 

 

Signature Page to Credit Party Guaranty

--------------------------------------------------------------------------------

 

EXHIBIT F

U.S. SECURITY AGREEMENT

[See attached.]

 

 

--------------------------------------------------------------------------------

 

U.S. SECURITY AGREEMENT

Dated as of January 24, 2014

From

The Grantors referred to herein
as Grantors

to

Credit Suisse AG,
as Collateral Agent

 

 

 

 

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

Section 1.

Grant of Security

2 

 

 

 

Section 2.

Security for Obligations

7 

 

 

 

Section 3.

Grantor Remain Liable

8 

 

 

 

Section 4.

Delivery and Control of Security Collateral

9 

 

 

 

Section 5.

Maintaining the Account Collateral

9 

 

 

 

Section 6.

Representations and Warranties

10 

 

 

 

Section 7.

Further Assurances

12 

 

 

 

Section 8.

Post—Closing Changes; Collections on Assigned Agreements; Receivables and
Related Contracts

13 

 

 

 

Section 9.

As to Intellectual Property Collateral

14 

 

 

 

Section 10.

Voting Rights; Dividends; Etc.

16 

 

 

 

Section 11.

As to the Assigned Agreements

17 

 

 

 

Section 12.

As to Letter-of-Credit Rights

17 

 

 

 

Section 13.

Commercial Tort Claims

17 

 

 

 

Section 14.

Transfers and Other Liens; Additional Shares

18 

 

 

 

Section 15.

Collateral Agent Appointed Attorney in Fact

18 

 

 

 

Section 16.

Collateral Agent May Perform

18 

 

 

 

Section 17.

The Collateral Agent’s Duties

18 

 

 

 

Section 18.

Remedies

19 

 

 

 

Section 19.

Indemnity and Expenses

22 

 

 

 

Section 20.

Amendments; Waivers; Additional Grantors; Etc.

23 

 

 

 

Section 21.

Notices; Etc.

23 

 

 

 

Section 22.

Continuing Security Interest; Assignments under the Credit Agreements

24 

 

 

 

Section 23.

Release; Termination

24 

 

 

 

Section 24.

Security Interest Absolute

24 

 

 

 

Section 25.

Execution in Counterparts

26 

 

 

 

Section 26.

Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial

26 

 

 

i

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

SCHEDULES

 

 

 

Schedule I

-

Investment Property

Schedule II

-

Pledged Accounts

Schedule III

-

Intellectual Property

Schedule IV

-

Commercial Tort Claims

Schedule V

-

Location, Chief Executive Office, Type of Organization, Jurisdiction of
Organization and Organizational Identification Number

Schedule VI

-

Changes in Name, Location, Etc.

Schedule VII

-

Locations of Equipment and Inventory

 

 

 

EXHIBITS

 

 

 

Exhibit A

-

Form of Consent and Agreement

Exhibit B

-

Form of Intellectual Property Security Agreement

Exhibit C

-

Form of Intellectual Property Security Agreement Supplement

Exhibit D

-

Form of Security Agreement Supplement

 

 

ii

HN\1119607.7

--------------------------------------------------------------------------------

 

 

U.S. SECURITY AGREEMENT

U.S. SECURITY AGREEMENT (this “Agreement”) dated as of January 24, 2014 (the
“Effective Date”) made by the persons listed on the signature pages hereof (such
persons so listed, collectively, the “Grantors”), to Credit Suisse AG, acting
through one or more of its branches and affiliates, as collateral agent under
the Credit Agreement (as defined below) and the LC Procurement Agreement (as
defined below) (together with any successor collateral agent appointed pursuant
to Section 8.06 of the Credit Agreement and Section 10.05 of the LC Procurement
Agreement, the “Collateral Agent”).

W I T N E S S E T H :

WHEREAS, Endeavour International Corporation, a Nevada corporation, as holdings
(“Holdings”), Endeavour International Holdings B.V., a private limited company
organized under the laws of the Netherlands (“EIH”), End Finco LLC, a Delaware
limited liability company (“DE Borrower” and, with EIH, each a “Borrower” and
collectively, the  “Borrowers”), Credit Suisse AG, acting through one or more of
its branches and affiliates, as administrative agent and collateral agent (the
“Collateral Agent”), the lenders from time to time party thereto (the “Lenders”)
and other parties thereto have entered into a Credit Agreement, dated as of
January 24, 2014 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”, and the Lenders, the
Collateral Agent, the Arranger and each other Agent thereto being the “Lender
Creditors”).

WHEREAS, Holdings, as holdings, Endeavour Energy UK Limited, a private limited
company registered in laws of England and Wales, as payer (“EEUK”), LC Finco S.à
r.l., a private limited liability company (société à responsabilité limitée)
incorporated and existing under the laws of the Grand Duchy of Luxembourg, whose
registered office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, pending registration with the Luxembourg Register of Commerce and
Companies and having a share capital of USD 20,000 (“Payee”), and the Collateral
Agent have entered into that certain LC Procurement Agreement, dated as of
January 24, 2014 (as amended, modified, restated and/or supplemented from time
to time, the “LC Procurement Agreement”), pursuant to which (a) EEUK has
instructed Payee to enter into LC Issuance Documents (as defined in the LC
Procurement Agreement) with Credit Suisse AG, London Branch (“LC Bank”) and, as
applicable, the Collateral Agent, as of the Closing Date and will instruct Payee
to enter into LC Issuance Documents from time to time thereafter pursuant to
which Payee will instruct the LC Bank to issue letters of credit and (b) EEUK
has agreed to reimburse Payee for certain payments made in connection with such
LC Issuance Documents and to pay Payee certain fees for the procurement of the
issuance of the letters of credit. The Payee, Secured Hedge Counterparties (as
defined below) and the Lender Creditors are collectively referred to herein as
the “Secured Creditors”.

WHEREAS, Holdings and its Restricted Subsidiaries may at any time and from time
to time enter into one or more Secured Hedging Agreements with one or more
Approved Hedge Counterparties (herein “Secured Hedge Counterparties” to the
extent, and for so long as, the obligations in respect of Secured Hedging
Agreements constitute “Obligations”  under the Credit Agreement).

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

WHEREAS, the Grantors, the Payee and the Collateral Agent have entered into a
Credit Party Guaranty, dated as of the date hereof, pursuant to which such
Grantors have guaranteed to the Collateral Agent, on behalf of the Secured
Creditors (as defined therein) the payment when due of all Guaranteed
Obligations (as defined therein) (as amended, amended and restated, supplemented
or otherwise modified from time to time, the “Credit Party Guaranty”).

WHEREAS, each Grantor is the owner of the shares of stock or other Equity
Interests (the “Initial Pledged Equity”) set forth opposite such Grantor’s name
on and as otherwise described in Part I of Schedule I hereto and issued by the
Persons named therein.

WHEREAS, each Grantor is the owner of the deposit accounts (the “Pledged Deposit
Accounts”) set forth opposite such Grantor’s name on Schedule II hereto.

WHEREAS, it is a condition precedent to the making of the Loans pursuant to the
Credit Agreement, the entering into of Secured Hedging Agreements by Approved
Hedge Counterparties and the procurement by the Payee of the issuance of letters
of credit pursuant to the LC Issuance Documents that the Grantors shall have
granted the security interests contemplated by this Agreement.  Each Grantor
will derive substantial direct and indirect benefit from the transactions
contemplated by the Credit Documents, the Secured Hedging Agreements and the LC
Procurement Documents (collectively, the “Secured Debt Agreements”).

WHEREAS, terms defined in the Credit Agreement or the LC Procurement Agreement
and not otherwise defined herein are used herein as defined in the Credit
Agreement and/or LC Procurement Agreement, as applicable.  Further, unless
otherwise defined in this Agreement, the LC Procurement Agreement or in the
Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined below)
are used in this Agreement as such terms are defined in such Article 8 or
9.  “UCC” means the Uniform Commercial Code as in effect from time to time in
the State of New York; provided that, if perfection or the effect of perfection
or non-perfection or the priority of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or
priority.  For purposes of the term “Event of Default”, such term shall mean any
Event of Default under, and as defined in, the Credit Agreement and shall also
include any Event of Default under, and as defined in, the LC Procurement
Agreement.

NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Loans, the Secured Hedge Counterparties to enter into Secured
Hedging Agreements and the procurement by the Payee of the issuance of Letters
of Credit pursuant to the LC Issuance Documents, the undersigned hereby agree
with the Collateral Agent, for the benefit of the Secured Creditors:

Section 1. Grant of Security.  Each Grantor hereby grants to the Collateral
Agent, for the benefit of the Secured Creditors, a security interest in all such
Grantor’s right, title and interest in and to the following, in each case, as to
each type of property described below, whether now owned or hereafter acquired
by such Grantor, wherever located, and whether now or hereafter existing or
arising (collectively, the “Collateral”):

2

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(a) all equipment in all of its forms, including, without limitation, all
machinery, tools, motor vehicles, vessels, aircraft, furniture and fixtures, and
all parts thereof and all accessions thereto, including, without limitation,
computer programs and supporting information that constitute equipment within
the meaning of the UCC (any and all such property being the “Equipment”);

(b) all inventory in all of its forms, including, without limitation, (i) all
raw materials, work in process, finished goods and materials used or consumed in
the manufacture, production, preparation or shipping thereof, (ii) goods in
which such Grantor has an interest in mass or a joint or other interest or right
of any kind (including, without limitation, goods in which such Grantor has an
interest or right as consignee) and (iii) goods that are returned to or
repossessed or stopped in transit by such Grantor, and all accessions thereto
and products thereof and documents therefor, including, without limitation,
computer programs and supporting information that constitute inventory within
the meaning of the UCC (any and all such property being the “Inventory”);

(c) all accounts (including, without limitation, health‑care‑insurance
receivables), chattel paper (including, without limitation, tangible chattel
paper and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter‑of‑credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all supporting
obligations and in and to all security agreements, mortgages, Liens, leases,
letters of credit and other contracts securing or otherwise relating to the
foregoing property (any and all of such accounts, chattel paper, instruments,
deposit accounts, letter‑of‑credit rights, general intangibles and other
obligations, to the extent not referred to in clause (d), (e) or (f) below,
being the “Receivables,” and any and all such supporting obligations, security
agreements, mortgages, Liens, leases, letters of credit and other contracts
being the “Related Contracts”);

(d) the following (the “Security Collateral”):

(i) the Initial Pledged Equity and the certificates, if any, representing the
Initial Pledged Equity, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Initial
Pledged Equity and all warrants, rights or options issued thereon or with
respect thereto;

(ii) all additional shares of stock and other Equity Interests in which such
Grantor shall from time to time acquire any interest in any manner (such shares
and other Equity Interests, together with the Initial Pledged Equity, being the
“Pledged Equity”), and the certificates, if any, representing such additional
shares or other Equity Interests, and all dividends, distributions, return of
capital, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares or other Equity Interests and all warrants, rights or options
issued thereon or with respect thereto;

3

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(iii) all indebtedness from time to time owed to such Grantor (all such
indebtedness owed to the Grantors, including any indebtedness owed to the
Grantors as of the date hereof, collectively being the “Pledged Debt”) and the
instruments, if any, evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
indebtedness; and

(iv) all other investment property (including, without limitation, all (A)
securities, whether certificated or uncertificated, (B) security entitlements,
(C) securities accounts, (D) commodity contracts and (E) commodity accounts) in
which such Grantor has now, or acquires from time to time hereafter, any right,
title or interest in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all dividends,
distributions, return of capital, interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such investment property and all warrants, rights
or options issued thereon or with respect thereto;

(e) all contract rights of each Grantor including, without limitation, each
Hedging Agreement, to which such Grantor is now or may hereafter become a party,
in each case as such agreements may be amended, amended and restated,
supplemented or otherwise modified from time to time (collectively, the
“Assigned Agreements”), including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of such Grantor for damages arising out of or for
breach of or default under the Assigned Agreements and (iv) the right of such
Grantor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder (all such
Collateral being the “Agreement Collateral”);

(f) the following (collectively, the “Account Collateral”):

(i) the Pledged Deposit Accounts and all funds and financial assets from time to
time credited thereto (including, without limitation, all cash and Cash
Equivalents and all certificates and instruments, if any, from time to time
representing or evidencing the Pledged Deposit Accounts);

(ii) all promissory notes, certificates of deposit, checks and other instruments
from time to time delivered to or otherwise possessed by the Collateral Agent
for or on behalf of such Grantor in substitution for or in addition to any or
all of the then existing Account Collateral; and

(iii) all interest, dividends, distributions, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;

(g) the following (collectively, the “Intellectual Property Collateral”):

4

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(i) all patents, patent applications, utility models and statutory invention
registrations, all inventions claimed or disclosed therein and all improvements
thereto (“Patents”);

(ii) all trademarks, service marks, domain names, trade dress, logos, designs,
slogans, trade names, business names, corporate names and other source
identifiers, whether registered or unregistered (provided that no security
interest shall be granted in United States intent‑to‑use trademark applications
to the extent that, and solely during the period in which, the grant of a
security interest therein would impair the validity or enforceability of such
intent‑to‑use trademark applications under applicable federal law), together, in
each case, with the goodwill symbolized thereby (“Trademarks”);

(iii) all copyrights, including, without limitation, copyrights in Computer
Software (as defined below), internet web sites and the content thereof, whether
registered or unregistered (“Copyrights”);

(iv) all computer software, programs and databases (including, without
limitation, source code, object code and all related applications and data
files), firmware and documentation and materials relating thereto, together with
any and all maintenance rights, service rights, programming rights, hosting
rights, test rights, improvement rights, renewal rights and indemnification
rights and any substitutions, replacements, improvements, error corrections,
updates and new versions of any of the foregoing (“Computer Software”);

(v) all confidential and proprietary information, including, without limitation,
know‑how, trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, databases and data, including,
without limitation, technical data, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information (collectively, “Trade Secrets”), and all other
intellectual, industrial and intangible property of any type, including, without
limitation, industrial designs and mask works;

(vi) all registrations and applications for registration for any of the
foregoing, including, without limitation, those registrations and applications
for registration set forth in Schedule III hereto, together with all reissues,
divisions, continuations, continuations‑in‑part, extensions, renewals and
reexaminations thereof;

(vii) all tangible embodiments of the foregoing, all rights in the foregoing
provided by international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

(viii) all agreements, permits, consents, orders and franchises relating to the
license, development, use or disclosure of any of the foregoing to which such
Grantor, now or hereafter, is a party or a beneficiary, including, without
limitation, the agreements set forth in Schedule III hereto (“IP Agreements”);
and

5

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(ix) any and all claims for damages and injunctive relief for past, present and
future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages,

but in any event excluding any intellectual property component of any undivided
interest of any Grantor in a joint operating agreement, the terms of which
preclude the granting of a separate security interest in such intellectual
property component;

(h) to the extent that such commercial tort claims may lawfully be pledged or
assigned under the laws of any relevant jurisdiction, the commercial tort claims
described in Schedule IV hereto (together with any commercial tort claims as to
which the Grantors have complied with the requirements of Section 13, the
“Commercial Tort Claims Collateral”);

(i) all books and records (including, without limitation, customer lists, credit
files, printouts and other computer output materials and records) of such
Grantor pertaining to any of the Collateral;

(j) all general intangibles; and

(k) all proceeds of, collateral for, income, royalties and other payments now or
hereafter due and payable with respect to, and supporting obligations relating
to, any and all of the Collateral (including, without limitation, proceeds,
collateral and supporting obligations that constitute property of the types
described in clauses (a) through (j) of this Section 1), and, to the extent not
otherwise included, all (A) payments under insurance (whether or not the
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral, and (B) cash.

Notwithstanding the foregoing, the Collateral shall not include:  (a) any
Grantor’s right, title or interest in any permit, lease, license, contract or
other agreement, to which such Grantor is a party to the extent, but only to the
extent, that the creation by such Grantor of any lien or encumbrance thereon,
would, under the terms of such permit, lease, license, contract or other
agreement constitute or result in (i) the abandonment, invalidation, or
unenforceability of any such right, title or interest of such Grantor therein or
(ii) a breach or termination pursuant to the terms thereof, or a default under
such permit, lease, license, contract or other agreement (other than to the
extent that any such term would be rendered unenforceable or otherwise deemed
ineffective by the UCC (including Sections 9‑406, 9‑407, 9‑408 and 9‑409
thereof) of any relevant jurisdiction or any other legal or regulatory
requirement or principle of equity); provided that (A) immediately upon the
ineffectiveness, lapse or termination of any such terms, the Collateral shall
include, and such Grantor shall be deemed to have granted a security interest
in, all such rights, title and interests as if such provision had never been in
effect and (B) to the extent that any such permit, lease, license, contract or
other agreement would otherwise constitute Collateral (but for the provisions of
this paragraph), all proceeds resulting from the sale or disposition by any
Grantor of any rights, title or interests of such Grantor under such permit,
lease, license contract or other agreement shall constitute Collateral; (b) any
Equipment owned by any Grantor that is subject to a purchase money lien or a
Capital Lease Obligation if the contract or other agreement in which such lien
or encumbrance is granted (or the

6

HN\1119607.7

--------------------------------------------------------------------------------

 

 

documentation providing for such Capital Lease Obligation) prohibits or requires
the consent of any person other than such Grantor as a condition to the creation
of any other lien or encumbrance on such equipment for so long as such
encumbrance is not removed, terminated, or rendered unenforceable or otherwise
deemed ineffective by the UCC (including Section 9‑406, 9‑407, 9‑408 and 9‑409
of the UCC) of any relevant jurisdiction or any other legal or regulatory
requirement or principle of equity; (c) any letter‑of‑credit rights solely to
the extent any Grantor is required by applicable law to apply the proceeds of a
drawing of such letter of credit for a specified purpose; (d) any monies,
checks, securities or other items on deposit or otherwise held in deposit
accounts or trust accounts specifically and exclusively used for payroll,
payroll taxes, deferred compensation and other employee wage and benefit
payments to or for the benefit of any Grantor’s employees; (e) any Excluded
Assets at any time; and (f) Equity Interests issued by any First-Tier Foreign
Subsidiary (collectively, the “Excluded Property”).  It is acknowledged and
agreed that the Excluded Property shall not constitute Collateral hereunder
until such time as such property or assets shall no longer constitute Excluded
Property.

Section 2. Security for Obligations.  This Agreement secures, in the case of
each Grantor, the payment and performance of the following (collectively, the
“Secured Obligations”):

(a) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, all Obligations described in clause (a) of the
definition thereof (as defined in the Credit Agreement) and all principal,
premium, interest (including, without limitation, all interest that accrues
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of such Grantor at
the rate provided for in the respective documentation, whether or not a claim
for post‑petition interest is allowed in any such proceeding), fees, costs and
indemnities) of such Grantor to the Lender Creditors, whether now existing or
hereafter incurred under, arising out of, or in connection with, each Credit
Document to which such Grantor is a party (including, without limitation, all
such obligations, liabilities and indebtedness of such Grantor under the Credit
Party Guaranty with respect to the Credit Document Obligations (as defined in
the Credit Party Guaranty)) and the due performance and compliance by such
Grantor with all of the terms, conditions and agreements contained in each such
Credit Document;

(b) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of such Grantor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding) owing by such Grantor to each Secured Hedge
Counterparty under any Secured Hedging Agreement, whether now in existence or
hereafter arising (including, without limitation, all obligations, liabilities
and indebtedness of such Grantor under the Credit Party Guaranty with respect to
the Secured Hedge Obligations (as defined in the Credit Party Guaranty)), and
the due performance and compliance by such Grantor with all of the terms,
conditions and agreements contained in each such Secured Hedging Agreement;

7

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(c) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, all Obligations (as defined in the LC
Procurement Agreement) and all interest that accrues after the commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of such Grantor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding) owing by such Grantor to the Payee under the
LC Procurement Documents, whether now in existence or hereafter arising
(including, without limitation, all obligations, liabilities and indebtedness of
such Grantor under the Credit Party Guaranty with respect to the LC Procurement
Document Obligations (as defined in the Credit Party Guaranty)), and the due
performance and compliance by such Grantor with all of the terms, conditions and
agreements contained in each LC Procurement Document;

(d) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral;

(e) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of such Grantor referred to in
clauses (a), (b) and (c) above, after an Event of Default shall have occurred
and be continuing, the expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys’ fees and court costs;

(f) all amounts paid by any Indemnitee (as defined below) as to which such
Indemnitee has the right to reimbursement under Section 19 of this Agreement;
and

(g) all amounts owing to any Agent pursuant to any of the Credit Documents,
Secured Hedging Agreements or LC Procurement Documents in its capacity as such;

it being acknowledged and agreed that the Secured Obligations shall include
extensions of credit of the types described above, whether outstanding on the
date of this Agreement or extended from time to time after the date of this
Agreement.

Without limiting the generality of the foregoing, this Agreement secures, as to
each Grantor, the payment of all amounts that constitute part of the Secured
Obligations and would be owed by such Grantor to any Secured Creditor under the
Secured Debt Agreements but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Credit Party.

Section 3. Grantors Remain Liable.  Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor’s Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Creditor shall have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement, any other Credit Document, any Secured

8

HN\1119607.7

--------------------------------------------------------------------------------

 

 

Hedging Agreement or any other LC Procurement Document, nor shall any Secured
Creditor be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

Section 4. Delivery and Control of Security Collateral.  (a) All certificates or
instruments representing or evidencing Security Collateral shall be delivered to
and held by or on behalf of the Collateral Agent, for the benefit of the Secured
Creditors, pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral
Agent.  The Collateral Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.

(a) With respect to any Security Collateral that constitutes an uncertificated
security, the relevant Grantor will cause the issuer thereof either (i) to
register the Collateral Agent as the registered owner of such security or (ii)
to agree with such Grantor and the Collateral Agent that such issuer will comply
with instructions with respect to such security originated by the Collateral
Agent without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Collateral Agent (such agreement being an
“Uncertificated Security Control Agreement”).

(b) With respect to any Security Collateral that constitutes a security
entitlement as to which the Collateral Agent is not the securities intermediary,
the relevant Grantor will at all times following the Effective Date (or such
later date as may be applicable pursuant to Section 5.16 of the Credit
Agreement) cause the securities intermediary with respect to such securities
account or security entitlement either (i) to identify in its records the
Collateral Agent as the entitlement holder thereof or (ii) to agree with such
Grantor and the Collateral Agent that such securities intermediary will comply
with entitlement orders originated by the Collateral Agent without further
consent of such Grantor, such agreement to be in form and substance satisfactory
to the Collateral Agent (a “Securities Account Control Agreement” or
“Securities/Deposit Account Control Agreement,” respectively).

(c) The Collateral Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Security Collateral,
subject only to the revocable rights specified in Section 10.

(d) Upon the request of the Collateral Agent, each Grantor will notify each
issuer of Security Collateral granted by it hereunder that such Security
Collateral is subject to the security interest granted hereunder.

Section 5. Maintaining the Account Collateral.  So long as any Loans or any
other Secured Obligations shall remain unpaid or any Secured Debt Agreement
shall be in effect:

(a) Each Grantor will maintain deposit accounts only with the Collateral Agent
or with a bank (a “Pledged Account Bank”) that has agreed with such Grantor and
the Collateral Agent to comply with instructions originated by the Collateral
Agent directing the disposition of

9

HN\1119607.7

--------------------------------------------------------------------------------

 

 

funds in such deposit account without the further consent of such Grantor, such
agreement to be in form and substance satisfactory to the Collateral Agent (a
“Deposit Account Control Agreement”); provided,  however, this Section 5(a)
shall not apply to (i) any deposit account with a principal balance that does
not exceed, or has not exceeded within the past 12 months, $250,000 or (ii) that
certain deposit account maintained with JPMorgan Chase Bank in Houston, Texas
(reference Endeavour Operating CO 010 General – Enertia), unless and until the
principal balance of such account on any day exceeds $250,000);

(b) Each Grantor will (i) promptly instruct each Person obligated at any time to
make any payment to such Grantor for any reason (an “Obligor”) to make such
payment to a Pledged Deposit Account, and (ii) deposit in a Pledged Deposit
Account, at the end of each Business Day, all proceeds of Collateral and all
other cash of such Grantor in excess of $250,000 in the aggregate;

(c) Each Grantor agrees that it shall not close any Pledged Deposit Account or
terminate any Deposit Account Control Agreement, in each case, without the prior
written consent of the Collateral Agent; and

(d) The Collateral Agent may, at any time and without notice to, or consent
from, the Grantor, transfer, or direct the transfer of, funds from the Pledged
Deposit Accounts to satisfy the Grantor’s obligations under the Credit
Documents, the Secured Hedging Agreements or the LC Procurement Documents;
provided, that the Collateral Agent may only exercise any such rights if an
Event of Default shall have occurred and be continuing.

Section 6. Representations and Warranties.  Each Grantor represents and warrants
as follows:

(a) Such Grantor’s exact legal name, location, chief executive office, type of
organization, jurisdiction of organization and organizational identification
number is set forth in Schedule V hereto.  Such Grantor has no trade names other
than as listed on Schedule III hereto.  Within the five years preceding the date
hereof, such Grantor has not changed its name, location, chief executive office,
type of organization, jurisdiction of organization or organizational
identification number from those set forth in Schedule V hereto except as set
forth in Schedule VI hereto.

(b) Such Grantor is the legal and beneficial owner of the Collateral granted or
purported to be granted by it free and clear of any Lien, claim, option or right
of others, except for the security interest created under this Agreement or
permitted under the Credit Agreement and the LC Procurement Agreement.  No
effective financing statement or other instrument similar in effect covering all
or any part of such Collateral or listing such Grantor or any trade name of such
Grantor as debtor is on file in any recording office, except such as may have
been filed in favor of the Collateral Agent relating to the Credit Documents or
the LC Procurement Documents or as otherwise permitted under the Credit
Agreement and the LC Procurement Agreement.

(c) All of the Equipment and Inventory of such Grantor are located at the places
specified therefor in Schedule VII hereto or at another location as to which
such Grantor has

10

HN\1119607.7

--------------------------------------------------------------------------------

 

 

complied with the requirements of Section 8.  Such Grantor has exclusive
possession and control of its Equipment and Inventory, other than Inventory
stored at any leased premises or warehouse for which a landlord’s or
warehouseman’s agreement, in form and substance satisfactory to the Collateral
Agent, is in effect.

(d) None of the Receivables or Agreement Collateral is evidenced by a promissory
note or other instrument that has not been delivered to the Collateral Agent.

(e) If such Grantor is an issuer of Security Collateral, such Grantor confirms
that it has received notice of the security interest granted hereunder.

(f) The Pledged Equity pledged by such Grantor hereunder has been duly
authorized and validly issued and is fully paid and non-assessable.  The Pledged
Debt pledged by such Grantor hereunder has been duly authorized, authenticated
or issued and delivered, is the legal, valid and binding obligation of the
issuers thereof, is evidenced by one or more promissory notes (which promissory
notes have been delivered to the Collateral Agent) and is not in default.

(g) The Initial Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity Interests of the issuers thereof
indicated on Schedule I hereto.  As of the date hereof, (i) the Pledged Debt
described on Schedule I hereto constitutes all of the outstanding Indebtedness
owed to such Grantor by the issuers thereof and is outstanding in the principal
amount indicated and (ii) other than as set forth on Schedule I hereto, there is
no Pledged Debt outstanding.

(h) Such Grantor has no deposit accounts, other than (i) the Pledged Deposit
Accounts listed on Schedule II hereto and (ii) the additional Pledged Deposit
Accounts as to which such Grantor has complied with the applicable requirements
of Section 5.  

(i) This Agreement creates in favor of the Collateral Agent for the benefit of
the Secured Creditors a valid security interest in the Collateral granted by
such Grantor, securing the payment of the Secured Obligations; all filings and
other actions (including, without limitation, (A) actions necessary to obtain
control of Collateral as provided in Sections 9‑104, 9‑106 and 9‑107 of the UCC
and (B) actions necessary to perfect the Collateral Agent’s security interest
with respect to Collateral, as required by the Collateral Agent) to perfect the
security interest in the Collateral granted by such Grantor have been duly made
or taken, or to the extent such actions have not been completed as of the date
hereof, will be duly made or taken promptly following the execution and delivery
hereof, and in any event within two Business Days of the date hereof; and such
security interest is (or will be upon the completion of such actions not yet
completed) first priority (subject to the terms of the Intercreditor Agreement);
provided, that (1) no Grantor shall be deemed to represent pursuant to the
foregoing that this Agreement creates a valid security interest in any Pledged
Equity Interests of any Person that is not organized under the laws of the
United States or any state thereof and (2) no steps have been taken in order to
perfect any such security interest in the Pledged Equity Interests referred to
in clause (1) above.

(j) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or any other third party is
required for (i) the grant by such Grantor of the security interest granted
hereunder or for the execution, delivery or

11

HN\1119607.7

--------------------------------------------------------------------------------

 

 

performance of this Agreement by such Grantor, (ii) the perfection or
maintenance of the security interest created hereunder (including, subject to
the Intercreditor Agreement, the first priority nature of such security
interest), except for the filing of financing and continuation statements under
the UCC, which financing statements have either been filed or will be filed
promptly (and in any event within two Business Days after the execution and
delivery of this Agreement), the other actions required by the Collateral Agent
as referred to in clause (i) above and the actions described in Section 4 with
respect to the Security Collateral, which actions have been taken, or will be
taken promptly after the execution and delivery of this Agreement, or (iii) the
exercise by the Collateral Agent of its voting or other rights provided for in
this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with the disposition of any
portion of the Security Collateral by laws affecting the offering and sale of
securities generally; provided, that the Collateral Agent acknowledges and
agrees that no Grantor is making (or will be deemed to have made) the foregoing
representations with respect to any Pledged Equity Interests of any Person that
is not organized under the laws of the United States or any state thereof.

(k) As of the date hereof, the aggregate fair market value of all Intellectual
Property Collateral of the Credit Parties is less than $100,000.

Section 7. Further Assurances.  (a) Each Grantor agrees that from time to time,
at the expense of such Grantor, such Grantor will promptly execute and deliver,
or otherwise authenticate, all further instruments and documents, and take all
further action that may be necessary or desirable, or that the Collateral Agent
may reasonably request, in order to perfect and protect any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor.  Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor:  (i) if any such Collateral shall be evidenced by a
promissory note or other instrument or chattel paper, deliver and pledge to the
Collateral Agent hereunder such note or instrument or chattel paper duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Collateral Agent; (ii) file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the security
interest granted or purported to be granted by such Grantor hereunder; and (iii)
deliver to the Collateral Agent evidence that all other actions that the
Collateral Agent may deem reasonably necessary or desirable in order to perfect
and protect the security interest granted or purported to be granted by such
Grantor under this Agreement has been taken.

(a) Each Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, including, without
limitation, one or more financing statements indicating that such financing
statements cover all assets or all personal property (or words of similar
effect) of such Grantor, regardless of whether any particular asset described in
such financing statements falls within the scope of the UCC or the granting
clause of this Agreement.  A photocopy or other reproduction of this Agreement
shall be sufficient as a financing statement where permitted by law.  Each
Grantor ratifies its authorization for the Collateral Agent to have filed such
financing statements, continuation statements or amendments filed prior to the
date hereof.

12

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(b) Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor subject to this Agreement and such other reports in connection with
such Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.

(c) Each Grantor will furnish to the Collateral Agent, at any time upon the
reasonable request of the Collateral Agent, an opinion of counsel, from outside
counsel reasonably satisfactory to the Collateral Agent, to the effect that all
financing or continuation statements have been filed, and all other action has
been taken to perfect continuously from the date hereof the security interest
granted hereunder; provided, that no Grantor shall be required pursuant to this
Section 7(d) to deliver opinions with respect to the perfection of any such
security interest in the Pledged Equity Interests of any Person that is not
organized under the laws of the United States or any state thereof.

Section 8. Post‑Closing Changes; Collections on Assigned Agreements, Receivables
and Related Contracts.  (a) No Grantor will change its name, type of
organization, jurisdiction of organization, organizational identification number
or location, except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a registered organization ceasing to constitute
same or (y) such Grantor changing its jurisdiction of organization or location
from the United States or a State thereof to a jurisdiction of organization or
location, as the case may be, outside the United States or a State thereof) if
(i) it shall have given to the Collateral Agent  not less than 15 days’ prior
written notice of each change to the information listed on Schedule V (as
adjusted for any subsequent changes thereto previously made in accordance with
this sentence), together with a supplement to Schedule V which shall correct all
information contained therein for such Grantor, and (ii) in connection with such
change or changes, it shall have taken all action reasonably requested by the
Collateral Agent to maintain the security interests of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.  In addition, to the extent that such Grantor does not
have an organizational identification number and later obtains one, such Grantor
shall promptly thereafter notify the Collateral Agent of such organizational
identification number and shall take all actions reasonably satisfactory to the
Collateral Agent to the extent necessary to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby fully
perfected and in full force and effect.

(a) Except as otherwise provided in this subsection (b), each Grantor will
continue to collect, at its own expense, all amounts due or to become due such
Grantor under the Assigned Agreements, Receivables and Related Contracts.  In
connection with such collections, such Grantor may take such action as such
Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection of the Assigned Agreements, Receivables and Related Contracts;
provided,  however, that the Collateral Agent shall have the right at any time
following the occurrence of an Event of Default, and upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Assigned
Agreements, Receivables and Related Contracts of the assignment of such Assigned
Agreements, Receivables and Related Contracts to the Collateral Agent and to
direct such Obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent and, upon such notification
and at the expense of such Grantor, to enforce collection of any such Assigned
Agreements,

13

HN\1119607.7

--------------------------------------------------------------------------------

 

 

Receivables and Related Contracts, to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor might
have done, and to otherwise exercise all rights with respect to such Assigned
Agreements, Receivables and Related Contracts, including, without limitation,
those set forth set forth in Section 9‑607 of the UCC.  After receipt by any
Grantor of the notice from the Collateral Agent referred to in the proviso to
the preceding sentence, (i) all amounts and proceeds (including, without
limitation, instruments) received by such Grantor in respect of the Assigned
Agreements, Receivables and Related Contracts of such Grantor shall be received
in trust for the benefit of the Collateral Agent hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
endorsement) to be deposited in a cash collateral account and applied as
provided in Section 18(b) and (ii) such Grantor will not adjust, settle or
compromise the amount or payment of any Receivable or amount due on any Assigned
Agreement or Related Contract, release wholly or partly any Obligor thereof or
allow any credit or discount thereon.  No Grantor will permit or consent to the
subordination of its right to payment under any of the Assigned Agreements,
Receivables and Related Contracts to any other indebtedness or obligations of
the Obligor thereof.

Section 9. As to Intellectual Property Collateral.  Each Grantor hereby agrees
that, if at any time, and from time to time, the aggregate fair market value of
the Intellectual Property Collateral of all the Credit Parties shall exceed
$100,000, then the Grantors shall:

(a) With respect to each item of its Intellectual Property Collateral, each
Grantor agrees to take, at its expense, all necessary steps, including, without
limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other Governmental Authority, to (i) maintain the validity and
enforceability of such Intellectual Property Collateral and maintain such
Intellectual Property Collateral in full force and effect, and (ii) pursue the
registration and maintenance of each patent, trademark, or copyright
registration or application, now or hereafter included in such Intellectual
Property Collateral of such Grantor, including, without limitation, the payment
of required fees and taxes, the filing of responses to office actions issued by
the U.S. Patent and Trademark Office, the U.S. Copyright Office or other
Governmental Authorities, the filing of applications for renewal or extension,
the filing of affidavits under Section 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation in part, reissue and renewal
applications or extensions, the payment of maintenance fees and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings.  No Grantor shall, without the
written consent of the Collateral Agent, discontinue use of or otherwise abandon
any Intellectual Property Collateral, or abandon any right to file an
application for patent, trademark, or copyright, unless such Grantor shall have
previously determined that such use or the pursuit or maintenance of such
Intellectual Property Collateral is no longer desirable in the conduct of such
Grantor’s business and that the loss thereof would not be reasonably likely to
have a Material Adverse Effect, in which case, such Grantor will give prompt
notice of any such abandonment to the Collateral Agent.

(b) Each Grantor agrees promptly to notify the Collateral Agent if such Grantor
becomes aware (i) that any item of the Intellectual Property Collateral may have
become abandoned, placed in the public domain, invalid or unenforceable, or of
any adverse determination or development regarding such Grantor’s ownership of
any of the Intellectual Property Collateral or its right to register the same or
to keep and maintain and enforce the same,

14

HN\1119607.7

--------------------------------------------------------------------------------

 

 

or (ii) of any adverse determination or the institution of any proceeding
(including, without limitation, the institution of any proceeding in the
U.S. Patent and Trademark Office or any court) regarding any item of the
Intellectual Property Collateral.

(c) In the event that any Grantor becomes aware that any item of the
Intellectual Property Collateral is being infringed or misappropriated by a
third party, such Grantor shall promptly notify the Collateral Agent and shall
take such actions, at its expense, as such Grantor or the Collateral Agent deems
reasonable and appropriate under the circumstances to protect or enforce such
Intellectual Property Collateral, including, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation.

(d) Each Grantor shall use proper statutory notice in connection with its use of
each item of its Intellectual Property Collateral.  No Grantor shall do or
permit any act or knowingly omit to do any act whereby any of its Intellectual
Property Collateral may lapse or become invalid or unenforceable or placed in
the public domain.

(e) Each Grantor shall take all steps which it or the Collateral Agent deems
reasonable and appropriate under the circumstances to preserve and protect each
item of its Intellectual Property Collateral, including, without limitation,
maintaining the quality of any and all products or services used or provided in
connection with any of the Trademarks, consistent with the quality of the
products and services as of the date hereof, and taking all steps necessary to
ensure that all licensed users of any of the Trademarks use such consistent
standards of quality.

(f) Each Grantor agrees that, should it obtain an ownership interest in any item
of the type set forth in Section 1(g) (excluding any intellectual property
component of any undivided interest of any Grantor in a joint operating
agreement, the terms of which preclude the granting of a separate security
interest in such intellectual property component; except to the extent any such
terms are rendered ineffective by Sections 9‑406, 9‑407, 9‑408 or 9‑409 of the
UCC) that is not on the date hereof a part of the Intellectual Property
Collateral, and such acquisition shall cause the total aggregate value of the
Intellectual Property Collateral to exceed $100,000 (“After‑Acquired
Intellectual Property”), then (i) the provisions of this Agreement shall
automatically apply thereto, (ii) any such After‑Acquired Intellectual Property
and, in the case of trademarks, the goodwill symbolized thereby, shall
automatically become part of the Intellectual Property Collateral subject to the
terms and conditions of this Agreement with respect thereto and (iii) in the
case of the first such ownership interest obtained in After‑Acquired
Intellectual Property, within ten business days following the date on which each
such Grantor obtains such ownership interest each such Grantor shall execute or
otherwise authenticate an agreement, in substantially the form set forth in
Exhibit B hereto or otherwise in form and substance satisfactory to the
Collateral Agent (an “Intellectual Property Security Agreement”), for recording
the security interest granted hereunder to the Collateral Agent in such
Intellectual Property Collateral with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other Governmental Authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.

15

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(g) If, at the end of each fiscal quarter of each Grantor following the
execution of the Intellectual Property Security Agreement, the acquisition of
After‑Acquired Intellectual Property shall have caused the total aggregate value
of the Intellectual Property Collateral to exceed $100,000, such Grantor shall
give prompt written notice to the Collateral Agent identifying any additional
After‑Acquired Intellectual Property acquired during such fiscal quarter, and
such Grantor shall execute and deliver to the Collateral Agent with such written
notice, or otherwise authenticate, an agreement substantially in the form of
Exhibit C hereto or otherwise in form and substance satisfactory to the
Collateral Agent (an “IP Security Agreement Supplement”) covering such
After‑Acquired Intellectual Property, which IP Security Agreement Supplement
shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other governmental authorities necessary to perfect the security
interest hereunder in such After‑Acquired Intellectual Property.

Section 10. Voting Rights; Dividends; Etc.  (a) So long as no Default  or Event
of Default shall have occurred and be continuing:

(i) Each Grantor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Security Collateral of such Grantor or any
part thereof for any purpose; provided however, that such Grantor will not
exercise or refrain from exercising any such right if such action would have a
material adverse effect on the value of the Security Collateral or any part
thereof or of the rights of the Secured Creditors therein.

(ii) Each Grantor shall be entitled to receive and retain any and all dividends,
interest and other distributions paid in respect of the Security Collateral of
such Grantor if and to the extent that the payment thereof is not otherwise
prohibited by the terms of the Credit Documents; provided,  however, that any
and all

(A) dividends, interest and other distributions paid or payable other than in
cash in respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Security
Collateral,

(B) dividends and other distributions paid or payable in cash in respect of any
Security Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid in surplus; and

(C) cash paid, payable or otherwise distributed in respect of principal of, or
in redemption of, or in exchange for, any Security Collateral,

that in each case are not otherwise expressly permitted to be retained by such
Grantor pursuant to the terms of the Credit Agreement shall be, and shall be
forthwith delivered to the Collateral Agent to hold as, Security Collateral and
shall, if received by such Grantor, be received in trust for the benefit of the
Collateral Agent, be segregated from the other property or funds of such Grantor
and be forthwith delivered to the Collateral Agent as Security Collateral in the
same form as so received (with any necessary indorsement).

16

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(iii) The Collateral Agent will execute and deliver (or cause to be executed and
delivered) to each Grantor all such proxies and other instruments as such
Grantor may reasonably request for the purpose of enabling such Grantor to
exercise the voting and other rights that it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends or interest payments that it is
authorized to receive and retain pursuant to paragraph (ii) above.

(h) Upon the occurrence and during the continuance of a Default or Event of
Default:

(i) All rights of each Grantor (A) to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 10(a)(i) shall, upon notice to such Grantor by the
Collateral Agent, cease and (B) to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and retain
pursuant to Section 10(a)(ii) shall automatically cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall thereupon
have the sole right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Security Collateral such dividends,
interest and other distributions.

(ii) All dividends, interest and other distributions that are received by any
Grantor contrary to the provisions of paragraph (i) of this Section 10(b) shall
be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement).

Section 11. As to the Assigned Agreements.  (a) Each Grantor hereby consents on
its behalf and on behalf of its Subsidiaries to the assignment and pledge to the
Collateral Agent for benefit of the Secured Creditors of each Assigned Agreement
to which it is a party by any other Grantor hereunder.

(a) Each Grantor agrees, and has effectively so instructed each other party to
each Assigned Agreement to which it is a party, that all payments due or to
become due under or in connection with such Assigned Agreement will be made
directly to a Pledged Deposit Account.

(b) All moneys received or collected pursuant to subsection (b) above and not
deposited directly into a Pledged Deposit Account shall be applied as provided
in Section 18(b).

Section 12. As to Letter‑of‑Credit Rights.  Upon the occurrence of a Default or
Event of Default, each Grantor will, promptly upon request by the Collateral
Agent, (a) notify (and such Grantor hereby authorizes the Collateral Agent to
notify) the issuer and each nominated person with respect to each of the Related
Contracts consisting of letters of credit that the proceeds thereof have been
assigned to the Collateral Agent hereunder and any payments due or to become due
in respect thereof are to be made directly to the Collateral Agent or its
designee and (b) arrange for the Collateral Agent to become the transferee
beneficiary of letter of credit.

Section 13. Commercial Tort Claims.  Each Grantor will promptly give notice to
the Collateral Agent of any material commercial tort claim capable of lawfully
being pledged or assigned that may arise after the date hereof and will
immediately execute or otherwise

17

HN\1119607.7

--------------------------------------------------------------------------------

 

 

authenticate a supplement to this Agreement, and otherwise take all necessary
action, to subject such commercial tort claim to the first priority security
interest created under this Agreement.

Section 14. Transfers and Other Liens; Additional Shares.  (a) Each Grantor
agrees that it will not (i) sell, assign or otherwise dispose of, or grant any
option with respect to, any of the Collateral, other than sales, assignments and
other dispositions of Collateral, and options relating to Collateral, permitted
under the Secured Debt Agreements, or (ii) create or suffer to exist any Lien
upon or with respect to any of the Collateral of such Grantor except for the
pledge, assignment and security interest created under the Secured Debt
Agreements and Liens permitted under the Secured Debt Agreements.

(a) Each Grantor agrees that it will (i) cause each issuer of the Pledged Equity
pledged by such Grantor not to issue any Equity Interests or other securities in
addition to or in substitution for the Pledged Equity issued by such issuer,
except to such Grantor, and (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional Equity
Interests or other securities (except to the extent constituting Excluded
Property).

Section 15. Collateral Agent Appointed Attorney in Fact.  Following the
occurrence and during the continuance of a Default or Event of Default, each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor’s attorney
in fact, with full authority in the place and stead of such Grantor and in the
name of such Grantor or otherwise, from time to time in the Collateral Agent’s
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:

(a) to obtain and adjust insurance required to be paid to the Collateral Agent
pursuant to this Agreement,

(b) to ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral,

(c) to receive, indorse and collect any drafts or other instruments, documents
and chattel paper, in connection with clause (a) or (b) above, and

(d) to file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce compliance with the terms and conditions
of any Assigned Agreement or the rights of the Collateral Agent with respect to
any of the Collateral.

Section 16. Collateral Agent May Perform.  If any Grantor fails to perform any
agreement contained herein, the Collateral Agent may, but without any obligation
to do so and without notice, itself perform, or cause performance of, such
agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 19.

Section 17. The Collateral Agent’s Duties.  (a) The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured Creditors’ interest
in the Collateral

18

HN\1119607.7

--------------------------------------------------------------------------------

 

 

and shall not impose any duty upon it to exercise any such powers.  Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no
duty as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not any Secured Creditor has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.  The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which it accords
its own property.

(a) Anything contained herein to the contrary notwithstanding, the Collateral
Agent may from time to time, when the Collateral Agent deems it to be necessary,
appoint one or more subagents (each a “Subagent”) for the Collateral Agent
hereunder with respect to all or any part of the Collateral.  In the event that
the Collateral Agent so appoints any Subagent with respect to any Collateral,
(i) the assignment and pledge of such Collateral and the security interest
granted in such Collateral by each Grantor hereunder shall be deemed for
purposes of this Agreement to have been made to such Subagent, in addition to
the Collateral Agent, for the benefit of the Secured Creditors, as security for
the Secured Obligations of such Grantor, (ii) such Subagent shall automatically
be vested, in addition to the Collateral Agent, with all rights, powers,
privileges, interests and remedies of the Collateral Agent hereunder with
respect to such Collateral, and (iii) the term “Collateral Agent,” when used
herein in relation to any rights, powers, privileges, interests and remedies of
the Collateral Agent with respect to such Collateral, shall include such
Subagent; provided,  however, that no such Subagent shall be authorized to take
any action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Collateral Agent.

Section 18. Remedies. 

If any Event of Default shall have occurred and be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may:  (i)
require each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent at a place and time to be designated by the Collateral
Agent that is reasonably convenient to both parties; (ii) without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Collateral Agent may deem commercially reasonable; (iii) occupy any
premises owned or leased by any of the Grantors where the Collateral or any part
thereof is assembled or located for a reasonable period in order to effectuate
its rights and remedies hereunder or under law, without obligation to such
Grantor in respect of such occupation; and (iv) exercise any and all rights and
remedies of any of the Grantors under or in connection with the Collateral, or
otherwise in respect of the Collateral, including, without limitation, (A) any
and all rights of such Grantor to demand or otherwise

19

HN\1119607.7

--------------------------------------------------------------------------------

 

 

require payment of any amount under, or performance of any provision of, the
Assigned Agreements, the Receivables, the Related Contracts and the other
Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with
respect to the Account Collateral and (C) exercise all other rights and remedies
with respect to the Assigned Agreements, the Receivables, the Related Contracts
and the other Collateral, including, without limitation, those set forth in
Section 9‑607 of the UCC.  Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days’ notice to such Grantor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification.  The Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given.  The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.

(b) Any cash held by or on behalf of the Collateral Agent and all cash proceeds
received by or on behalf of the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied in whole or in
part by the Collateral Agent for the benefit of the Secured Creditors against,
all or any part of the Secured Obligations in the following order:

(i) FIRST, to the payment of all amounts owing to the Collateral Agent (in its
capacity as such) pursuant to the terms of any Secured Debt Agreement,

(ii) SECOND, to the payment in full of the Secured Obligations on a ratable
basis in accordance with the terms of the applicable Secured Debt Agreements,
and

(iii) THIRD, after payment of all Secured Obligations, to Holdings, the
Borrowers, the Payee and the other Grantors or their successors and assigns, as
their interests may appear, or to whosoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.

The provisions of this Section 18(b) (i) shall inure solely to the benefit of
each of the Secured Creditors and their respective successors and assigns and
(ii) are intended solely for the purpose of defining the relative rights of the
Secured Creditors.  No Grantor or any other creditor thereof (including, without
limitation, any Person who is entitled to or is otherwise granted a ratable Lien
over any Collateral pursuant to any contractual obligation of any Grantor) shall
have any rights hereunder.  Nothing in this Agreement is intended to or shall
impair the obligations of the Borrowers or any other Grantor, which are absolute
and unconditional, to pay the Secured Obligations owing to the Secured Creditors
as and when the same shall become due and payable in accordance with the terms
of the Credit Documents, the Secured Hedging Agreements or the LC Procurement
Documents, as applicable.

(c) All payments received by any Grantor under or in connection with any
Assigned Agreement or otherwise in respect of the Collateral shall be received
in trust for the benefit of the Collateral Agent, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the Collateral Agent
in the same form as so received (with any necessary endorsement).

20

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(d) The Collateral Agent may, without notice to any Grantor except as required
by law and at any time or from time to time, charge, set off and otherwise apply
all or any part of the Secured Obligations against any funds held with respect
to the Account Collateral or in any other deposit account.

(e) The Collateral Agent may send to each bank, securities intermediary or
issuer party to any Deposit Account Control Agreement, Securities/Deposit
Account Control Agreement, Securities Account Control Agreement or
Uncertificated Security Control Agreement a “Notice of Exclusive Control” (or
similar term) as defined in and under such Agreement.

(f) In the event of any sale or other disposition of any of the Intellectual
Property Collateral of any Grantor, the goodwill symbolized by any Trademarks
subject to such sale or other disposition shall be included therein, and such
Grantor shall supply to the Collateral Agent or its designee such Grantor’s
know‑how and expertise, and documents and things relating to any Intellectual
Property Collateral subject to such sale or other disposition, and such
Grantor’s customer lists and other records and documents relating to such
Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of products and services of such Grantor.

(g) If the Collateral Agent shall determine to exercise its right to sell all or
any of the Security Collateral of any Grantor pursuant to this Section 18, each
Grantor agrees that, upon request of the Collateral Agent, such Grantor will, at
its own expense:

(i) execute and deliver, and cause each issuer of such Security Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of the Collateral
Agent, advisable to register such Security Collateral under the provisions of
the Securities Act of 1933 (as amended from time to time, the “Securities Act”),
to cause the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished and to make all amendments and supplements thereto and to the related
prospectus that, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;

(ii) use its best efforts to qualify the Security Collateral under the state
securities or “Blue Sky” laws and to obtain all necessary governmental approvals
for the sale of such Security Collateral, as requested by the Collateral Agent;

(iii) cause each such issuer of such Security Collateral to make available to
its security holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act;

21

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(iv) provide the Collateral Agent with such other information and projections as
may be necessary or, in the opinion of the Collateral Agent, advisable to enable
the Collateral Agent to effect the sale of such Security Collateral; and

(v) do or cause to be done all such other acts and things as may be necessary to
make such sale of such Security Collateral or any part thereof valid and binding
and in compliance with applicable law.

(h) The Collateral Agent is authorized, in connection with any sale of the
Security Collateral pursuant to this Section 18, to deliver or otherwise
disclose to any prospective purchaser of the Security Collateral:  (i) any
registration statement or prospectus, and all supplements and amendments
thereto, prepared pursuant to subsection (g)(i) above; (ii) any information and
projections provided to it pursuant to subsection (g)(iv) above; and (iii) any
other information in its possession relating to such Security Collateral.

(i) Each Grantor acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Secured Creditors by reason of the failure
by such Grantor to perform any of the covenants contained in subsection (g)
above and, consequently, agrees that, if such Grantor shall fail to perform any
of such covenants, it will pay, as liquidated damages and not as a penalty, an
amount equal to the value of the Security Collateral on the date the Collateral
Agent shall demand compliance with subsection (g) above.

Section 19. Indemnity and Expenses.  Each Grantor agrees, jointly and severally,
to indemnify each Secured Creditor and each of their respective Affiliates and
the respective directors, trustees, officers, employees, agents and advisors of
each Secured Creditor and their respective Affiliates (each, a “Related Party”)
against, and to hold each Secured Creditor and each Related Party of each
Secured Creditor (each such person being called an “Indemnitee”) harmless from
all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements (collectively, the
“Liabilities”), incurred by or asserted against any Indemnitee arising out of,
in any way connected with, or as a result of (i) the execution or delivery of
this Agreement or any other Secured Debt Agreement or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby, (ii) the use of the proceeds of the
Loans, (iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto (and
regardless of whether such matter is initiated by a third party or by any
Secured Creditor or any of their respective Affiliates), or (iv) any actual or
alleged presence or Release of Hazardous Materials on any property currently or
formerly owned or operated by such Grantor or its Subsidiaries, or any
Environmental Liability related in any way to such Grantor or its Subsidiaries;
 provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and non-appealable
judgment to have resulted from the willful misconduct, bad faith or gross
negligence of such Indemnitee or any proceeding not involving an act or omission
by any Secured Creditor or any of their respective Affiliates that is brought by
an Indemnitee against any other Indemnitee (other than disputes involving claims
against an Agent in its capacity as such).  To the extent permitted by
applicable law, no Grantor shall assert, and each Grantor hereby waives, any
claim against any Indemnitee,

22

HN\1119607.7

--------------------------------------------------------------------------------

 

 

on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby.

Section 20. Amendments; Waivers; Additional Grantors; Etc.  (a) No amendment,
modification or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by each Grantor directly affected thereby
(it being understood that the addition or release of any Grantor hereunder shall
not constitute an amendment, modification, waiver or consent affecting any
Grantor other than the Grantor so added or released), and the Collateral Agent
(at the direction of the Required Secured Creditors), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

(a) For the purpose of this Agreement, “Required Secured Creditors” shall mean
(i) at any time when any Secured Obligations of the type described in Section
2(a) are outstanding, the Required Lenders (or, to the extent provided in
Section 9.08 of the Credit Agreement, each of the Lenders), and (ii) at any time
when all of Secured Obligations of the type described in Section 2(a) have been
paid in full, the holders of at least a majority of the outstanding Secured
Obligations of the types described in Sections 2(b) and 2(c). No failure on the
part of the Collateral Agent or any other Secured Creditor to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.

(b) Upon the execution and delivery by any Person of a security agreement
supplement in substantially the form of Exhibit D hereto (each a “Security
Agreement Supplement”), such Person shall be referred to as an “Additional
Grantor” and shall be and become a Grantor hereunder, and each reference in this
Agreement and the other Credit Documents to “Grantor” shall also mean and be a
reference to such Additional Grantor, each reference in this Agreement and the
other Secured Debt Agreements to the “Collateral” shall also mean and be a
reference to the Collateral granted by such Additional Grantor and each
reference in this Agreement to a Schedule shall also mean and be a reference to
the schedules attached to such Security Agreement Supplement.

Section 21. Notices, Etc.   Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by fax, as follows:  (a) in the
case of any Grantor, c/o Endeavour International Corporation, 811 Main Street,
Suite 2100, Houston, Texas 77002, Attention: Chief Financial Officer, Facsimile:
(713) 307-8794; (b) in the case of the Collateral Agent, to it at Credit Suisse,
Eleven Madison Avenue, 23rd Floor, New York, NY  10010, Attn:  Loan Operations –
Boutique Management, Telephone No.:  (212) 538‑3525,
Email:  Ops-collateral@credit-suisse.com; (c) in the case of any Lender, at such
address as such Lender shall have specified in the Credit Agreement; (d) in the
case of any Secured Hedge Counterparty, at such address as such Secured Hedge
Counterparty shall have specified in writing to each Grantor and the Collateral
Agent; and (e) in the case of Payee, at such address as Payee shall have
specified in the LC Procurement Agreement.  All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt if delivered by hand
or overnight courier service or sent by fax (or

23

HN\1119607.7

--------------------------------------------------------------------------------

 

 

other electronic communications pursuant to procedures approved by the
Collateral Agent) or on the date five Business Days after dispatch by certified
or registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 21 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 21.  As agreed to among the Grantors, the Secured Creditors and the
Collateral Agent from time to time, notices and other communications may also be
delivered by e mail to the e mail address of a representative of the applicable
Person provided from time to time by such Person and shall be deemed to have
been given as of the date of receipt thereof. 

Section 22. Continuing Security Interest; Assignments under the Credit
Agreement.  This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the later of (i)
the payment in full in cash (it being understood for the purposes of this
Agreement that receipt of Collateral pursuant to a credit bid shall be regarded
as cash) of the Secured Obligations and the termination of the Commitments and
(ii) the termination or expiration of the Secured Hedging Agreements, (b) be
binding upon each Grantor, its successors and assigns and (c) inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Secured Creditors and their respective successors, transferees and
assigns.  Without limiting the generality of the foregoing, any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement (including, without limitation, all or any portion of
its Commitment, the Loans owing to it and the Note or Notes) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lenders herein or otherwise, in each
case as provided in Section 9.04 of the Credit Agreement.

Section 23. Release; Termination. (a) Upon any sale, lease, transfer or other
disposition of any item of Collateral of any Grantor effected in accordance with
the terms of the Secured Debt Agreements, then the security interest hereunder
shall be released, and the Collateral Agent will, at such Grantor’s reasonable
request and at such Grantor’s sole expense, take all steps necessary to evidence
such release; provided,  however, that at the time of such request and such
release no Default or Event of Default shall have occurred and be continuing.

(a) Upon the later of (i) the payment in full in cash of the Secured Obligations
and the termination of the Commitments and (ii) the termination or expiration of
the Secured Hedging Agreements, the pledge and security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the applicable
Grantor.  Upon any such termination, the Collateral Agent will, at the
applicable Grantor’s expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.

(b) Any Grantor which is designated as an Unrestricted Subsidiary pursuant to
Section 6.08 of the Credit Agreement and 8.08 of the LC Procurement Agreement
shall, upon notification of such designation in writing to the Collateral Agent,
be released as a Grantor hereunder, in which case the Collateral Agent will, at
such Grantor’s reasonable request and at such Grantor’s sole expense, take all
steps necessary to evidence such release.

Section 24. Security Interest Absolute.  The Obligations of each Grantor under
this Agreement are independent of the Secured Obligations or any other
Obligations of any other Credit Party under or in respect of the Secured Debt
Documents, and a separate action or actions

24

HN\1119607.7

--------------------------------------------------------------------------------

 

 

may be brought and prosecuted against each Grantor to enforce this Agreement,
irrespective of whether any action is brought against such Grantor or any other
Credit Party or whether such Grantor or any other Credit Party is joined in any
such action or actions.  All rights of the Collateral Agent and the other
Secured Creditors and the pledge, assignment and security interest hereunder,
and all obligations of each Grantor hereunder, shall be irrevocable, absolute
and unconditional irrespective of, and each Grantor hereby irrevocably waives
(to the maximum extent permitted by applicable law) any defenses it may now have
or may hereafter acquire in any way relating to, any or all of the following:

(a) any lack of validity or enforceability of any Secured Debt Agreement or any
other agreement or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Secured Obligations or any other Obligations of any other
Credit Party under or in respect of the Secured Debt Agreements or any other
amendment or waiver of or any consent to any departure from any Secured Debt
Agreement, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to any Credit
Party or any of its Subsidiaries or otherwise;

(c) any taking, exchange, release or non perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;

(d) any manner of application of any Collateral or any other collateral, or
proceeds thereof, to all or any of the Secured Obligations, or any manner of
sale or other disposition of any Collateral or any other collateral for all or
any of the Secured Obligations or any other Obligations of any other Credit
Party under or in respect of the Secured Debt Agreements or any other assets of
any Credit Party or any of its Subsidiaries;

(e) any change, restructuring or termination of the corporate structure or
existence of any Credit Party or any of its Subsidiaries;

(f) any failure of any Secured Creditor to disclose to any Credit Party any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects of
any other Credit Party now or hereafter known to such Secured Creditor (each
Grantor waiving any duty on the part of the Secured Creditors to disclose such
information);

(g) the failure of any other Person to execute this Agreement or any other
Security Document, guaranty or agreement or the release or reduction of
liability of any Grantor or other grantor or surety with respect to the Secured
Obligations; or

(h) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any
Secured Creditor that might otherwise constitute a defense available to, or a
discharge of, such Grantor or any other Grantor or a third party grantor of a
security interest.

25

HN\1119607.7

--------------------------------------------------------------------------------

 

 

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Creditor or by any other Person upon
the insolvency, bankruptcy or reorganization of any Credit Party or otherwise,
all as though such payment had not been made.

Section 25. Execution in Counterparts.  This Agreement may be executed in any
number of 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 to this
Agreement by telecopier or other electronic transmission shall be effective as
delivery of an original executed counterpart of this Agreement.

Section 26. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury
Trial.  

(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS
AGREEMENT WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES
THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE
OF NEW YORK. 

(b) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY COMPETENT NEW YORK STATE
COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR LC
PROCUREMENT DOCUMENT TO WHICH ANY GRANTOR IS A PARTY, 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 SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO 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.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE
SECURED CREDITORS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR LC PROCUREMENT DOCUMENT TO
WHICH ANY GRANTOR IS A PARTY AGAINST THE GRANTORS OR THEIR PROPERTIES IN THE
COURTS OF ANY JURISDICTION.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE

26

HN\1119607.7

--------------------------------------------------------------------------------

 

 

TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR LC PROCUREMENT
DOCUMENT TO WHICH ANY GRANTOR IS A PARTY IN ANY NEW YORK STATE OR FEDERAL
COURT.  EACH OF THE PARTIES HERETO 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.

(d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 21.  NOTHING IN THIS AGREEMENT, ANY
OTHER CREDIT DOCUMENT OR ANY OTHER LC PROCUREMENT DOCUMENT TO WHICH ANY GRANTOR
IS A PARTY WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.

(e) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY OTHER LC PROCUREMENT DOCUMENT
TO WHICH ANY GRANTOR IS A PARTY.  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 26.

Section 27. Acknowledgment of Liens.    

(a) Each Grantor, the Collateral Agent and each Secured Creditor agrees and
acknowledges that (i) the grants of Liens pursuant to the Secured Debt
Agreements constitute three separate and distinct grants of Liens and (ii)
because of, among other things, their differing rights in the Collateral, the
Secured Obligations described in clauses (a), (b) and (c) of Section 2 hereof
are fundamentally different from the Secured Obligations described in the other
clauses (a), (b) and (c) of Section 2 hereof, as applicable, and must be
separately classified in any plan of reorganization proposed or adopted in any
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect. 

(b) In the event a proceeding under any Debtor Relief Law shall be commenced by
or against any Grantor (a “Bankruptcy Proceeding”), Payee and Secured Hedge
Counterparties shall not, so long as any Secured Obligations of the type
described in Section 2(a) are outstanding, oppose or object to any disposition
of any Collateral free and clear of the Liens of such Secured Creditors or other
claims under Section 363 of the Bankruptcy Code, if the Lender Creditors, or a
representative authorized by the Lender Creditors, shall consent to such
disposition.

27

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(c) Notwithstanding anything herein to the contrary, the lien and security
interest granted pursuant to this Agreement and the exercise of any right or
remedy hereunder are subject to the provisions of the Intercreditor Agreement.
In the event of any conflict between the terms of the Intercreditor Agreement
and this Agreement, the terms of the Intercreditor Agreement shall govern and
control.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

28

HN\1119607.7

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.

 

 

 

 

 

ENDEAVOUR INTERNATIONAL

 

CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

ENDEAVOUR OPERATING CORPORATION

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

ENDEAVOUR ENERGY NORTH SEA L.P.

 

 

 

 

 

By:

Endeavour Energy North Sea LLC,

 

 

 

its general partner

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

Title:

 

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

ENDEAVOUR INTERNATIONAL HOLDING

 

B.V.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

ENDEAVOUR ENERGY UK LIMITED

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

END Finco LLC

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

ENDEAVOUR ENERGY NORTH SEA LLC

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

Acknowledged and agreed as of the date hereof:

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS

 

BRANCH, as Collateral Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

Signature Page to
U.S. Security Agreement

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

SCHEDULE I

INVESTMENT PROPERTY

Part I

Initial Pledged Equity

Grantor

Issuer

Class of Equity Interest

Par Value

Number of Shares

Certificate Number

Percentage of outstanding shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule I-1

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

Part II

Pledged Debt

Schedule I-2

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

Part III

Other Investment Property

This Schedule I Part III incorporates all Pledged Deposit Accounts as set out in
Schedule II.

 

 

 

 

 

Grantor

Sort Code

Bank Account Number

Designation

 

 

 

 

 

 

Schedule I-3

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

SCHEDULE II

Pledged Deposit Accounts

 

 

 

 

 

 

Grantor

Sort Code

Bank Account Number

Designation

Location of
Account

 

 

 

 

 

 

 

Schedule II-1

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

SCHEDULE III

INTELLECTUAL PROPERTY

Trademarks:

 

 

 

 

 

#

Domain Name

Registrant Name

Registrant Organization

Expiration Date

1

 

 

 

 

 

Copyrights:  

 

 

Patents:

 

Schedule III-1

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

SCHEDULE iV

COMMERCIAL TORT CLAIMS

 

 

Schedule IV-1

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

SCHEDULE V

LEGAL NAME, LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF ORGANIZATION, JURISDICTION
OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION NUMBER

Grantor's Legal Name

Location

Chief Executive
Office

Type of
Organization

Jurisdiction of
Organization

Organizational
I.D. No.

 

 

 

 

 

 

 

Schedule V-1

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

SCHEDULE VI

CHANGES IN NAME, LOCATION ETC.

 

 

Schedule VI-1

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

SCHEDULE VII

LOCATIONS OF EQUIPMENT AND INVENTORY

 

 

Schedule VII-1

 

 

 

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

EXHIBIT A

TO

THE U.S. SECURITY AGREEMENT

FORM OF CONSENT AND AGREEMENT

The undersigned hereby (a) acknowledges notice of, and consents to the terms and
provisions of, the U.S. Security Agreement dated as of January 24, 2014 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Security Agreement”; the terms defined therein being used herein as
therein defined) from ______________ (the “Grantor”) and certain other grantors
from time to time party thereto to Credit Suisse AG, acting through one or more
of its branches and affiliates, as Collateral Agent, for the Secured Creditors,
(b) consents in all respects to the pledge and assignment to the Collateral
Agent of all of the Grantor’s right, title and interest in, to and under the
Assigned Agreement (as defined below) pursuant to the Security Agreement, (c)
acknowledges that the Grantor has provided it with notice of the right of the
Collateral Agent in the exercise of its rights and remedies under the Security
Agreement to make all demands, give all notices, take all actions and exercise
all rights of the Grantor under the Assigned Agreement, and (d) agrees with the
Collateral Agent that:

(1) A true copy of the agreement between the undersigned and the Grantor dated
________ ___, _______ (the “Assigned Agreement”), including, without limitation,
all amendments, modifications, restatements and supplements is attached hereto
as Schedule 1.  The Assigned Agreement is in full force and effect, and the
undersigned is not aware of any default under the Assigned Agreement or any
event that would give any party the right to terminate or rescind the Assigned
Agreement.  No prepayments have been made of any amounts to become due under the
Assigned Agreement.

(2) The undersigned will make all payments to be made by it under or in
connection with the Assigned Agreement directly to a Pledged Deposit Account or
otherwise in accordance with the instructions of the Collateral Agent.

(3) All payments referred to in paragraph (2) above shall be made by the
undersigned irrespective of, and without deduction for, any counterclaim,
defense, recoupment or set off and shall be final, and the undersigned will not
seek to recover from any Secured Creditor for any reason any such payment once
made.

(4) The Collateral Agent or its designee shall be entitled to exercise any and
all rights and remedies of the Grantor under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the undersigned shall
comply in all respects with such exercise.

(5) The undersigned will not, without the prior written consent of the
Collateral Agent, (i) cancel or terminate the Assigned Agreement or consent to
or accept any cancellation or termination thereof, or (ii) amend, amend and
restate, supplement or

Exhibit A-1

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

otherwise modify the Assigned Agreement, except, in each case, to the extent
otherwise permitted under the Credit Agreement referred to in the Security
Agreement.

(6) In the event of a default by the Grantor in the performance of any of its
obligations under the Assigned Agreement, or upon the occurrence or
non‑occurrence of any event or condition under the Assigned Agreement which
would immediately or with the passage of any applicable grace period or the
giving of notice, or both, enable the undersigned to terminate or suspend its
obligations under the Assigned Agreement, the undersigned shall not terminate
the Assigned Agreement until it first gives the Collateral Agent written notice
of the default and permits the Collateral Agent to cure the default within a
period of 60 days after the later of (i) notice of default having been given to
the Collateral Agent by the undersigned and (ii) the expiration of the
applicable cure period provided in the Assigned Agreement for the Grantor to
cure the default.

(7) The undersigned shall deliver to the Collateral Agent, concurrently with the
delivery thereof to the Grantor, a copy of each notice, request or demand given
by the undersigned pursuant to the Assigned Agreement.

(8) Except as specifically provided in this Consent and Agreement, neither the
Collateral Agent nor any other Secured Creditor shall have any liability or
obligation under the Assigned Agreement as a result of this Consent and
Agreement, the Security Agreement or otherwise.

(9) Upon the enforcement of the Security Agreement by the Collateral Agent and
the transfer of the Assigned Agreement to a transferee, the undersigned will
recognize the transferee as the counterparty to the Assigned Agreement in the
place and stead of the Grantor.

In order to induce the Lenders to make Loans, the Secured Hedge Counterparties
to enter into Secured Hedging Agreements and the procurement by the Payee of the
issuance of letters of credit pursuant to the LC Issuance Documents, the
undersigned repeats and reaffirms for the benefit of the Secured Creditors the
representations and warranties made by it in the Assigned Agreement.

This Consent and Agreement shall be binding upon the undersigned and its
successors and assigns, and shall inure, together with the rights and remedies
of the Collateral Agent hereunder, to the benefit of the Secured Creditors and
their successors, transferees and assigns.  This Consent and Agreement shall be
governed by and construed in accordance with the laws of the State of New York.

[SIGNATURES ON FOLLOWING PAGE]

Exhibit A-2

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the undersigned has duly executed this Consent and Agreement
as of the date set opposite its name below.

Dated:  _________ ___, 20[__]

 

 

 

 

 

 

 

 

[NAME OF OBLIGOR]

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

Exhibit A-3

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

EXHIBIT B

TO

THE U.S. SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “IP Security
Agreement”) dated ____ __, 201[__], is made by the Persons listed on the
signature pages hereof (collectively, the “Grantors”) in favor of Credit Suisse
AG, acting through one or more of its branches and affiliates, as Collateral
Agent (as defined in the Security Agreement referred to below) for the Secured
Creditors (as defined in the Security Agreement referred to below).

WHEREAS, Endeavour International Corporation, a Nevada corporation, as holdings
(“Holdings”), Endeavour International Holdings B.V., a private limited company
organized under the laws of the Netherlands (“EIH”) and End Finco LLC, a
Delaware limited liability company (“DE Borrower” and, with EIH, each a
“Borrower” and collectively, the  “Borrowers”), Credit Suisse AG, as collateral
agent (the “Collateral Agent”), and the lenders from time to time party thereto
(the “Lenders”) have entered into a Credit Agreement, dated as of January 24,
2014 (said agreement, as it may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, being the “Credit
Agreement” and the Lenders, the Administrative Agent, the Collateral Agent, the
Arranger and each other Agent thereto being the “Lender Creditors”).

WHEREAS, Holdings, as holdings, Endeavour Energy UK Limited, a private limited
company registered in laws of England and Wales, as payer (“EEUK”), LC Finco S.à
r.l., a private limited liability company (société à responsabilité limitée)
incorporated and existing under the laws of the Grand Duchy of Luxembourg, whose
registered office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, pending registration with the Luxembourg Register of Commerce and
Companies and having a share capital of USD 20,000 (“Payee”), and the Collateral
Agent have entered into that certain LC Procurement Agreement, dated as of
January 24, 2014 (as amended, modified, restated and/or supplemented from time
to time, the “LC Procurement Agreement”), pursuant to which  EEUK has instructed
Payee to enter into LC Issuance Documents (as defined in the LC Procurement
Agreement) with Credit Suisse AG, London Branch (“LC Bank”) and, as applicable,
the Collateral Agent, as of the Closing Date and will instruct Payee to enter
into LC Issuance Documents from time to time thereafter pursuant to which Payee
will instruct the LC Bank to issue letters of credit and (b) EEUK has agreed to
reimburse Payee for certain payments made in connection with such LC Issuance
Documents and to pay Payee certain fees for the procurement of the issuance of
the letters of credit.

WHEREAS, the Grantors may at any time and from time to time enter into one or
more Secured Hedging Agreements with one or more Secured Hedge Counterparties.

Exhibit B-1

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

WHEREAS, as a condition precedent to the making of the Loans pursuant to the
Credit Agreement, the entering into of Secured Hedging Agreements by Approved
Hedge Counterparties and the procurement by the Payee of the issuance of letters
of credit pursuant to the LC Issuance Documents, each Grantor has executed and
delivered that certain U.S. Security Agreement dated January 24, 2014 made by
the Grantors to the Collateral Agent (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Security
Agreement”).  Terms defined in the Security Agreement and not otherwise defined
herein are used herein as defined in the Security Agreement.

WHEREAS, under the terms of the Security Agreement, the Grantors have granted to
the Collateral Agent, for the benefit of the Secured Creditors, a security
interest in, among other property, certain intellectual property of the
Grantors, and have agreed therein to execute this IP Security Agreement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities within ten Business Days following the
acquisition of any After‑Acquired Intellectual Property.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees as follows:

Section 1. Grant of Security.  Each Grantor hereby grants to the Collateral
Agent for the benefit of the Secured Creditors a security interest in all of
such Grantor’s right, title and interest in and to the following (the
“Collateral”):

(i) the patents and patent applications set forth in Schedule A hereto (the
“Patents”);

(ii) the trademark and service mark registrations and applications set forth in
Schedule B hereto (provided that no security interest shall be granted in United
States intent‑to‑use trademark applications to the extent that, and solely
during the period in which, the grant of a security interest therein would
impair the validity or enforceability of such intent‑to‑use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby (the “Trademarks”);

(iii) all copyrights, whether registered or unregistered, now owned or hereafter
acquired by such Grantor, including, without limitation, the copyright
registrations and applications and exclusive copyright licenses set forth in
Schedule C hereto (the “Copyrights”);

(iv) all reissues, divisions, continuations, continuations‑in‑part, extensions,
renewals and reexaminations of any of the foregoing, all rights in the foregoing
provided by international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

(v) any and all claims for damages and injunctive relief for past, present and
future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages; and

Exhibit B-2

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(vi) any and all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral of or arising from any of
the foregoing.

Section 2. Security for Obligations.  The grant of a security interest in, the
Collateral by each Grantor under this IP Security Agreement secures the payment
of all Secured Obligations of such Grantor now or hereafter existing, whether
direct or indirect, absolute or contingent, and whether for principal, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.  Without limiting the generality of the foregoing, this
IP Security Agreement secures, as to each Grantor, the payment of all amounts
that constitute part of the Secured Obligations and that would be owed by such
Grantor to any Secured Creditor under the Credit Documents but for the fact that
such Secured Obligations are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving any Credit
Party.

Section 3. Recordation.  Each Grantor authorizes and requests that the Register
of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer record this IP Security Agreement.

Section 4. Execution in Counterparts.  This IP Security Agreement may be
executed in any number of 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.

Section 5. Grants, Rights and Remedies.  This IP Security Agreement has been
entered into in conjunction with the provisions of the Security Agreement.  Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Collateral Agent with
respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if
fully set forth herein.

Section 6. Governing Law.  This IP Security Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

[Signatures on following page]

Exhibit B-3

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, each Grantor has caused this IP Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.

 

 

 

 

 

 

 

[NAME OF GRANTOR]

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B-4

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

EXHIBIT C

TO

THE U.S. SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this “IP Security
Agreement Supplement”) dated _____ __, 201[_], is made by the Person listed on
the signature page hereof (the “Grantor”) in favor of Cyan Partners, LP, as
Collateral Agent (such term used herein as defined in the Security Agreement
referred to below); for the Secured Creditors (used herein as defined in the
Security Agreement referred to below).

WHEREAS, Endeavour International Corporation, a Nevada corporation (“Holdings”),
as holdings, Endeavour International Holdings B.V., a private limited company
organized under the laws of the Netherlands (“EIH”) and End Finco LLC, a
Delaware limited liability company (“DE Borrower” and, with EIH, each a
“Borrower” and collectively, the  “Borrowers”), Credit Suisse AG, as collateral
agent (the “Collateral Agent”), the lenders from time to time party thereto (the
“Lenders”) have entered into a Credit Agreement, dated as of January 24, 2014
(said agreement, as it may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, being the “Credit
Agreement” and the Lenders, the Administrative Agent, the Collateral Agent, the
Arranger and each other Agent thereto being the “Lender Creditors”).

WHEREAS, Holdings, as holdings, Endeavour Energy UK Limited, a private limited
company registered in laws of England and Wales, as payer (“EEUK”), LC Finco S.à
r.l., a private limited liability company (société à responsabilité limitée)
incorporated and existing under the laws of the Grand Duchy of Luxembourg, whose
registered office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, pending registration with the Luxembourg Register of Commerce and
Companies and having a share capital of USD 20,000 (“Payee”), and the Collateral
Agent have entered into that certain LC Procurement Agreement, dated as of
January 24, 2014 (as amended, modified, restated and/or supplemented from time
to time, the “LC Procurement Agreement”), pursuant to which  EEUK has instructed
Payee to enter into LC Issuance Documents (as defined in the LC Procurement
Agreement) with Credit Suisse AG, London Branch (“LC Bank”) and, as applicable,
the Collateral Agent, as of the Closing Date and will instruct Payee to enter
into LC Issuance Documents from time to time thereafter pursuant to which Payee
will instruct the LC Bank to issue letters of credit and (b) EEUK has agreed to
reimburse Payee for certain payments made in connection with such LC Issuance
Documents and to pay Payee certain fees for the procurement of the issuance of
the letters of credit.

WHEREAS, the Grantors may at any time and from time to time enter into one or
more Secured Hedging Agreements with one or more Secured Hedge Counterparties.

 

Exhibit C-1

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

WHEREAS, the Grantor and certain other Persons have executed and delivered that
certain Security Agreement dated January 24, 2014 made by the Grantor and such
other Persons to the Collateral Agent (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”)
and that certain Intellectual Property Security Agreement dated as of _____ __,
20[__] (as amended, amended and restated, supplemented or otherwise modified
from time to time, the “IP Security Agreement”).  Terms defined in the Security
Agreement and not otherwise defined herein are used herein as defined in the
Security Agreement.

WHEREAS, under the terms of the Security Agreement, the Grantor has granted to
the Collateral Agent, for the benefit of the Secured Creditors, a security
interest in the Additional Collateral (as defined in Section 1 below) of the
Grantor and has agreed to execute this IP Security Agreement Supplement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor agrees as follows:

Section 1. Grant of Security.  The Grantor hereby grants to the Collateral
Agent, for the benefit of the Secured Creditors, a security interest in all of
the Grantor’s right, title and interest in and to the following (the “Additional
Collateral”):

(i) the patents and patent applications set forth in Schedule A hereto (the
“Patents”);

(ii) the trademark and service mark registrations and applications set forth in
Schedule B hereto (provided that no security interest shall be granted in United
States intent‑to‑use trademark applications to the extent that, and solely
during the period in which, the grant of a security interest therein would
impair the validity or enforceability of such intent‑to‑use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby (the “Trademarks”);

(iii) the copyright registrations and applications and exclusive copyright
licenses set forth in Schedule C hereto (the “Copyrights”);

(iv) all reissues, divisions, continuations, continuations‑in‑part, extensions,
renewals and reexaminations of any of the foregoing, all rights in the foregoing
provided by international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

(v) all any and all claims for damages and injunctive relief for past, present
and future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages; and

Exhibit C-2

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

(vi) any and all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the foregoing or arising from any of the
foregoing.

Section 7. Security for Obligations.  The grant of a security interest in the
Additional Collateral by the Grantor under this IP Security Agreement Supplement
secures the payment of all Secured Obligations of the Grantor now or hereafter
existing, whether direct or indirect, absolute or contingent, and whether for
principal, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise.  Without limiting the generality
of the foregoing, this IP Security Agreement Supplement and the IP Security
Agreement secures the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Creditor
under the Credit Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Credit Party

Section 8. Recordation.  The Grantor authorizes and requests that the Register
of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer to record this IP Security Agreement
Supplement.

Section 9. Grants, Rights and Remedies.  This IP Security Agreement Supplement
has been entered into in conjunction with the provisions of the Security
Agreement.  The Grantor does hereby acknowledge and confirm that the grant of
the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Additional Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated herein by reference as if fully set forth herein.

Section 10. Governing Law.  This IP Security Agreement Supplement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

IN WITNESS WHEREOF, the Grantor has caused this IP Security Agreement Supplement
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

 

 

 

 

 

[NAME OF GRANTOR]

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

Exhibit C-3

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

EXHIBIT D

TO

THE U.S. SECURITY AGREEMENT

FORM OF SECURITY AGREEMENT SUPPLEMENT

[DATE]

Credit Suisse, as Collateral Agent for

the Secured Creditors

[   ]

[   ]

Attn: 

 

ENDEAVOUR INTERNATIONAL CORPORATION

Ladies and Gentlemen:

Further reference is made to the U.S. Security Agreement, dated January 24,
2014, made by the Grantors party thereto in favor of the Collateral Agent for
the benefit of the Secured Creditors (used herein as defined in such security
agreement; such security agreement, as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Security
Agreement”).  Terms defined in the Security Agreement and not otherwise defined
herein are used herein as defined in the Security Agreement.

Section 1. Grant of Security.  The undersigned hereby grants to the Collateral
Agent, for the benefit of the Secured Creditors, a security interest in all of
its right, title and interest in and to the following, in each case whether now
owned or hereafter acquired by the undersigned, wherever located and whether now
or hereafter existing or arising (collectively, the undersigned’s
“Collateral”):  all Equipment, Inventory, Receivables, Related Contracts,
Security Collateral (including, without limitation, the shares of stock and
other Equity Interests set forth on Part I of Schedule I hereto, the
indebtedness set forth on Part II of Schedule I hereto and the securities and
securities/deposit accounts set forth on Schedule II hereto), Agreement
Collateral, Account Collateral (including, without limitation, the deposit
accounts set forth on Schedule II hereto), Intellectual Property Collateral,
Commercial Tort Claims Collateral (including, without limitation, the commercial
tort claims described in Schedule IV hereto), all books and records (including,
without limitation, customer lists, credit files, printouts and other computer
output materials and records) of the undersigned pertaining to any of the
undersigned’s Collateral, all general intangibles, and all proceeds of,
collateral for, income, royalties and other payments now or hereafter due and
payable with respect to, and supporting obligations relating to, any and all of
the undersigned’s Collateral (including, without limitation, proceeds,
collateral and supporting obligations that constitute property of the types
described in this Section 1) and, to the extent not otherwise included, all (A)
payments under insurance (whether or not the Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral, and (B)
cash.  Notwithstanding

Exhibit D-1

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

the foregoing, the Collateral shall not include any Excluded Property until such
time as any property or assets shall no longer constitute Excluded Property.

Section 2. Security for Obligations.  The grant of a security interest in, the
Collateral by the undersigned under this Security Agreement Supplement and the
Security Agreement secures the payment of all Secured Obligations of the
undersigned now or hereafter existing, whether direct or indirect, absolute or
contingent, and whether for principal, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or
otherwise.  Without limiting the generality of the foregoing, this Security
Agreement Supplement and the Security Agreement secures the payment of all
amounts that constitute part of the Secured Obligations and that would be owed
by the undersigned to any Secured Creditor under the Secured Debt Agreements but
for the fact that such Secured Obligations are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving any Credit Party.

Section 3. Representations and Warranties.  (a) The undersigned’s exact legal
name, location, chief executive office, type of organization, jurisdiction of
organization and organizational identification number is set forth in Schedule V
hereto.  The undersigned has no trade names other than as listed on Schedule III
hereto.  Within the five years preceding the date hereof, the undersigned has
not changed its name, location, chief executive office, type of organization,
jurisdiction of organization or organizational identification number from those
set forth in Schedule V hereto except as set forth in Schedule VI hereto.

(a) All of the Equipment of the undersigned is located at the places specified
therefor in Schedule VII hereto. Within the five years preceding the date
hereof, the undersigned has not changed the location of its Equipment except as
set forth in Schedule VI hereto.

(b) The undersigned is not a beneficiary or assignee under any letter of credit
other than the letters of credit described in Schedule VIII hereto.

(c) The undersigned hereby makes each other representation and warranty set
forth in Section 6 of the Security Agreement with respect to itself and the
Collateral granted by it.

Section 4. Obligations Under the Security Agreement.  The undersigned hereby
agrees, as of the date first above written, to be bound as a Grantor by all of
the terms and provisions of the Security Agreement to the same extent as each of
the other Grantors.  The undersigned further agrees, as of the date first above
written, that each reference in the Security Agreement to an “Additional
Grantor” or a “Grantor” shall also mean and be a reference to the undersigned,
that each reference to the “Collateral” or any part thereof shall also mean and
be a reference to the undersigned’s Collateral or part thereof, as the case may
be, and that each reference in the Security Agreement to a Schedule shall also
mean and be a reference to the schedules attached hereto.

Section 5. Governing Law.  This Security Agreement Supplement shall be governed
by, and construed in accordance with, the laws of the State of New York.1

Exhibit D-2

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

Very truly yours,

 

[NAME OF ADDITIONAL GRANTOR]

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

___________________________

1 If the Additional Grantor is not concurrently executing a guaranty or other
Credit Document containing provisions relating to submission to jurisdiction and
jury trial waiver, add the relevant provisions from the Credit Agreement.

 

 

Exhibit D-3

 

HN\1119607.7

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

Acknowledged and agreed as of the date hereof:

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit D-4

 

HN\1119607.7

--------------------------------------------------------------------------------

 

EXHIBIT G

ENGLISH DEBENTURE

[See attached.]

 

 

--------------------------------------------------------------------------------

 

 

Dated 24 January 2014

 

DEBENTURE

 

 

between

 

 

ENDEAVOUR ENERGY UK LIMITED
as the Company

 

and

 

CREDIT SUISSE AG
as the Collateral Agent

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

Page

1

DEFINITIONS, CONSTRUCTION AND INCORPORATION OF TERMS

3 

2

COVENANTS TO PAY

8 

3

REPRESENTATIONS

10 

4

SECURITY

10 

5

FLOATING CHARGE

11 

6

FURTHER ASSURANCE

14 

7

UNDERTAKINGS WITH RESPECT TO THE CHARGED ASSETS

14 

8

FURTHER UNDERTAKINGS

15 

9

ACCOUNTS AND RECEIPTS

16 

10

THE COLLATERAL AGENT

17 

11

RIGHTS OF THE COLLATERAL AGENT

26 

12

EXONERATION

28 

13

APPOINTMENT OF RECEIVER OR ADMINISTRATOR

28 

14

RECEIVER’S POWERS

29 

15

PROTECTION OF PURCHASERS

30 

16

POWER OF ATTORNEY AND DELEGATION

30 

17

APPLICATION OF MONIES RECEIVED UNDER THIS DEBENTURE

31 

18

RELEASE OF SECURITY

32 

19

POWER OF SEVERANCE

32 

20

NEW ACCOUNTS

32 

21

SET-OFF

33 

22

MISCELLANEOUS

33 

23

NOTICES

37 

24

CERTIFICATES AND DETERMINATIONS

38 

25

PARTIAL INVALIDITY

38 

26

COUNTERPARTS

39 

27

THIRD PARTIES

39 

28

GOVERNING LAW

39 

29

ENFORCEMENT

39 

Schedule 1 FORM OF NOTICES

40 

Schedule 2 PROJECT AGREEMENTS

44 

Schedule 3 PROJECT LICENCES

45 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

THIS DEBENTURE is made on 24 January 2014

BETWEEN:

(1)

ENDEAVOUR ENERGY UK LIMITED, a company registered in England and Wales with
registration number 5030838, whose registered office is at 33rd Floor, City
Point, One Ropemaker Street, London EC2Y 9UE (the “Company”); and

(2)

CREDIT SUISSE AG as agent and trustee for itself and each of the other Secured
Parties (as such term is defined below) (the “Collateral Agent”).

IT IS AGREED as follows:

1.

DEFINITIONS, CONSTRUCTION AND INCORPORATION OF TERMS

1.1

Definitions

(a)

Terms defined in the Credit Agreement (as such term is defined below) shall,
unless otherwise defined in this Debenture or unless a contrary intention
appears, bear the same meaning when used in this Debenture and the following
terms shall have the following meanings:

“Account” means any account now or in the future opened or maintained by the
Company with a bank or other financial institution (and any replacement account
or subdivision or subaccount of that account), together with all amounts from
time to time standing to the credit of, or accrued or accruing on, such account
and any monies, proceeds or income paid or payable in respect of such account.

“Administrator” means a person appointed under schedule B1 to the Insolvency Act
1986 to manage the Company’s affairs, business and property.

“Assigned Account” means any Account designated in writing as an Assigned
Account by the Collateral Agent in accordance with Clause 9.3 (Accounts after
Security becomes enforceable).

“BP” means BP Exploration Operating Company Limited.

“Charged Assets” means the assets mortgaged, charged or assigned pursuant to
Clauses 4 (Security) and 5.1 (Creation of floating charge). 

“Charges” means Security from time to time created or expressed to be created
pursuant to this Debenture.

“Collateral Account” means any Account that may from time to time be opened by
the Company with the Collateral Agent pursuant to Clause 9.1(a)(ii) (Accounts
general).

“Confidentiality Undertaking” means a confidentiality undertaking substantially
in a form from time to time recommended by the Loan Market Association or in any
other form agreed between the Company and the Collateral Agent.

“Credit Agreement” means that certain credit agreement dated on or about the
date of this Debenture between (among others) Endeavour International Holding
B.V. and End

3

 

--------------------------------------------------------------------------------

 

 

Finco LLC as borrowers, Credit Suisse AG as administrative agent, and the
Collateral Agent (as amended, modified, restated or supplemented from time to
time).

“Credit Document Obligation” has the meaning given to the term “Obligations” in
the Credit Agreement.

“Credit Document Secured Parties” has the meaning given to the term “Secured
Parties” in the Credit Agreement.

“Delegate” means a delegate or sub-delegate appointed directly or indirectly
pursuant to Clause 16.3 (General delegation).

“Enforcement Date” means the date on which a notice is issued by the
Administrative Agent to the Borrowers under article 7 (Events of Default) of the
Credit Agreement upon the occurrence of an Event of Default which has occurred
and is continuing.

“Enoch PLTPA” means the Enoch pipeline liquids transportation and processing
agreement dated 24 February 2006 and made between, among others, the Company and
BP.

“Group” means Holdings and its Subsidiary for the time being.

“Hedging Provider” means any Person that is a party to a Hedging Agreement.

“Indemnified Party” has the meaning given to it in the U.S. Security Agreement.

“Insolvency Event” has the meaning given to it in Clause 10.20(a) (Insolvency
Events).

“Insurances” means any insurances that are required from time to time to be
maintained by, or on behalf of, any Credit Party in respect of the Oil and Gas
Properties and/or any activities related thereto, in each case pursuant to the
Credit Agreement.

 

“LC Procurement Agreement Obligation” has the meaning given to the term
“Obligation” in the LC Procurement Agreement.

“LPA” means the Law of Property Act 1925.

“Party” means a party to this Debenture.

“Payee” has the meaning given to it in the LC Procurement Agreement.

“Production Payment Security Documents” means:

(i)

the English security agreement entered into between the Company and Cidoval S.à
r.l. originally dated 30 April 2013 and subsequently amended and restated on 21
May 2013;

(ii)

the English share charge entered into between Endeavour Energy North Sea, L.P.
and Cidoval S.à r.l. originally dated 30 April 2013 and subsequently amended and
restated on 21 May 2013;

4

 

--------------------------------------------------------------------------------

 

 

(iii)

the U.S. security agreement entered into between, amongst others, Endeavour
Energy North Sea, L.P. and Cidoval S.à r.l. dated 30 April 2013 as subsequently
amended;

(iv)

the English security agreement entered into between the Company and Sand Waves
S.à r.l. dated 12 December 2013;

(v)

the English share charge entered into between Endeavour Energy North Sea, L.P.
and Sand Waves S.à r.l. dated 12 December 2013; and

(vi)

the U.S. security agreement entered into between, amongst others, Endeavour
Energy North Sea, L.P. and Sand Waves S.à r.l. dated 12 December 2013 as
subsequently amended.

“Project Agreements” means:

(vii)

each of the contracts, agreements and documents listed in Schedule 2 (Project
Agreements) together with all Related Property Rights and all documents which
are supplemental to, or are expressed to be collateral with, or are entered into
pursuant to or in connection with, any such contracts, agreements and documents;
and

(viii)

any joint operating agreements or unitisation or unit operating agreements, in
each case relating to such petroleum production licences, which are, in each
case, entered into (or in respect of which the Company acquires an interest)
after the date of this Debenture together with all Related Property Rights and
all documents which are supplemental to, or are expressed to be collateral with,
or are entered into pursuant to or in connection with, any such contracts,
agreements and documents.

“Project Documents” means Project Agreements and Project Licences together.

“Project Licences” means:

(ix)

each of the documents listed in Schedule 3 (Project Licences) together with all
Related Property Rights and all documents which are supplemental to, or are
expressed to be collateral with, or are entered into pursuant to or in
connection with, any such contracts, agreements and documents; and

(x)

any petroleum production licences for material oil and gas reserves of the
Company which are entered into (or in respect of which the Company acquires an
interest) after the date of this Debenture together with all Related Property
Rights and all documents which are supplemental to, or are expressed to be
collateral with, or are entered into pursuant to or in connection with, any such
contracts, agreements and documents,

but excluding each of the Project Agreements.

“Receiver” means any person appointed by the Collateral Agent to be a receiver
or receiver and manager or administrative receiver of any property subject to
the Security created by this Debenture or any part thereof.

 

5

 

--------------------------------------------------------------------------------

 

 

“Related Property Rights” means, in relation to any property or asset:

(i)

the proceeds of sale and/or other realisation of that property or asset (or any
part thereof or interest therein);

(ii)

all Security, options, agreements, rights, easements, benefits, indemnities,
guarantees, warranties or covenants for title held by the Company in respect of
such property or asset; and

(iii)

all the Company’s rights under any lease, licence or agreement for lease, sale
or use in respect of such property or asset.

“Secured Agreements” means each Credit Document, each Secured Hedging Agreement
and the LC Procurement Agreement, and “Secured Agreement” shall mean any of
those agreements.

“Secured Liabilities” has the meaning given to it in Clause 2 (Covenants to
pay).

“Secured Parties” means each of:

(i)

the Credit Document Secured Parties; and

(ii)

the Payee.

“Security” means a mortgage, charge, pledge, lien or other security interest
securing any obligation of any person or any other agreement or arrangement
having a similar effect.

“Security Period” means the period from the date of this Debenture until the
date on which the Collateral Agent has determined that all of the Secured
Liabilities (whether actual or contingent) have been irrevocably and
unconditionally paid and discharged in full and no further Secured Liabilities
are capable of being outstanding.

(b)

Unless a contrary intention appears, words defined in the Companies Act 2006
have the same meanings in this Debenture.

1.2

Construction

Unless a contrary indication appears, any reference in this Debenture to:

(a)

the “Collateral Agent”,  a “Secured Party”,  a “Credit Party” or the “Company”
shall be construed so as to include its successors in title, permitted assigns
and permitted transferees;

(b)

“assets” includes present and future properties, revenues and rights of every
description;

(c)

“indebtedness” includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money, whether present or future, actual
or contingent;

(d)

a “person” includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium
or partnership (whether or not having separate legal personality) or two or more
of the foregoing;

6

 

--------------------------------------------------------------------------------

 

 

(e)

a “regulation” includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law but, if not having the force
of law, being of a kind that is normally complied with by those to whom it is
addressed) of any governmental, intergovernmental or supranational body, agency,
department or regulatory, self-regulatory or other authority or organisation;

(f)

a “guarantee” includes any form of indemnity or other assurance against
financial loss (including any obligation to pay, purchase or provide funds for
the purchase of any liability) (and the verb “to guarantee” shall be construed
accordingly);

(g)

a provision of law is a reference to that provision as amended or re-enacted;

(h)

any matter “including” specific instances or examples of such matter shall be
construed without limitation to the generality of that matter (and “include”
shall be construed accordingly);

(i)

“losses” includes losses, actions, damages, claims, proceedings, costs, demands,
expenses (including fees) and liabilities (and “loss” shall be construed
accordingly);

(j)

a “modification” includes an amendment, supplement, novation, re-enactment,
restatement, variation, extension, replacement, modification or waiver or the
giving of any waiver, release, consent having the same commercial effect of any
of the foregoing, (and “modify” shall be construed accordingly);

(k)

the “winding-up”, “dissolution” or “administration” of a person shall be
construed so as to include any equivalent or analogous proceedings under the law
of the jurisdiction in which such person is incorporated or established, or any
jurisdiction in which such person carries on business including the seeking of
liquidation, winding-up, reorganisation, dissolution, administration,
arrangement, adjustment, protection or relief of debtors;

(l)

the words “other”, “or otherwise” and “whatsoever” shall not be construed
eiusdem generis or be construed as any limitation upon the generality of any
preceding words or matters specifically referred to;

(m)

any Secured Party, any Credit Party, the Company or the Collateral Agent or any
other person is, where relevant, deemed to be a reference to or to include, as
appropriate, that person’s successors in title, permitted assignees and
transferees and in the case of the Collateral Agent, any person for the time
being appointed as Collateral Agent or Collateral Agents in accordance with the
Secured Agreements; and

(n)

any Secured Agreement or other agreement or instrument is to be construed as a
reference to that agreement or instrument as amended, modified or novated,
including by way of increase of the facilities or other obligations or addition
of new facilities or other obligations made available under them or accession or
retirement of the parties to these agreements but excluding any amendment,
modification or novation made contrary to any provision of any Secured
Agreement.

1.3

Implied covenants for title

The obligations of the Company under this Debenture shall be in addition to the
covenants for title deemed to be included in this Debenture by virtue of Part I
of the Law of Property (Miscellaneous Provisions) Act 1994.

7

 

--------------------------------------------------------------------------------

 

 

1.4

Effect as a deed

This Debenture is intended to take effect as a deed notwithstanding that the
Collateral Agent may have executed it under hand only.

1.5

Law of Property (Miscellaneous Provisions) Act 1989

To the extent necessary for any agreement for the disposition of the Charged
Assets in this Debenture to be a valid agreement under Section 2(1) of the Law
of Property (Miscellaneous Provisions) Act 1989, the terms of the other Secured
Agreements are incorporated into this Debenture.

1.6

Intercreditor Agreement

Notwithstanding anything herein to the contrary, the lien and security interest
granted to the Collateral Agent pursuant to this Debenture and the exercise of
any right or remedy by the Collateral Agent hereunder are subject to the
provisions of the Intercreditor Agreement.  In the event of any conflict between
the terms of the Intercreditor Agreement and this Debenture, the terms of the
Intercreditor Agreement shall govern and control.

1.7

Moratorium

Notwithstanding any other provision of this Debenture, the obtaining of a
moratorium under section 1A of the Insolvency Act 1986, or anything done with a
view to obtaining such a moratorium (including any preliminary decision or
investigation), shall not be an event causing any floating charge created by
this Debenture to crystallise or causing restrictions which would not otherwise
apply to be imposed on the disposal of property by the Company or a ground for
the appointment of a Receiver.

1.8

Incorporation

(a)

Without prejudice to the application of any other provisions of the Credit
Agreement to this Debenture (by reason of this Debenture being a Credit Document
and a Secured Agreement for the purposes of the Credit Agreement), sections 1.03
(Pro Forma Calculations), 2.20 (Tax Gross-Up and Indemnities), 9.06 (Right of
Setoff), 9.08 (Waivers; Amendment), 9.13 (Counterparts) and 9.20 (Judgment
Currency) of the Credit Agreement shall apply to this Debenture, mutatis
mutandis, as if the same had been set out in full herein with references in such
clauses to:

(i)

any “agreement” includes any legally binding arrangement, concession, contract,
deed or franchise (in case whether oral or written);

(ii)

an “amendment” includes any amendment, supplement, variation, novation,
modification, replacement or restatement and “amend”, “amending” and “amended”
shall be construed accordingly;

(iii)

the “Agreement” or “hereunder” being construed as references to this Debenture;

(iv)

the “Credit Documents” and “Secured Agreements” being construed as (A) including
this Debenture, or (B) if the context so requires, as references specifically to
this Debenture; and

8

 

--------------------------------------------------------------------------------

 

 

(v)

in the context of section 2.20 (Tax Gross-Up and Indemnities) of the Credit
Agreement, the “Administrative Agent” or a “Lender” being, if the context so
requires, construed, in each case, as references to the Collateral Agent and, in
the context of section 9.05 (Expenses; Indemnity) of the Credit Agreement, the
“Administrative Agent” or a “Lender” being construed, in each case, as
references to each Secured Party, Receiver (as defined herein), attorney,
manager, agent or other person as may be appointed by the Collateral Agent under
this Debenture; and

(b)

a reference to “Secured Liabilities” includes any liabilities which would be
treated as such but for the liquidation or dissolution or similar event
affecting any Credit Party.

2.

COVENANTS TO PAY

2.1

Covenant to pay Secured Liabilities

The Company covenants with the Collateral Agent (for the benefit of itself and
the other Secured Parties) that it shall promptly on demand pay in full to the
Secured Parties, in accordance with the Secured Agreements:

(a)

when due (whether at stated maturity, by acceleration or otherwise) all Credit
Document Obligations (including, without limitation, principal, premium,
interest (including, without limitation, all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency, reorganisation or similar proceeding of any Credit Party at the rate
provided for in the respective documentation, whether or not a claim for
post-petition interest is allowed in any such proceeding), fees, costs and
indemnities) of any Credit Party whether now existing or incurred after the date
of this Debenture (including, without limitation, any additional indebtedness
incurred by any Credit Party pursuant to any Credit Document) and the due
performance and compliance by each Credit Party with all Credit Document
Obligations and all other terms, conditions and agreements contained in the
Credit Documents;

(b)

when due (whether at stated maturity, by acceleration or otherwise) all LC
Procurement Agreement Obligations (including, without limitation, all interest
that accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency, reorganisation or similar proceeding of
the Company or Holdings at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) of each of the Company and Holdings to the Payee whether
now in existence or arising after the date of this Debenture (including, without
limitation, all obligations, liabilities and indebtedness of the Company or
Holdings under any guaranty in respect of the LC Procurement Agreement), and the
due performance and compliance by the Company and Holdings with all LC
Procurement Agreement Obligations and all other terms, conditions and agreements
contained in the LC Procurement Agreement;

(c)

when due (whether at stated maturity, by acceleration or otherwise) all
obligations, liabilities and indebtedness (including, without limitation, all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganisation or similar
proceeding of any Credit Party at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) owing by any Credit Party to a Hedging Provider under any
Secured Hedging Agreement whether now in existence or arising after the date of
this

9

 

--------------------------------------------------------------------------------

 

 

Debenture (including, without limitation, all obligations, liabilities and
indebtedness of any Credit Party under any guaranty in respect of any Secured
Hedging Agreement), and the due performance and compliance by each Credit Party
with all of the terms, conditions and agreements contained in each such Secured
Hedging Agreement;

(d)

any other Credit Document Obligation, LC Procurement Agreement Obligation or
other money, obligation or liability due, owing or incurred to any Secured Party
by any Credit Party under any Secured Agreement at present or in the future,
whether actual or contingent, whether incurred solely or jointly with any other
person and whether as principal or surety, together with all interest accruing
thereon and all losses incurred by any Secured Party in connection therewith;

(e)

any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral;

(f)

in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of the Company referred to in Clauses
2.1(a) to 2.1(e) (inclusive) above, on and from the Enforcement Date, the
reasonable expenses of retaking, holding, preparing for sale or lease, selling
or otherwise disposing of or realising on the Collateral, or of any exercise by
the Collateral Agent of its rights under this Debenture or the English Charge
Over Shares, together with reasonable attorneys’ fees and court costs;

(g)

all amounts paid by any Indemnified Party as to which such Indemnified Party has
the right to reimbursement under any Secured Agreement; and

(h)

all amounts owing to any Agent pursuant to any Secured Agreement in its capacity
as such,

collectively the “Secured Liabilities”, it being acknowledged and agreed that
the Secured Liabilities shall include extensions of credit of the types
described above, whether outstanding on the date of this Debenture or extended
from time to time after the date of this Debenture and in each case as such
obligations, liabilities or indebtedness may be actual or contingent, whether
incurred solely or jointly with any other person and whether as principal or
surety.

2.2

Potential invalidity

Neither the covenant to pay in Clause 2.1 (Covenant to pay Secured Liabilities),
nor the Security created by this Debenture shall extend to or include any
liability or sum which would, but for this Clause 2.2, cause such covenant,
obligation or Security to be unlawful under any applicable law or would if it
were so included, cause the infringement of section 678 of the Companies Act
2006.

3.

REPRESENTATIONS

3.1

Agreements and licences

The Company represents and warrants to the Collateral Agent that the Project
Agreements listed in Schedule 2 (Project Agreements) and the Project Licences
listed in Schedule 3 (Project Licences) represent all of the agreements and/or
licences (as applicable) to which the Company is a party constituting either:

10

 

--------------------------------------------------------------------------------

 

 

(a)

petroleum production licences for material oil and gas reserves of the Company;
or

(b)

joint operating agreements or unitisation or unit operating agreements, in each
case relating to such petroleum production licences.

3.2

Assets and security

The Company represents and warrants that:

(a)

subject to the terms of the Intercreditor Agreement, the matters set out in
section 3.11 (Security Documents) of the Credit Agreement, as they relate to
this Debenture, are true and correct; and

(b)

the matters set out in section 3.12 (Properties) of the Credit Agreement, as
they relate to the assets of the Company, are true and correct.

4.

SECURITY

4.1

General

(a)

All the Security created under this Debenture:

(i)

is created in favour of the Collateral Agent; and

(ii)

is security for the payment of all the Secured Liabilities.

(b)

If the Company is not entitled to grant any Security over its rights and/or
interests under any document without the consent of a party to that document:

(i)

the Company must notify the Collateral Agent as soon as it becomes aware of the
same;

(ii)

the Security constituted under this Debenture will include and extend to all
amounts which the Company may receive, or has received, under that document but
shall, until the date on which the relevant consent is obtained by the Company,
not extend to and exclude the document itself and its rights and/or interests
under such document;

(iii)

unless the Collateral Agent otherwise requires, the Company must use reasonable
endeavours to obtain the consent of the relevant party to enable the Company to
grant Security over that document under this Debenture; and

(iv)

on and from the date on which such consent is obtained, the Security constituted
under this Debenture shall extend to and include that document.

(c)

The Collateral Agent holds the benefit of this Debenture on trust for the
Secured Parties.

4.2

Creation of fixed charge

To the extent that such charge is capable of being effective, taking into
account the provisions of Clause 9.2 (Book and other debts after Security
becomes enforceable), the Company charges to the Collateral Agent by way of
fixed charge with full title guarantee and as a

11

 

--------------------------------------------------------------------------------

 

 

continuing security for the payment and discharge of the Secured Liabilities all
of the Company’s right to and title and interest both present and future from
time to time in:

(a)

each Collateral Account, including all amounts from time to time standing to the
credit of, or accrued or accruing on, such Collateral Accounts and any monies,
proceeds or income paid or payable on such Collateral Accounts; and

(b)

each of the Project Licences together with all Related Property Rights in
respect thereof.

4.3

Assignments

Subject to Clause 4.1(b) (General), the Company assigns absolutely (subject to a
proviso for re-assignment at the end of the Security Period) to the Collateral
Agent with full title guarantee as a continuing security for the payment and
discharge of the Secured Liabilities all of the Company’s rights to and title
and interest from time to time in:

(a)

the Project Agreements; and

(b)

any present or future Insurances, together with any and all proceeds of claim
and Related Property Rights in respect thereof.

5.

FLOATING CHARGE

5.1

Creation of floating charge

(a)

The Company charges to the Collateral Agent by way of first floating charge with
full title guarantee and as a continuing security for the payment and discharge
of the Secured Liabilities all of the Company's rights to and title and interest
from time to time in the whole of its property, assets (including, without
limitation, any Account), undertakings, rights and revenues, whatsoever and
wheresoever, present and future, other than any assets validly and effectively
charged or assigned (whether at law or in equity) pursuant to Clause 4.2
(Creation of fixed charge) or Clause 4.3 (Assignments). 

(b)

Except as otherwise agreed in writing by the Collateral Agent and except as
otherwise provided under the Intercreditor Agreement with respect to relative
ranking of the security created pursuant to the Production Payment Security
Documents, the floating charge hereby created ranks in priority to any Security
which shall subsequently be created or permitted to arise by the Company or any
Security created by a Receiver appointed under this Debenture and is a
qualifying floating charge to which paragraph 14 of schedule B1 to the
Insolvency Act 1986 applies.

(c)

Without prejudice to Clause 5.1(a), the Collateral Agent reserves any rights it
may have to appoint an administrative receiver on and following the Enforcement
Date in accordance with Sections 72B to H (inclusive) of the Insolvency Act
1986.

5.2

Automatic crystallisation of floating charge

Notwithstanding anything express or implied in this Debenture, and without
prejudice to any law which may have similar effect, if:

12

 

--------------------------------------------------------------------------------

 

 

(a)

the Company creates or attempts to create any Security over all or any of the
Charged Assets (save as permitted by section 6.06 (Limitation on Liens) of the
Credit Agreement) without the prior consent of the Collateral Agent;

(b)

any person levies or attempts to levy any distress, execution or other process
against any of the Charged Assets;

(c)

a resolution is passed or a petition is presented for the winding-up or
administration in relation to the Company which is not discharged within 14 days
(in the case of a winding-up petition) or 5 days (in the case for an
administration order) or in any event before such petition is heard or an order
is made for the winding-up, dissolution, administration or other reorganisation
of the Company;

(d)

an Administrator or Receiver is appointed in respect of the Company or any step
intended to result in such appointment is taken pursuant to paragraphs 15 or 26
of Schedule B1 of the Insolvency Act 1986 in respect of the Company; or

(e)

any other floating charge created by the Company crystallises for any reason,

then the floating charge created by Clause 5.1 (Creation of floating charge)
will automatically (with immediate effect and without notice) be converted into
a fixed charge as regards all of the assets subject to the floating charge.

5.3

Crystallisation on notice of floating charge

Notwithstanding anything express or implied in this Debenture the Collateral
Agent may at any time:

(a)

on or after the Enforcement Date;

(b)

if it considers in good faith that any of the Charged Assets are in danger of
being seized or sold as a result of any legal process, or are otherwise in
jeopardy; or

(c)

if it reasonably believes that steps likely or intended to lead to the
presentation of a petition for the administration or winding-up of or the
appointment of an Administrator in respect of the Company are being, or have
been, taken,

by giving notice in writing to that effect to the Company, convert the floating
charge created by Clause 5.1 (Creation of floating charge) into a fixed charge
as regards any assets specified in such notice.  The conversion shall take
effect immediately upon the giving of the notice.

5.4

Fixed and floating security

If for any reason any Security in respect of any asset created or purported to
be created pursuant to this Clause 5 as a fixed charge or assignment does not,
or ceases to, take effect as a fixed charge or assignment, then it shall take
effect as a floating charge in respect of such asset.  However, it is the intent
of the Parties that the Security over other Charged Assets shall remain
unaffected.

13

 

--------------------------------------------------------------------------------

 

 

5.5

Retention of documents

The Collateral Agent shall be entitled to continue to retain any document
delivered to it under this Debenture relating to a Charged Asset until the
Charges over such Charged Asset are released in accordance with this
Debenture.  If, for any reason, it ceases to hold any such document before such
time, it may by notice to the Company require that the relevant document be
redelivered to it and the Company shall, to the extent that such document has
not already been provided to the collateral agent under the Production Payment
Security Documents, immediately comply with that requirement or procure that it
is complied with.

5.6

Project Documents 

(a)

The Security created by this Debenture in relation to each Project Document
shall, to the extent required by that Project Document, in each case as that
agreement may have been subsequently assigned, transferred or novated, be:

(i)

without prejudice to the provisions of that Project Document;

(ii)

subordinated to the express rights specified under that Project Document of the
parties thereto from time to time (other than the Company); and

(iii)

subject to the liabilities and obligations of the Company relating to the
interest of the Company in and under that Project Document;

provided that, nothing in this Clause 5.6 shall (i) release the Company from any
obligations to fulfil any requisite condition in connection therewith, or (ii)
(subject to Clause 5.6(b)) impose on the Collateral Agent or any Receiver or
Administrator appointed by it an obligation to perform any of the obligations of
the Company under any Project Document or to procure the performance of the
Company of any such obligation.

(b)

The Company and the Collateral Agent acknowledge that:

(i)

in the event of the Collateral Agent exercising any rights created under this
Debenture in respect of the Enoch PLTPA, the Collateral Agent will continue to
fulfil the obligations of the Company under the Enoch PLTPA; and

(ii)

notwithstanding Clause 27 (Third parties), BP may rely on the undertaking given
by the Collateral Agent under Clause 5.6(b)(i).

5.7

Gas sales agreements

This Debenture shall not create any Security over the Company’s interest in the
Enoch Field Gas Sales Agreement dated 17 January 2006 as such agreement may be
assigned, amended, modified, supplemented or novated from time to time.

6.

FURTHER ASSURANCE

(a)

The Company shall at its own expense promptly upon request by the Collateral
Agent execute (in such form as the Collateral Agent may reasonably require) such
documents (including assignments, transfers, mortgages, charges, notices and
instructions) in favour of the Collateral Agent or its nominees and do all such
assurances and things as the Collateral Agent may otherwise reasonably require
for:

14

 

--------------------------------------------------------------------------------

 

 

(i)

perfecting and/or protecting (by registration or in any other way) the Security
created or intended to be created by this Debenture;

(ii)

conferring upon the Collateral Agent such Security as it may require over the
assets of the Company outside of England and Wales which if in England or Wales
would form part of or be intended to form part of the Charged Assets;

(iii)

facilitating the realisation of all or any part of the Charged Assets; and/or

(iv)

for exercising all rights, powers, authorities and discretions conferred on the
Collateral Agent or any Receiver pursuant to this Debenture or by law,

including a reaffirmation/confirmation signed by the Company with respect to the
continuing effectiveness of the Security created pursuant to this Debenture
following any increase in the Secured Liabilities from time to time.

(b)

The covenants set out in section 2(1)(b) of the Law of Property (Miscellaneous
Provisions) Act 1994 shall extend to include the obligations set out in this
Clause 6 and Clause 7.6 (Consents and other necessary action).

7.

UNDERTAKINGS WITH RESPECT TO THE CHARGED ASSETS

The Company undertakes to the Collateral Agent with respect to the Charged
Assets that it shall:

7.1

Negative pledge

except as permitted by section 6.06 (Limitation on Liens) of the Credit
Agreement:

not create or agree to create or allow to exist any Security on, over, or
affecting, all or any of its assets; and