Exhibit 10.3
(HERBERT SMITH LOGO) [h83989h8398904.gif]
CONFORMED COPY
25 July 2011
ENDEAVOUR INTERNATIONAL CORPORATION
as the Parent
ENDEAVOUR ENERGY UK LIMITED
as the Company
THE SUBSIDIARIES OF THE PARENT LISTED IN SCHEDULE 1 HERETO
as the Original Guarantors
and
COMMONWEALTH BANK OF AUSTRALIA
as the Bank
 
LETTER OF CREDIT
FACILITY AGREEMENT
 
Herbert Smith LLP

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CONTENTS

          Clause   Page  
1. DEFINITIONS
    1  
2. THE FACILITY
    33  
3. PURPOSE
    33  
4. CONDITIONS PRECEDENT
    33  
5. UTILISATION
    33  
6. CASH COLLATERAL
    37  
7. CASH COLLATERAL DISCHARGE DATE
    38  
8. CYAN FACILITY DISCHARGE DATE
    39  
9. PREPAYMENT AND CANCELLATION
    40  
10. DEFAULT INTEREST
    41  
11. FEES
    42  
12. TAX GROSS UP AND INDEMNITIES
    43  
13. INCREASED COSTS
    44  
14. OTHER INDEMNITIES
    45  
15. MITIGATION BY THE BANK
    46  
16. COSTS AND EXPENSES
    47  
17. WAIVER OF CERTAIN RIGHTS
    48  
18. DISCLOSURE OF INFORMATION
    48  
19. GUARANTEE AND INDEMNITY
    49  
20. REPRESENTATIONS AND WARRANTIES
    52  
21. COVENANTS
    62  
22. EVENTS OF DEFAULT
    92  
23. ADDITIONAL GUARANTORS
    97  
24. STAMP AND REGISTRATION TAXES
    97  
25. RELEASE OF LIABILITIES
    97  
26. CONTRACTS (RIGHTS OF THIRD PARTIES ACT) 1999
    97  

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          Clause   Page  
27. NOTICES
    98  
28. ASSIGNMENT
    99  
29. SET OFF
    99  
30. AMENDMENTS
    99  
31. PARTIAL INVALIDITY
    99  
32. REMEDIES AND WAIVERS
    99  
33. COUNTERPARTS
    100  
34. SURVIVAL
    100  
35. GOVERNING LAW
    100  
36. ENFORCEMENT
    100  
SCHEDULE 1 ORIGINAL GUARANTORS
    101  
SCHEDULE 2 CONDITIONS PRECEDENT
    102  
SCHEDULE 3 FORM OF UTILISATION REQUEST
    107  
SCHEDULE 4 FORM OF LETTER OF CREDIT
    108  
SCHEDULE 5 OIL AND GAS PROPERTIES
    110  
SCHEDULE 6 SUBSIDIARIES
    112  
SCHEDULE 7 EXISTING INDEBTEDNESS
    115  
SCHEDULE 8 INSURANCES
    116  
SCHEDULE 9 FORM OF COMPLIANCE CERTIFICATE
    123  
SCHEDULE 10 INVESTMENTS
    126  
SCHEDULE 11 EXISTING SECURITY
    127  
SCHEDULE 12 FORM OF ACCESSION LETTER
    128  
SCHEDULE 13 FORM OF AMENDED AND RESTATED TERMS
    129  
19. [DELIBERATELY LEFT BLANK]
    130  
20. REPRESENTATIONS AND WARRANTIES
    130  
21. COVENANTS
    132  
22. EVENTS OF DEFAULT
    160  

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THIS LETTER OF CREDIT FACILITY AGREEMENT is dated 25 July 2011 and made between:

(1)   ENDEAVOUR INTERNATIONAL CORPORATION (a corporation incorporated under the
laws of the State of Nevada) whose principal place of business is 1001 Fannin
Street, Suite 1600, Houston, Texas, 77002, USA (the “Parent”);   (2)   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”);   (3)   THE SUBSIDIARIES OF
THE PARENT listed in Schedule 1 (Original Guarantors) as guarantors (together
with the Parent the “Original Guarantors”); and   (4)   COMMONWEALTH BANK OF
AUSTRALIA (a company registered in England and Wales under company number
FC016009 and with UK Establishment number BR000250) whose UK Registered
Establishment is at Senator House, 85 Queen Victoria Street, London EC4V 4HA
(the “Bank”).

BACKGROUND:

(A)   The Company and Hess Limited are party to three abandonment security
agreements, each dated 26 October 2006, in respect of certain interests in the
United Kingdom Continental Shelf Petroleum Production Licences of the IVRR/Rob
Roy/Hamish, Renee and Rubie fields, under which certain letters of credit have
been required to be issued.   (B)   The required letters of credit have been
issued by BNP Paribas pursuant to a letter of credit facility agreement dated 16
August 2010 between BNP Paribas and the Company (the “BNPP LC Facility”).   (C)
  The Company, Parent and the Bank have agreed to enter into this Agreement
pursuant to which the Bank is to provide letters of credit in substitution for
the letters of credit issued under the BNPP LC Facility.

IT IS AGREED as follows:

1.   DEFINITIONS   1.1   In this Agreement:       “2014 Senior Subordinated
Notes” means the Parent’s 12% Senior Subordinated Notes due 2014 issued pursuant
to the 2014 Senior Subordinated Notes Agreement, as in effect on the date of
this Agreement and as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof.       “2014 Senior
Subordinated Notes Agreement” means the note agreement pursuant to which the
2014 Senior Subordinated Notes were issued, as in effect on the date of this
Agreement and as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof.       “2016 Convertible Senior Notes”
means the Endeavour Energy Luxembourg S.ar.l.’s 11.5% Guaranteed Convertible
Senior Bonds due 2016 issued pursuant to the 2016 Convertible Senior Notes Trust
Deed, as in effect on the date of this Agreement and as the

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    same may be amended, modified or supplemented from time to time in
accordance with the terms thereof.       “2016 Convertible Senior Notes Trust
Deed” means the trust deed pursuant to which the 2016 Convertible Senior Notes
were issued, as in effect on the date of this Agreement and as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.       “2P Reserves” means the sum of Proved Reserves and Probable
Reserves.       “2P Reserve Value” means, as of any date of determination with
respect to Proved Reserves and Probable Reserves in each case of the Parent and
its Subsidiaries, the sum of:

  (A)   the PV-10 Value of such Proved Reserves as of such date; plus     (B)  
the Probable Reserve Value of such Probable Reserves as of such date.

    “Accession Letter” means a document substantially in the form set out in
Schedule 12 (Form of Accession Letter).       “Acquired Entity or Business”
means either:

  (A)   the assets constituting a business, division or product line of any
person not already a Subsidiary of the Parent; or     (B)   100% of the Equity
Interests of any such person, which person shall, as a result of the acquisition
of such Equity Interests, become a Wholly-Owned Subsidiary of the Parent (or
shall be merged with and into the Company or a Wholly-Owned Subsidiary of the
Parent, with the Company or the Wholly-Owned Subsidiary of the Parent being the
surviving or continuing Person).

    “Additional Guarantor” means a member of the Group which becomes an
Additional Guarantor in accordance with Clause 23 (Additional Guarantors).      
“Additional Post-Cyan Obligor” has the meaning given to that term in Clause
8.1(D) (Release of Security in respect of the Cyan Facility Agreement).      
“Additional Post-Cyan Security Document” means any document designated as an
Additional Post-Cyan Security Document by the Bank and the Company.      
“Affiliate” means, with respect to any person, any other person directly or
indirectly controlling (including but not limited to, all directors and officers
of such person) controlled by, or under direct or indirect common control with
such person. For the purposes of this definition, a person shall be deemed to
control another person if such person processes, directly or indirectly, the
power to vote 10% or more of the shares having ordinary voting power for the
election of directors (or ownership of voting rights by contract or otherwise,
provided however, that the Bank shall not be considered an Affiliate of the
Parent or any of its Subsidiaries.       “Aggregate Consideration” means, with
respect to any Permitted Acquisition, the sum (without duplication) of:

  (A)   the Fair Market Value of the Parent Common Stock issued (or to be
issued) as consideration in connection with such Permitted Acquisition
(including, without

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      limitation, the Parent Common Stock which may be required to be issued as
earn-out consideration upon the achievement of certain future performance goals
of the respective Acquired Entity or Business (as determined in good faith by
the senior management of the Parent));     (B)   the aggregate amount of all
cash paid (or to be paid) by Parent or any of its Subsidiaries in connection
with such Permitted Acquisition (including, without limitation, payments of fees
and costs and expenses in connection therewith) and all contingent cash purchase
price, earn-out, non-compete and other similar obligations of the Parent or any
of its Subsidiaries incurred and reasonably expected to be incurred in
connection therewith (as determined in good faith by the Parent);     (C)   the
aggregate principal amount of all Indebtedness assumed, incurred, refinanced
and/or issued in connection with such Permitted Acquisition;     (D)   the
aggregate liquidation preference of all Qualified Preferred Stock of the Parent
issued or to be issued as consideration in connection with such proposed
Permitted Acquisition (including, without limitation, Qualified Preferred Stock
of the Parent which may be required to be issued as earn-out consideration upon
the achievement of certain future performance goals of the respective Acquired
Entity or Business (as determined in good faith by the Parent)); and     (E)  
the Fair Market Value of all other consideration paid (or to be paid) in
connection with such Permitted Acquisition.

    “Asset Sale” means any direct or indirect sale, transfer, issuance,
conveyance, lease (other than operating leases entered into in the ordinary
course of business), assignment or other disposition by the Parent or any of its
Subsidiaries to any person (including by way of redemption by such person) other
than to the Parent or a Wholly-Owned Subsidiary of the Parent of any property or
asset (including, without limitation, any capital stock or other securities of,
or Equity Interests in, another person), but excluding sales of assets pursuant
to Clauses 21.18.2, 21.18.3, 21.18.4, 21.18.9, 21.18.10, 21.18.11, 21.18.12 and
21.18.13 (Consolidation, Merger, Purchase or Sale of Assets, etc.).      
“Attributable Indebtedness” means, in respect of a sale-leaseback transaction,
as at the time of determination, the present value of the total obligations of
the lessee for rental/lease payments during the remaining term of the lease
included in such sale-leaseback transaction (including any period for which such
lease has been extended); provided, however that if such sale-leaseback
transaction results in a Capitalised Lease Obligation, the amount of
Indebtedness represented thereby shall be determined in accordance with the
definition of Capitalised Lease Obligations.       “Authorisation” means an
authorisation, consent, permit, approval, resolution, licence, exemption,
filing, notarisation or registration.       “Authorised Officer” means, with
respect to:

  (A)   delivering financial information and officer’s certificates (including
certificates described in Clause 21.1.4 (Reserve Report) pursuant to this
Agreement, the chief financial officer, the treasurer or the principal
accounting officer of the Parent or the Company, as applicable; and

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  (B)   any other matter in connection with this Agreement or any other Finance
Document, any officer (or a person or persons so designated by any two officers)
of the Parent or the Company, as applicable

    “Availability Period” means the period from and including the date of this
Agreement to and including 31 October 2012.       “BNPP LC Facility” has the
meaning given to it in recital (B) above.       “Business” means any
corporation, limited liability company, partnership or other business entity.  
    “Business Day” means a day (other than a Saturday or Sunday) on which banks
are open for general business in London.       “Calculation Period” means with
respect to any Material Permitted Acquisition, any Material Permitted Business
Investment, any Material Asset Sale or any other event expressly requiring a
calculation to be made on a Pro Forma Basis pursuant to the terms of this
Agreement, the Test Period most recently ended prior to the date of such
Material Permitted Acquisition, such Material Permitted Business Investment,
such Material Asset Sale or other event for which financial statements have been
delivered to the Bank pursuant to this Agreement.       “Capital Expenditures”
means, with respect to any person, all expenditures by such person which should
be capitalised in accordance with GAAP (excluding Permitted Acquisitions and
Permitted Business Investments whether or not capitalised in accordance with
GAAP) and, without duplication, the amount of all Capitalised Lease Obligations
incurred by such person.       “Capitalised Lease Obligations” means with
respect to any person, all rental obligations of such person, which under GAAP,
are or will be required to be capitalised on the books of such person, in each
case taken at the amount thereof accounted for as indebtedness in accordance
with such principles.       “Cash Collateral” means cash cover paid by the
Company to the Bank pursuant to the Cash Collateral Agreement.       “Cash
Collateral Agreement” means the English law agreement dated on or about the date
of this Agreement between the Company and the Bank in respect of the Cash
Collateral.       “Cash Collateral Amount” means, at any time, the amount (if
any) equal to the excess of the aggregate of the outstanding liabilities under
all Letters of Credit (less any amount then held by the Bank as Cash Collateral)
over the Sterling Equivalent of the LC Carve Out Amount as determined pursuant
to Clause 6 (Cash Collateral).       “Cash Collateral Discharge Amount” means,
at any time, an amount equal to the aggregate of the outstanding liabilities
under all Letters of Credit at that time.       “Cash Collateral Discharge Date”
means the date on which the Bank confirms to the Company that it is satisfied
(in its absolute discretion (acting reasonably)) that full cash cover has been
provided to the Bank in respect of the outstanding Letters of Credit.

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    “Cash Equivalents” shall mean, as to any person:

  (A)   securities issued or directly and fully guaranteed or insured by the
United States or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition;     (B)  
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within six months from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either S&P
or Moody’s;     (C)   Dollar-denominated time deposits, certificates of deposit
and bankers acceptances of the Bank or any commercial bank having, or which is
the principal banking subsidiary of a bank holding company having, a long-term
unsecured debt rating of at least “A” or the equivalent thereof from S&P or “A2”
or the equivalent thereof from Moody’s with maturities of not more than six
months from the date of acquisition by such person;     (D)   repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in Clause (A) above entered into with any bank meeting the
qualifications specified in Clause (C) above;     (E)   commercial paper issued
by any person incorporated in the United States rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s
and in each case maturing not more than six months after the date of acquisition
by such person;     (F)   investments in money market funds substantially all of
whose assets are comprised of securities of the types described in clauses
(A) through (E) above; and     (G)   instruments equivalent to those referred to
in clauses (A) through (F) above denominated in Pounds 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 organised
in such jurisdiction.

    “Change of Control” means:

  (A)   the Company ceasing to be a Wholly-Owned Subsidiary of the Parent;    
(B)   any person or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) becoming the “beneficial owner” (as defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of
45% or more on a fully diluted basis of the economic or voting interest in the
Parent’s capital stock;     (C)   the directors (as at the date of this
Agreement) ceasing to constitute a majority of the board of directors of the
Parent; or     (D)   the occurrence of a “change of control” or similar event
which gives rise to a mandatory prepayment or redemption, required offer to
purchase or the occurrence of an event of default under any Permitted Junior
Debt (or any documentation

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      governing the same) or any Qualified Preferred Stock (as defined in the
Cyan Facility Agreement) (or any documentation governing the same).

    “Class C Convertible Preferred Stock” means the Parent’s 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 30
October 2006.       “Collateral” means all property with respect to which any
Security has 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.       “Collateral Agent” means the collateral agent
appointed in respect of the Cyan Security Documents in accordance with the terms
of the Intercreditor Agreement.       “Commitment” means £20,600,000 as at the
date of this Agreement.       “Commodity Hedging Agreement” means 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).
      “Company Asset Transfer” means the transfer of one or more of the Oil and
Gas Properties owned by the Company as at the date of this Agreement or acquired
by the Company after the date of this Agreement to another member of the Group
in accordance with the terms of this Agreement.       “Company Shareholder”
means:

  (A)   Endeavour Energy North Sea L.P.; and     (B)   any other Subsidiary of
the Parent which has a direct Equity Interest in the Company.

    “Compliance Certificate” has the meaning given to that term in Clause 21.1.6
(Compliance Certificate).       “Confidential Information” has the meaning given
to it in Clause 18.1 (Disclosure of Information).       “Consolidated EBITDAX”
means, for any period, Consolidated Net Income for such period:

  (A)   without giving effect to:

  (i)   any extraordinary gain or losses;     (ii)   any non-cash income or
non-cash expenses; provided that any such non-cash expenses that are excluded
from the calculation of Consolidated EBITDAX in any period pursuant to this
sub-paragraph (ii) that later become cash expenses in a subsequent period shall
reduce Consolidated EBITDAX in an amount equal to such cash expense;     (iii)  
any gains or losses from sales of assets other than inventory and Hydrocarbons
sold in the ordinary course of business; and

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  (iv)   interest income; and

  (B)   adjusted by adding thereto (in each case to the extent deducted in
determining Consolidated Net Income for such period), without duplication, the
amount of:

  (i)   total interest expense (inclusive of amortization of deferred financing
fees and other original issue discount and banking fees, charges and commissions
(e.g., letter of credit fees and commitment fees) of the Parent and its
Subsidiaries determined on a consolidated basis for such period;     (ii)  
provision for Taxes based on income and foreign withholding Taxes for the Parent
and its Subsidiaries determined on a consolidated basis for such period;    
(iii)   all depletion, depreciation and amortisation expense of the Parent and
its Subsidiaries determined on a consolidated basis for such period;     (iv)  
in the case of any period including the fiscal quarter of the Parent ended or
ending 30 June 2011 the amount of all fees and expenses incurred by the Parent
and its Subsidiaries in connection with the entering into of this Agreement and
the other Finance Documents during such fiscal quarter;     (v)   geological and
geophysical expense for such period;     (vi)   all amounts attributable to
impairment of oil and gas properties for such period, and     (vii)  
consolidated amortisation expense or impairment charges of the Parent and its
Subsidiaries recorded in connection with the application of Statement of
Financial Accounting Standard No. 142, “Goodwill and Other Intangibles.”

    For the avoidance of doubt, it is understood and agreed that, to the extent
any amounts are excluded from Consolidated Net Income by virtue of the proviso
to the definition thereof contained herein, any add backs to Consolidated Net
Income in determining Consolidated EBITDAX as provided above shall be limited
(or denied) in a fashion consistent with the proviso to the definition of
Consolidated Net Income contained herein.       “Consolidated Indebtedness”
means, at any time, the sum of (without duplication):

  (A)   all Indebtedness of the Parent and its Subsidiaries (on a consolidated
basis) as would be required to be reflected as debt or Capitalised Lease
Obligations on the liability side of a consolidated balance sheet of the Parent
and its Subsidiaries in accordance with GAAP;     (B)   all Indebtedness of the
Parent or any of its Subsidiaries of the type described in clauses (B), (G) and
(H) of the definition of Indebtedness; and     (C)   all Contingent Obligations
of the Parent or any of its Subsidiaries in respect of Indebtedness of any third
person of the type referred to in preceding clauses (A) and (B);

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    provided that the amount of any Indebtedness in respect of Hedging
Agreements shall be at any time the unrealised net loss position (taking into
account all Hedging Agreements), if any, of the Parent and/or its Subsidiaries
thereunder on a marked-to-market basis determined as of the most recently ended
fiscal quarter; provided further, that if at any time when Consolidated
Indebtedness is being determined, the net position across all the Parent’s and
its Subsidiaries Hedging Agreements is positive, Consolidated Indebtedness
shall, other than for the purposes of calculations of the Total Leverage Ratio,
be reduced by such positive amount.       “Consolidated Net Income” means for
any period, the net income (or loss) of the Parent and its Subsidiaries
determined on a consolidated basis for such period (taken as a single accounting
period) in accordance with GAAP, provided that the following items shall be
excluded in computing Consolidated Net Income (without duplication):

  (A)   the net income (or loss) of any person in which a person or persons
other than the Parent and its Wholly-Owned Subsidiaries has an Equity Interest
or Equity Interests to the extent of such Equity Interests held by persons other
than the Parent and its Wholly-Owned Subsidiaries in such person;     (B)  
except for determinations expressly required to be made on a Pro Forma Basis,
the net income (or loss) of any person accrued prior to the date it becomes a
Subsidiary or all or substantially all of the property or assets of such person
are acquired by a Subsidiary; and     (C)   the net income of any Subsidiary to
the extent that the declaration or payment of cash dividends or similar cash
distributions by such Subsidiary of such net income is not at the time permitted
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Subsidiary.

    “Consolidated Net Indebtedness” means, at any time, the difference of:

  (A)   Consolidated Indebtedness at such time; less     (B)   the average daily
amount of the Parent’s and its Subsidiaries’ Unrestricted cash and Unrestricted
Cash Equivalents during the thirty day period ending on the respective date on
which “Consolidated Net Indebtedness” is determined.

    “Consolidated Net Secured Indebtedness” means, at any time, the difference
of:

  (A)   Consolidated Indebtedness at such time that is secured by Security; less
    (B)   the average daily amount of the Parent’s and its Subsidiaries’
Unrestricted cash and Unrestricted Cash Equivalents during the thirty day period
ending on the respective date on which “Consolidated Net Secured Indebtedness”
is determined.

    “Contingent Hedge” means any Commodity Hedging Agreement other than a put
option, floor or any other arrangement under which a member of the Group
acquires a right and has (and will have) no contingent liability.      
“Contingent Obligation” means, 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:

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  (A)   to purchase any such primary obligation or any property constituting
direct or indirect security therefore;     (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.       “Cyan Facility Agreement” means the facility agreement dated
16 August 2010 made between, amongst others, the Parent, the Company and Cyan
Partners L.P.       “Cyan Facility Discharge Date” has the meaning given to that
term in Clause 8.1 (Release of Security in respect of the Cyan Facility
Agreement).       “Cyan Security Documents” means the Security Documents as
defined in the Cyan Facility Agreement.       “Cygnus Disposal” means the
disposal of certain assets in the Cygnus oil field by the Company to Bayerngas
UK Limited (as buyer) for a consideration of approximately $110,000,000 pursuant
to agreements entered into on 19 October 2010.       “Default” means an Event of
Default or any event or circumstance specified in Clause 22 (Events of Default)
which would (with the expiry of a grace period, the giving of notice or any
combination of any of the foregoing) be an Event of Default.       “Dividend”
means, with respect to any person, that such person has declared or paid a
dividend, distribution or returned any equity capital to its stockholders,
partners or members or authorised or made any other distribution, payment or
delivery of property (other than common Equity Interests of such person) or cash
to its stockholders, partners or members in their capacity as such, or redeemed,
retired, purchased or otherwise acquired, directly or indirectly, for a
consideration any shares of any class of its capital stock or any

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    other Equity Interests outstanding on or after the date of this Agreement
(or any options or warrants issued by such person with respect to its capital
stock or other Equity Interests), or set aside any funds for any of the
foregoing purposes, or shall have permitted any of its Subsidiaries to purchase
or otherwise acquire for consideration any shares of any class of the capital
stock or any other Equity Interests of such person outstanding on or after the
date of this Agreement (or any options or warrants issued by such person with
respect to its capital stock or other Equity Interests). Without limiting the
foregoing, “Dividends” with respect to any person shall also include all
payments (other than in the ordinary course of business, consistent with past
practices) made or required to be made by such person with respect to any stock
appreciation rights, equity incentive or achievement plans or any similar plans
or setting aside of any funds for the foregoing purposes.       “Dollars” and
the sign “$” each means freely transferable lawful money of the United States.  
    “Dutch Subsidiaries” means:

  (A)   Endeavour International Holding B.V.; and     (B)   Endeavour Energy
Netherland B.V.

    “Environment” means humans, animals, plants and all other living organisms
including the ecological systems of which they form part and the following
media:

  (A)   air (including air within natural or man-made structures, whether above
or below ground);     (B)   water (including territorial, coastal and inland
waters, water under or within land and water in drains and sewers); and     (C)
  land (including land under water).

    “Environmental Approval” means any authorisation, permit, licence (including
statutory licence), consent, permission, exemption or other approval and the
filing of any notification, report or assessment required under or in relation
to any Environmental Law for the operation of the business of the Company
conducted on or from properties owned or used by the Company.      
“Environmental Claims” means any claim by any person in connection with (i) a
breach, or alleged breach, of Environmental Law; (ii) any accident, fire,
explosion or other event of any type involving an emission or substance which is
capable of causing harm to the Environment; or (iii) any Environmental
Contamination.       “Environmental Contamination” means each of the following,
and their consequences:

  (A)   any Release of any Hazardous Material at or from any relevant site into
any part of the Environment;     (B)   any accident, fire, explosion or sudden
event at any relevant site which is directly or indirectly caused by, or
attributable to, any Hazardous Material; or     (C)   any other pollution of the
Environment arising in connection with any relevant site,

    where, for these purposes, “relevant site” means any site of a Petroleum
asset in which the

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    Company has an interest or otherwise owned, occupied or used by the Company.
      “Environmental Law” means any applicable UK, U.S. Federal, state, local 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.       “Event of Default”
means any event or circumstance specified as such in Clause 22 (Events of
Default).       “Equity Interests” means:

  (A)   with respect to any person that is a corporation, any and all shares,
interests, participation or other equivalents of or interest in (however
designated and whether or not voting) corporate stock of such person, including
each class of common stock and preferred stock of such person;     (B)   with
respect to any person that is not a corporation, any and all partnership,
membership or other equity interests of such person; and     (C)   any warrants,
rights or options to purchase any of the instruments or interests referred to in
the preceding clauses (A) or (B).

    “Exchange Act” means the United States Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder.       “Exchange Rate” means,
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.      
“Existing Indebtedness” means the existing Indebtedness listed in Schedule 7
(Existing Indebtedness).       “Expiry Date” means for a Letter of Credit, the
last day of its Term.       “Facility” means the facility to be made available
by the Bank to the Company hereunder as described in Clause 2 (The Facility).  
    “Fair Market Value” means with respect to any asset (including any Equity
Interest of any person), the price at which a willing buyer, not an Affiliate of
the seller, and a willing seller who does not have to sell such asset, as
determined in good faith by the Board of Directors or other governing body or,
pursuant to a specific delegation of authority by such Board of Directors or
governing body, a designated senior executive officer, of the Parent, or the
Subsidiary of the Parent selling such asset.       “Final Discharge Date” means
the date on which, in the Bank’s sole discretion (acting reasonably), (i) the
Bank has ceased to be under any commitment, obligation or liability (whether
actual or contingent) under or in respect of any Letters of Credit and under or
in respect of the other Finance Documents, (ii) no amounts are outstanding to
the Bank under or pursuant to the terms of any Finance Document (whether or not
the same is due) and

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    (iii) the Company shall have no further obligation or liability (whether
actual or contingent) to make payments to the Bank under or pursuant to the
terms of any of the Finance Documents and for these purposes contingent
obligations or liabilities are those which expressly survive the discharge of
the Company’s other obligations to the Bank under the Finance Documents (and in
respect of which no claim is outstanding).       “Final Maturity Date” means 31
October 2013.       “Finance Documents” means:

  (A)   this Agreement;     (B)   each Security Document;     (C)   the
Intercreditor Agreement;     (D)   the Cash Collateral Agreement;     (E)   each
Letter of Credit;     (F)   any Subordination Agreement;     (G)   any Secured
Hedging Agreement;     (H)   any Utilisation Request;     (I)   any Compliance
Certificate;     (J)   any Accession Letter; and     (K)   any other document
designated as a Finance Document by the Bank and the Company.

    “GAAP” means generally accepted accounting principles in the United States,
provided, that to the extent the term “GAAP” is used in reference to the
financial statements of the Company and any other Subsidiary of the Company
incorporated in the United Kingdom, “GAAP” shall mean generally accepted
accounting principles in the United Kingdom.       “Governmental Authority”
means the government of the United Kingdom, the United States, 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 function of or pertaining to
government.       “Group” means the Parent and its Subsidiaries from time to
time.       “Guarantors” means the Original Guarantors and any Additional
Guarantor.       “Hazardous Materials” means any waste or other natural or
artificial substance (whether in solid or liquid form or in the form of a gas or
vapour and whether alone or in combination with any such other substance) that
is capable of causing harm to the Environment or damaging the Environment or
human health and safety and/or 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

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    petroleum, Hydrocarbons and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.       “Hedging
Agreement” means any Commodity Hedging Agreement, Interest Rate Hedging
Agreement or foreign currency exchange agreement or other currency exchange rate
hedging agreement.       “Hedging Counterparty” means a counterparty to any
Hedging Agreement.       “Hess Contracts” means the Abandonment and Security
Agreements between Hess Limited and the Company relating to the IVRR/Rob
Roy/Hamish, Renee Area A and Rubie Area A, each dated 26 October 2006.      
“Hydrocarbons” means 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, sulphur and all other minerals.       “Hydrocarbon Interests”
means all rights, titles, interests and estates now owned or hereafter acquired
in and to oil and gas leases, leasehold interests and licences, oil, gas and
mineral leases, leasehold interests and licences, or other liquid or gaseous
hydrocarbon licences, 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” means
any Subsidiary of the Parent (other than a Relevant Holding Company) that did
not, as of the last day of the most recently ended Test Period, have assets with
a book value in excess of 2.5% of the consolidated total assets of the Parent
and its Subsidiaries; provided that if at any time the aggregate amount of
consolidated total assets attributable to Immaterial Subsidiaries would
otherwise exceed 5% of the consolidated total assets of the Parent and it
Subsidiaries, then 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 the purposes of calculations of the book value of assets of a Subsidiary
pursuant to this definition:

  (A)   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 Endeavour International Holding B.V. and Endeavour Energy
Luxembourg S.a.r.l.;     (B)   the value of other loans and receivables in an
aggregate amount not in excess of $5,000,000 owed to such Subsidiary by the
Parent or any other Subsidiary of the Parent,

    in each case shall be disregarded.

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    “Indebtedness” means, as to any person, without duplication:

  (A)   all indebtedness of such person for borrowed money or for the deferred
purchase price of property or services;     (B)   the maximum amount available
to be drawn or paid under all letters of credit, bankers’ acceptances, bank
guaranties, surety and appeal bonds and similar obligations issued for the
account of such person and all unpaid drawings and unreimbursed payments in
respect of such letters of credit, bankers’ acceptances, bank guarantees, surety
and appeal bonds and similar obligations;     (C)   all indebtedness of the
types described in Clause (A), (B), (D), (E), (F), (G), (H) or (I) of this
definition secured by any Security on any property owned by such person, whether
or not such indebtedness has been assumed by such person (provided that, if the
person has not assumed or otherwise become liable in respect of such
indebtedness, such indebtedness shall be deemed to be in an amount equal to the
Fair Market Value of the property to which such Security relates);     (D)   all
Capitalised Lease Obligations of such person;     (E)   all obligations of such
person to pay a specified purchase price for goods or services, whether or not
delivered or accepted, i.e., take-or-pay and similar obligations;     (F)   all
Contingent Obligations of such person (other than Contingent Obligations of an
Obligor in respect of contractual obligations of another Obligor arising in the
ordinary course of business and not otherwise constituting Indebtedness);    
(G)   all obligations under any Hedging Agreement;     (H)   all Off-Balance
Sheet Liabilities of such Person; and     (I)   all Attributable Indebtedness of
such Person.

    The Indebtedness of any person shall include the Indebtedness of any other
entity (including any partnership in which such person is a general partner) to
the extent such person is directly liable therefor as a result of such person’s
ownership interest in or other relationship with such entity, except to the
extent the terms of such Indebtedness provide that such person is not liable
therefor. Notwithstanding the foregoing, Indebtedness shall not include trade
payables, accrued expenses and deferred Tax and other credits incurred by any
person in accordance with customary practices and in the ordinary course of
business of such person       “Insolvency Officer” means any liquidator, trustee
in bankruptcy, judicial custodian or manager, compulsory manager, receiver,
administrative receiver, administrator or similar officer, in each case,
appointed in any relevant jurisdiction.       “Intercreditor Agreement” means
the agreement entered into on or about the date of this Agreement between the
Parent, the Company, and any other members of the Group, Cyan Partners L.P. (as
administrative agent and collateral agent) and the Bank.       “Intercompany
Loan” has the meaning given to that term in Clause 21.21 (Advances, Investments
and Loans).       “Interest Rate Hedging Agreement” means any interest rate swap
agreement, interest

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    rate cap agreement, interest collar agreement or other interest rate hedging
arrangement or other similar arrangement or arrangement.       “Investment” has
the meaning given to it in Clause 21.21 (Advances, Investments and Loans).      
“Investment Grade” means a rating of BBB- or higher (with a stable outlook) by
S&P and Baa3 or higher (with a stable outlook) by Moody’s.       “Junior
Financing” shall mean each of:

  (A)   the 2014 Senior Subordinated Notes;     (B)   the 2016 Convertible
Senior Notes;     (C)   the New 2016 Convertible Senior Notes; and     (D)  
Permitted Junior Debt.

    “LC Carve Out Amount” means the amount equal to $35,000,000.      
“Leaseholds” of any person means all the right, title and interest of such
person as lessee, sublessee or licensee in, to and under leases, subleases or
licences of land, improvements and/or fixtures.       “Letter of Credit” means a
letter of credit issued or renewed to be issued or renewed pursuant to Clause 5
(Utilisation).       “Letter of Credit Fee” has the meaning given to such term
in Clause 11.1.1 (Fee payable in respect of Letters of Credit).       “Letter of
Credit Fee Payment Date” has the meaning given to such term in Clause 11.1.2
(Fee payable in respect of Letters of Credit).       “Marcellus Acquisition”
means the acquisition of certain assets in Pennsylvania by Endeavour Operating
Corporation from SM Energy Company, Potato Creek LLC, Open Flow Gas Supply
Corporation and SJ Exploration LLC (as sellers) for a consideration of
approximately $110,000,000 pursuant to agreements entered into on 17 July 2011.
      “Material Adverse Effect” means any event, development or circumstance
that has a material adverse effect on:

  (A)   the business, property or financial condition of the Parent and its
Subsidiaries taken as a whole;     (B)   (i) the rights and remedies of the Bank
or (as applicable) the Collateral Agent) under any Finance Document or (ii) the
ability of any Obligor to perform its obligations to the Bank or (as applicable)
the Collateral Agent) under any Finance Document; or     (C)   a material
portion of the Collateral.

    “Material Asset Sale” means any Asset Sale or series of related Asset Sales
(i.e., separate assets being sold, transferred or otherwise disposed of as part
of an identifiable group of assets and within a reasonably limited time period)
where the aggregate consideration

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    therefor is equal to, or in excess of, $5,000,000 and shall, subject to the
aforementioned dollar limitation, include any such Asset Sale or Asset Sales of
any Subsidiary or any Oil and Gas Properties.       “Material Permitted
Acquisition” means any Permitted Acquisition where the Consolidated EBITDAX
attributable to the Acquired Entity or Business (as determined on a basis
consistent with the definition of Consolidated EBITDAX with any necessary
reference changes) for the Test Period most recently ended prior to the date of
such Permitted Acquisition for which financial statements have been delivered to
the Bank pursuant to this Agreement exceeds 5% of Consolidated EBITDAX
(calculated without giving effect to such Permitted Acquisition) for such Test
Period.       “Material Permitted Business Investment” means any Permitted
Business Investment where the Consolidated EBITDAX attributable to the assets
acquired pursuant to such Permitted Business Investment (as determined on a
basis consistent with the definition of Consolidated EBITDAX with any necessary
reference changes) for the Test Period most recently ended prior to the date of
such Permitted Business Investment for which financial statements have been
delivered to the Bank pursuant to this Agreement exceeds 5% of Consolidated
EBITDAX (calculated without giving effect to such Permitted Business Investment)
for such Test Period.       “Moody’s” means Moody’s Investor Services Inc.      
“Mortgage” shall mean a mortgage, leasehold mortgage, deed of trust, leasehold
deed of trust, deed to secure debt, leasehold deed to secure debt, debenture or
similar security instrument.       “Net Insurance Proceeds” means, with respect
to any Recovery Event, the cash proceeds received by the respective person in
connection with such Recovery Event (net of:

  (A)   reasonable costs and Taxes incurred in connection with such Recovery
Event; and     (B)   required payments of any Indebtedness (other than
Indebtedness secured pursuant to the Security Documents) which is secured by the
respective assets the subject of such Recovery Event).

    “Net Sale Proceeds” means for any sale or other disposition of assets, the
gross cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and when
received) received from such sale or other disposition of assets, net of:

  (A)   reasonable transaction costs (including, without limitation, any
underwriting, brokerage or other customary selling commissions, reasonable
legal, advisory and other fees and expenses (including title and recording
expenses), associated therewith and sales, VAT and transfer Taxes arising
therefrom);     (B)   payments of unassumed liabilities relating to the assets
sold or otherwise disposed of at the time of, or within 30 days after, the date
of such sale or other disposition;     (C)   the amount of such gross cash
proceeds required to be used to permanently repay any Indebtedness (other than
Indebtedness secured pursuant to the Security Documents), which is secured by
the respective assets which were sold or otherwise disposed of; and

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  (D)   the estimated net marginal increase in income, franchise or similar
Taxes which will be payable by the Parent’s consolidated group or any Subsidiary
of the Parent with respect to the tax year of the Parent

    in which the sale or other disposition occurs as a result of such sale or
other disposition (or, without duplication, which will be payable by the Parent
consolidated group or any Subsidiary of the Parent in the tax year of the Parent
in which cash proceeds in respect of such sale or other disposition are received
by way of deferred payment pursuant to a promissory note, receivable or
otherwise); provided, however, that such gross proceeds shall not include any
portion of such gross cash proceeds which the Parent determines in good faith
should be reserved for post-closing adjustments (to the extent the Parent
delivers to the Bank a certificate signed by an Authorised Officer as to such
determination), it being understood and agreed that on the day that all such
post-closing adjustments have been determined (which shall not be later than six
months following the date of the respective asset sale), the amount (if any) by
which the reserved amount in respect of such sale or disposition exceeds the
actual post-closing adjustments payable by the Parent or any of its Subsidiaries
shall constitute Net Sale Proceeds on such date received by Parent and/or any of
its Subsidiaries from such sale or other disposition.       “New 2016
Convertible Senior Notes” means the 5.5% Guaranteed Convertible Senior Notes due
2016 issued by the Parent pursuant to the New 2016 Convertible Senior Notes
Indenture, as in effect on the date of this Agreement and as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.       “New 2016 Convertible Senior Notes Indenture” means the indenture
pursuant to which the New 2016 Convertible Senior Notes were issued, as in
effect on the date of this Agreement and as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.      
“Non-U.S. Subsidiary” means, as to any person, any Subsidiary of such person
that is not a U.S. Subsidiary of such person.      
“Non-Wholly-Owned-Subsidiary” means, as to any person, each Subsidiary of such
person which is not a Wholly-Owned Subsidiary of such person.       “North Sea”
means, collectively, the Dutch Continental Shelf, the United Kingdom Continental
Shelf and surrounding areas of the North Sea, including, without limitation, any
such areas in Scottish or Norwegian waters.       “Obligations” means all
amounts owing to the Bank pursuant to the terms of this Agreement or any other
Finance Document including, without limitation, all amounts in respect of any
principal, interest (including any interest accruing subsequent to the filing of
a petition in bankruptcy, reorganization or similar proceeding at the rate
provided for in this Agreement or any other Finance Document, whether or not
such interest is an allowed claim under any such proceeding or under applicable
law), penalties, fees, expenses, indemnifications, reimbursements, damages and
other liabilities, and guarantees of the foregoing.       “Obligors” means the
Company, the Parent and (prior to the Cyan Facility Discharge Date) each
Guarantor.       “Off-Balance Sheet Liabilities” means in respect of any person:

  (A)   any repurchase obligations or liability of such person with respect to
accounts or

17

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      notes receivable or sold by such person;     (B)   any liability of such
person under any sale and leaseback transactions that does not create a
liability on the sheet of such person;     (C)   any obligation under a
Synthetic Lease; or     (D)   any obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of a
borrowing but which does not constitute a liability in the balance sheet of such
person.

    “Oil and Gas Business” means:

  (A)   the acquisition, exploration, exploitation, development, operation and
disposition of interests in Oil and Gas Properties and Hydrocarbons;     (B)  
the gathering, treating, refining, processing, storage, marketing, distribution,
selling and transporting of any production from such interests or properties;
and     (C)   any business directly relating to or arising directly from
exploration for, or development, production, treatment, processing, storage or
selling of, Hydrocarbons, or that is or necessary or desirable to facilitate the
activities described in this definition.

    “Oil and Gas Contracts” means 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, licences, 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 the Parent 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 the Parent and each of its Subsidiaries, as any
such contracts and agreements as they may be amended, restated, modified,
substituted or supplemented from time to time.       “Oil and Gas Properties”
means:

  (A)   Hydrocarbon Interests;     (B)   the properties now or hereafter pooled
or unitised with Hydrocarbon Interests;     (C)   all currently existing or
future rights arising under:

  (i)   unitisation 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;

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  (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.

    “Original Post-Cyan Security Documents” means:

  (A)   the English Law Debenture entered into between the Company and the
Collateral Agent dated 16 August 2010; and     (B)   the English Law Charge Over
Shares entered into between the Company Shareholder and the Collateral Agent
dated 16 August 2010.

    “Parent Common Stock” means any authorised shares of common stock of the
Parent.       “PDP” means Proved Developed Reserves that are categorised as
producing in accordance with the petroleum reserves definitions promulgated by
the Society of Petroleum Engineers (SPE) Inc. (or any generally recognised
successor) as in effect at the time in question.       “PDP Coverage Ratio”
means on the date of any determination, the ratio of:

  (A)   PV-10 Value (determined by substituting the phrase “from PDP production
on the Parent’s and each of its Subsidiaries’ Oil and Gas Properties” for the
phrase “from Proved Reserves on the Parent’s and each of its Subsidiaries’ Oil
and Gas Properties” appearing in the second line of the definition thereof) on
such date

    to

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  (B)   Consolidated Net Secured Indebtedness on such date.

    “Permitted Acquisition” means the acquisition by the Parent or any
Subsidiary of the Parent of an Acquired Entity or Business; provided that (in
the case of each Permitted Acquisition completed prior to the Cash Collateral
Discharge Date):

  (A)   the consideration paid or to be paid by that member of the Group
consists solely of cash, Parent Common Stock, Qualified Preferred Stock of the
Parent, the issuance or incurrence of Indebtedness otherwise permitted by Clause
21.20 (Indebtedness) and the assumption/acquisition of any Indebtedness
(calculated at face value) which is permitted to remain outstanding in
accordance with the requirements of Clause 21.20 (Indebtedness);     (B)   in
the case of the acquisition of 100% of the Equity Interests of any Acquired
Entity or Business (including by way of merger), such Acquired Entity or
Business shall own no Equity Interests of any other person (either directly or
indirectly) unless either:

  (i)   such Acquired Entity or Business owns 100% of the Equity Interests of
such other person; or     (ii)   if such Acquired Entity or Business owns Equity
Interests in any other person which is a Non-Wholly-Owned Subsidiary of such
Acquired Entity or Business:

  (a)   such Acquired Entity or Business shall not have been created or
established in contemplation of, or for purposes of, the respective Permitted
Acquisition;     (b)   any such Non-Wholly-Owned Subsidiary of the Acquired
Entity or Business shall have been a Non-Wholly-Owned Subsidiary of such
Acquired Entity or Business prior to the date of the respective Permitted
Acquisition and shall not have been created or established in contemplation
thereof; and     (c)   such Acquired Entity or Business and/or its Wholly-Owned
Subsidiaries own at least 90% of the total value of all the assets owned by such
Acquired Entity or Business and its Subsidiaries (for purposes of such
determination, excluding the value of the Equity Interests of Non-Wholly-Owned
Subsidiaries held by such Acquired Entity or Business and its Wholly-Owned
Subsidiaries),

  (C)   all of the business, division or product line acquired pursuant to the
respective Permitted Acquisition, or the business of the person acquired
pursuant to the respective Permitted Acquisition and its Subsidiaries taken as a
whole, is in the United States, the United Kingdom or the North Sea;     (D)  
the Acquired Entity or Business acquired pursuant to the respective Permitted
Acquisition is in a business permitted by Clause 21.28 (Business); and     (E)  
all requirements of Clauses 21.14 (Permitted Acquisitions), 21.18
(Consolidation, Merger, Purchase or Sale of Assets etc.) and 21.29 (Limitation
on Creation of Subsidiaries) applicable to Permitted Acquisitions are satisfied.

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    For the avoidance of doubt, a Permitted Business Investment shall not
constitute a Permitted Acquisition.       “Permitted Business Investments” shall
mean investments of a nature that is or shall have become customary in, the Oil
and Gas Business as a means of actively exploiting, exploring for, acquiring,
developing, producing, processing, gathering, marketing, storing, treating,
selling or transporting oil and gas through agreements, transactions, interests
or arrangements (including those that permit a person to share risks or costs,
comply with regulatory requirements regarding local ownership or satisfy other
objectives customarily achieved through the conduct of Oil and Gas Business
jointly with third parties), including the entry into or acquisition of
operating agreements, working interests, licences, royalty interests, mineral
leases, processing agreements, farm-out and farm-in agreements, division orders,
contracts for the sale, transportation or exchange of oil or natural gas,
unitization and pooling declarations and agreements and area of mutual interest
agreements, production sharing agreements or other similar or customary
agreements, transactions, properties, interests, and investments and
expenditures in connection therewith (with the amount thereof measured at the
time initially made); provided that neither Permitted Acquisitions nor other
investments in Equity Interests of a Person shall constitute Permitted Business
Investments.       “Permitted Indebtedness” has the meaning given to it in
Clause 21.20 (Indebtedness)       “Permitted Junior Debt” means any Indebtedness
of the Parent or any of its Subsidiaries in the form of unsecured or second lien
loans or notes, provided that in any event, unless the Bank otherwise expressly
consents in writing prior to the issuance thereof:

  (A)   except as provided in paragraph (F) below, no such Indebtedness shall be
secured by any asset of the Parent or any of its Subsidiaries;     (B)   no such
Indebtedness shall be guaranteed by any person other than an Obligor;     (C)  
no such Indebtedness shall be subject to scheduled amortization or have a final
maturity, in either case prior to the date occurring 91 days following the Final
Maturity Date (for this purpose without regard to any proviso contained
therein);     (D)   any “asset sale” mandatory prepayment provision or offer to
prepay covenant included in the agreement, indenture or other instrument
governing such Indebtedness shall provide that the Parent, the Company or the
respective Subsidiary shall be permitted to repay obligations under this
Agreement before prepaying or offering to prepay such Indebtedness;     (E)  
any “change of control” covenant included in the indenture governing any such
Indebtedness that takes the form of notes issued pursuant to an indenture shall
provide that, before the mailing of any required “notice of redemption” in
connection therewith, the Parent shall (i) obtain the consent of the Bank or
(ii) pay the obligations in full in cash;     (F)   in the case of any such
Indebtedness that is secured:

  (i)   such Indebtedness is secured only by assets comprising Collateral on a
second-lien basis relative to the Security on such Collateral securing

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      the Obligations of the Obligors, and not secured by any property or assets
of the Parent or any of it Subsidiaries other than the Collateral;     (ii)  
such Indebtedness (and the Liens securing the same) are permitted by the terms
of the Permitted Junior Debt Intercreditor Agreement;     (iii)   the security
agreements relating to such Indebtedness are substantially the same as the
Security Documents (with such differences as are reasonably satisfactory to the
Collateral Agent); and     (iv)   a Permitted Junior Debt Representative acting
on behalf of the holders of such Indebtedness shall have become party to a
Permitted Junior Debt Intercreditor Agreement,

      provided that if such Indebtedness is the initial incurrence of Permitted
Junior Debt by the Parent or any of its Subsidiaries that is secured by assets
of the Parent or any of its Subsidiaries, then the Parent, the Company, its
applicable Subsidiaries, the Collateral Agent and the Permitted Junior Debt
Representative for such Indebtedness shall have executed and delivered the
Permitted Junior Debt Intercreditor Agreement;     (G)   the representations and
warranties, covenants, and events of defaults shall be no more onerous in any
material respect than the related provisions contained in this Agreement,
provided that:

  (i)    

  (A)   in the case of any such Indebtedness that takes the form of notes issued
pursuant to an indenture, the “default to other indebtedness” event of default
contained in the indenture governing such indebtedness shall provide for
“cross-acceleration” rather than a “cross-default”; and     (B)   in the case of
any other such Indebtedness, any cross-default to the obligations contained in
any agreement evidencing such Indebtedness shall be limited to a cross-payment
default and shall be subject to a grace period reasonably acceptable to the
Bank; and

  (ii)   in the event that any agreement evidencing such Indebtedness contains
financial maintenance covenants, except as may otherwise be agreed to by the
Bank, such financial maintenance covenants shall be limited to those set forth
in Clauses 21.24 (Maximum Total Leverage Ratio) to 21.26 (Minimum Asset Coverage
Ratios) and shall be set back from the ratios set forth in Clauses 21.24
(Maximum Total Leverage Ratio) to 21.26 (Minimum Asset Coverage Ratios) by at
least 20%; and

  (G)   the aggregate outstanding principal amount of all Permitted Junior Debt
shall not at any time exceed $100,000,000, provided that the aggregate
outstanding principal amount of all Permitted Junior Debt that is secured on all
or any portion of the assets of the Parent or its Subsidiaries shall not at any
time exceed $50,000,000.

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    “Permitted Junior Debt Intercreditor Agreement” has the meaning given to
that term in the Cyan Facility Agreement as at the date of this Agreement.      
“Permitted Junior Debt Representative” means, with respect to any Permitted
Junior Debt, the trustee, administrative agent, collateral agent, security
agent, security trustee or similar agent under the indenture, collateral trust
agreement or other agreement pursuant to which such Permitted Junior Debt is
issued, incurred or otherwise obtained and each of their successors in such
capacities.       “Permitted Security” has the meaning given to it in Clause
21.17 (Negative Pledge).       “Petroleum” means any mineral, oil or relative
hydrocarbon (including condensate and natural gas liquids) and natural gas
existing in its natural condition in strata (but not including coal or
bituminous shale or other stratified deposits from which oil can be extracted by
destructive distillation).       “Post-Cyan Obligor” means:

  (A)   the Company;     (B)   the Parent; and     (B)   any Additional
Post-Cyan Obligor.     “Post-Cyan Security Documents” means:     (A)   the
Original Post-Cyan Security Documents; and     (B)   any Additional Post-Cyan
Security Document.

    “Preferred Equity Interests” of any person means any Equity Interests of
such person that have preferential rights to any other Equity Interests with
respect to dividends or redemptions or upon liquidation, and shall include any
Qualified Preferred Stock.       “Probable Reserves” means the estimated
quantities of crude oil, 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).      
“Probable Reserve Value” means, as of any date of determination, 50% of the
present value of future cash flow from Probable Reserves on the Parent’s and
each of its Subsidiaries’ Oil and Gas Properties as set forth in the most recent
Reserve Report delivered pursuant to Clause 21.1.4 (Reserve Report), utilising:

  (A)   in the case of any Oil and Gas Properties located in the United States
or any of its territories or possessions (including U.S. Federal waters in the
Gulf of Mexico), 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

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      Three-Year Strip Price for crude oil and natural gas, in each case quoted
on any commodities exchange or other price quotation source generally recognised
in the oil and gas industry in such jurisdiction and reasonably acceptable to
the Bank,

    in the case of each of paragraphs (A), (B) and (C) above, 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 the
purposes of calculating Probable Reserve Value, 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.      
“Pro Forma Basis” means, in connection with any calculation of compliance with
any financial covenant or financial term, the calculation thereof after giving
effect on a pro forma basis to:

  (A)   the incurrence of any Indebtedness (other than revolving Indebtedness,
except to the extent same is incurred to refinance other outstanding
Indebtedness, to finance a Permitted Acquisition or a Permitted Business
Investment) after the first day of the relevant Calculation Period or Test
Period, as the case may be, as if such Indebtedness had been incurred (and the
proceeds thereof applied) on the first day of such Test Period or Calculation
Period, as the case may be;     (B)   the permanent repayment of any
Indebtedness (other than revolving Indebtedness, except to the extent
accompanied by a corresponding voluntary permanent commitment reduction) after
the first day of the relevant Test Period or Calculation Period, as the case may
be, as if such Indebtedness had been retired or repaid on the first day of such
Test Period or Calculation Period, as the case may be; and     (C)   any
Material Permitted Acquisition, any Material Permitted Business Investment or
any Material Asset Sale then being consummated as well as any other Material
Permitted Acquisition, any other Material Permitted Business Investment or any
other Material Asset Sale if consummated after the first day of the relevant
Test Period or Calculation Period, as the case may be, and on or prior to the
date of such calculation, with the following rules to apply in connection
therewith:

  (i)   all Indebtedness:

  (a)   (other than revolving Indebtedness, except to the extent same is
incurred to refinance other outstanding Indebtedness or to finance a Permitted
Acquisition or a Permitted Business Investment) incurred or issued after the
first day of the relevant Test Period or Calculation Period (whether incurred to
finance a Permitted Acquisition or a Permitted Business Investment, to refinance
Indebtedness or otherwise) shall be deemed to have been incurred or issued (and
the proceeds thereof applied) on the first day of such Test Period or
Calculation Period, as the case may be, and remain outstanding through the date
of determination; and     (b)   (other than revolving Indebtedness, except to
the extent accompanied by a corresponding voluntary permanent commitment
reduction) permanently retired or redeemed after the first day of the relevant
Test Period or Calculation Period, as the

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      case may be, shall be deemed to have been retired or redeemed on the first
day of such Test Period or Calculation Period, as the case may be, and remain
retired through the date of determination;

  (ii)   all Indebtedness assumed to be outstanding pursuant to preceding
sub-paragraph (i) shall be deemed to have borne interest at:

  (a)   the rate applicable thereto, in the case of fixed rate indebtedness; or
    (b)   the rates which would have been applicable thereto during the
respective period when same was deemed outstanding, in the case of floating rate
Indebtedness (although interest expense with respect to any Indebtedness for
periods while same was actually outstanding during the respective period shall
be calculated using the actual rates applicable thereto while same was actually
outstanding);     provided that all Indebtedness (whether actually outstanding
or deemed outstanding) bearing interest at a floating rate of interest shall be
tested on the basis of the rates applicable at the time the determination is
made pursuant to said provisions; and

  (iii)   in making any determination of Consolidated EBITDAX on a Pro Forma
Basis, pro forma effect shall be given to any Material Permitted Acquisition,
any Material Permitted Business Investment, or any Material Asset Sale if
effected during the respective Calculation Period or Test Period (or, except for
the purposes of determining quarterly compliance with Clauses 21.24 (Maximum
Total Leverage Ratio) to 21.26 (Minimum Asset Coverage Ratio) pursuant to the
terms thereof, thereafter and on or prior to the date of the respective
calculation) as if the same had occurred on the first day of the respective
Calculation Period or Test Period, as the case may be, and taking into account
factually supportable and identifiable cost savings and expenses which would
otherwise be accounted for as an adjustment pursuant to Article 11 of
Regulation S-X under the Securities Act, as if such cost savings or expenses
were realised on the first day of the respective period.

    “Project Documents” means and includes in relation to each Oil and Gas
Property of the Parent or any of its Subsidiaries:

  (A)   each joint operating agreement and/or unitisation and unit operating
agreement relating thereto, each agreement relating to the development thereof
or the transportation, processing and/or storage of production therefrom and
each agreement for the sale or marketing of production therefrom and each other
major agreement relating to such Oil and Gas Property and/or Hydrocarbons
produced therefrom;     (B)   each Authorisation required for the lawful
exploitation, development, or operation of such Oil and Gas Property or the
production, transportation or sale of Hydrocarbons therefrom (and including,
without limitation, any Hydrocarbons production licence);

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  (C)   any development plan approved by any relevant operating committee and/or
any Governmental Authority relating to that Oil and Gas Property; and     (D)  
any other document designated as such by the Bank acting reasonably.

    “Projections” has the meaning given to that term in Clause 21.1.5
(Projections).       “Proved Developed Reserves” means oil and gas reserves that
can be expected to be recovered through existing wells with existing equipment
and operating methods.       “Proved Reserves” means the estimated quantities of
crude oil, natural gas and natural gas liquids that geological and engineering
data demonstrates with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions (i.e.
prices and costs as of the date the estimate is made).       “PV-10 Value”
means, as of any date of determination, the present value of future cash flows
from Proved Reserves on Parent’s and each of its Subsidiaries’ Oil and Gas
Properties as set forth in the most recent Reserve Report delivered pursuant to
Clause 21.1.4 (Reserve Report), utilising:

  (A)   in the case of any Oil and Gas Properties located in the United States
or any of its territories or possessions (including U.S. Federal waters in the
Gulf of Mexico), 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 recognised in the
oil and gas industry in such jurisdiction and reasonably acceptable to the Bank,

    in the case of each of paragraphs (A), (B) and (C) above, as of the date as
of which the information set forth in such Reserve Report is provided (as
adjusted for basis differentials) and utilising a 10% discount rate. For the
purposes of calculating PV-10 Value, 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.

    “Qualified Obligor” means the Parent, the Company and each wholly-owned
Guarantor that is organised under the laws of the United States or any state
thereof or the laws of England and Wales.       “Qualified Preferred Stock”
means any Preferred Equity Interests of the Parent so long as the terms of any
such Preferred Equity Interests:

  (A)   do not contain any mandatory put, redemption, repayment, sinking fund or
other similar provision prior to the date which is 91 days after the Final
Discharge Date;     (B)   do not require the cash payment of dividends or
distributions that would

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    otherwise be prohibited by the terms of this Agreement or any other
agreement or contract of the Parent or any of its Subsidiaries;

  (C)   do not contain any covenants (other than periodic reporting
requirements); and     (D)   do not grant the holders thereof any voting rights
except for:

  (i)   voting rights required to be granted to such holders under applicable
law; and     (ii)   limited customary voting rights on fundamental matters such
as mergers, consolidations, sales of all or substantially all of the assets of
the Parent or liquidations involving the Parent.

    “Real Property” of any person means all the right, title and interest of
such person in and to land, improvements and fixtures, including Leaseholds.    
  “Recovery Event” means the receipt by the Parent or any of its Subsidiaries of
any cash insurance proceeds or condemnations awards, payable:

  (A)   by reason of theft, loss physical destruction, damage, taking or other
similar event with respect to any property or assets of the Parent or any of its
Subsidiaries; or     (B)   under any policy of insurance maintained by any of
them

    “Refinanced Debt” has the meaning given to it in Clause 21.20.1(B)(1)
(Indebtedness).       “Refinancing Debt” has the meaning given to it in Clause
21.20.1(B) (Indebtedness).       “Release” means 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      
“Relevant Holding Company” means the Parent and any Subsidiary of the Parent
which has an Equity Interest (directly or indirectly) of the Company.      
“Renewal Letter of Credit” means a Letter of Credit issued in accordance with
the requirements of Clause 5.4 (Renewal of a Letter of Credit).       “Repeating
Representations” means each of the representations set out in Clauses 20.1
(Company status), 20.2 (Binding obligations), 20.3 (Power and authority), 20.4
(Non-conflict with other obligations), 20.5 (Approvals), 20.6 (Governing law and
enforcement) and 20.14 (Security Documents).       “Reserve Coverage Ratio”
means, or any date of determination, the ratio of:

  (A)   the sum of:

  (i)   PV-10 Value on such date; and     (ii)   Probable Reserve Value on such
date

    to:

  (B)   Consolidated Net Secured Indebtedness.

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    “Reserve Report” means:

  (A)   each annual reserve report prepared by the Parent and audited by an
Independent Engineering Firm, in form and detail consistent with the Reserve
Report delivered pursuant to Part I of Schedule 2 (Conditions Precedent) or
otherwise reasonably acceptable to the Bank; and     (B)   each interim reserve
report prepared by the Parent, in form and detail reasonably acceptable to the
Bank (it being understood and agreed that the Parent will prepare each such
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 and Probable Reserves during the calendar months of the
respective year specified therein), in each case with respect to Oil and Gas
Properties of the Parent and each of its Subsidiaries as of:

  (i)   December 31 of the year immediately preceding the year in which such
report is delivered pursuant to Clause 21.1.4 (Reserve Report) , in the case of
an annual reserve report; or     (ii)   June 30 of the year in which such report
is delivered pursuant to Clause 21.1.4 (Reserve Report) (or such other date
specified therein in the event the Parent has elected to deliver additional
reserve reports pursuant to 21.1.4 (Reserve Report), in the case of semi-annual
or additional reserve reports.

    Each Reserve Report prepared by the Parent shall be certified by the chief
engineering officer of the Parent as being accurate in all material respects.  
    “Restricted” means, when referring to cash or Cash Equivalent of the Parent
or any of its Subsidiaries, that such cash or Cash Equivalents:

  (A)   appears (or would be required to appear) as “restricted” on a
consolidated balance sheet of the Parent or any such Subsidiary (unless such
appearance is related to Finance Documents or Security created thereunder);    
(B)   are subject to any Security in favour of any person other than:

  (i)   the Bank; and     (ii)   holders of the Security permitted under Clause
21.17.3(P) (Negative Pledge); or

  (C)   are not otherwise generally available for use by the Parent or such
Subsidiary, provided that cash or Cash Equivalent of the Parent and its
Subsidiaries that have been pledged to secure the repayment of outstanding
Consolidated Indebtedness (other than the Obligations) shall be deemed not to be
Restricted for the purposes of this Agreement.

    “S&P” means Standard & Poor’s Rating Services, a division of McGraw-Hill,
Inc.       “SEC” means the Securities and Exchange Commission or any
Governmental Authority succeeding to any of its principal functions.      
“Secured Hedging Agreement” means any Hedging Agreement made between a member

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    of the Group and the Bank.

    “Secured Creditors” has the meaning given to that term in the Intercreditor
Agreement.       “Securities Act” means the Securities Act of 1933 of the United
States, as amended and the rules and regulations promulgated thereunder.      
“Security” means a mortgage, charge, pledge, lien, hypothecation, assignment for
security, deposit arrangement, encumbrance (other than any ordinary encumbrance
not securing any obligations of any person), preference, priority or other
security interest securing any obligation of any person or any other agreement
or arrangement having similar effect (including, without limitation, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the UCC or any other similar recording or notice
statute, and any lease having substantially the same effect as any of the
foregoing).       “Security Document” means:

  (A)   each Cyan Security Document; and     (B)   any other document, agreement
or grant pursuant to which any member of the Group grants, perfects or continues
a security interest in favour of the Bank.

    “Sterling” or “£” means the lawful currency for the time being of the United
Kingdom.       “Sterling Equivalent” means, in relation to a determination of
the Cash Collateral Amount, the LC Carve Out Amount converted into Sterling at
the Bank’s spot rate of exchange for the purchase of Dollars on the date of such
determination.       “Subsidiary” means:

  (A)   in relation to any company or corporation, a company or corporation:

  (i)   which is controlled, directly or indirectly, by the first mentioned
company or corporation;     (ii)   in respect of which, more than half the
issued share capital of which is beneficially owned, directly or indirectly by
the first mentioned company or corporation; or     (iii)   which is a Subsidiary
of the first mentioned company or corporation,

      and for this purpose, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct its
affairs and/or to control the composition of its board of directors or
equivalent body; and

  (B)   in relation to any partnership, Delaware limited liability company,
association joint venture or other entity, such entity in which the first
mentioned person and/or one or more Subsidiaries of such person has more than
50% equity interest.

    “Synthetic Lease” means a lease transaction under which the parties intend
that:

  (A)   the lease will be treated as an “operating lease” by the lessee; and    
(B)   the lessee will be entitled to various Tax and other benefits ordinarily
available to

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      owners (as opposed to lessees) of like property.

    “Taxes” means all taxes, duties, levies, withholdings or deductions of
whatever nature.       “Term” means in relation to any Letter of Credit, the
period during which the Bank is under a liability under that Letter of Credit.  
    “Test Period” means each period of four consecutive fiscal quarters of the
Parent then last ended, in each case taken as one accounting period, provided
that for any Test Period that includes fiscal quarters occurring prior to the
first Utilisation Date, the rules set forth in the succeeding sentences in this
definition shall apply. If the respective Test Period:

  (A)   includes the fiscal quarter of the Parent ended 30 September 2010, the
Consolidated EBITDAX for such fiscal quarter shall be deemed to be $12,505,000;
    (B)   includes the fiscal quarter of the Parent ended 31 December 2010, the
Consolidated EBITDAX for such fiscal quarter shall be deemed to be $100,139,000;
and     (C)   includes the fiscal quarter of the Parent ended 31 March 2011, the
Consolidated EBITDAX for such fiscal quarter shall be deemed to be -$3,439,000,

    provided that Consolidated EBITDAX for the foregoing periods shall be
increased or decreased (as applicable) in accordance with the definition of Pro
Forma Basis by the amount of Consolidated EBITDAX for such period attributable
to: (i) any Acquired Entity or Business acquired pursuant to a Material
Permitted Acquisition or Oil and Gas Properties acquired pursuant to Material
Permitted Business Investments; and (ii) any assets disposed of pursuant to any
Material Asset Sale, in each case consummated on or prior to 31 December 2010.
Such attributable Consolidated EBITDAX shall be determined on a basis consistent
with the definition of “Consolidated EBITDAX” with any necessary reference
changes.       “Three-Year Strip Price” means, 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 definitions of “PV-10 Value” and “Probable Reserve 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 Leverage Ratio” means, on any date of determination, the ratio of:

  (A)   Consolidated Net Indebtedness on such date (calculated exclusive of any
Indebtedness or any of its Subsidiaries of the type described in Clause (g) of
the definition of Indebtedness

    to

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  (B)   Consolidated EBITDAX for the Test Period most recently ended on or prior
to such date,

    provided that for the purposes of any calculation of the Total Leverage
Ratio pursuant to this Agreement, Consolidated EBITDAX shall be determined on a
Pro Forma Basis in accordance with the definition thereof.       “Transaction
Expense” has the meaning given to it in Clause 16 (Costs and Expenses).      
“UCC” means the Uniform Commercial Code as from time to time in effect in the
relevant jurisdiction.       “United Kingdom” and “UK” means each of England,
Wales, Northern Ireland and Scotland as the case may be and includes the United
Kingdom Continental Shelf.       “United States” and “U.S.” means the United
States of America and any of its territories or possessions (including U.S.
Federal waters in the Gulf of Mexico).       “Unrestricted” means, when
referring to cash or Cash Equivalents of the Parent or any of its Subsidiaries,
that such cash or Cash Equivalents are not Restricted.       “U.S. Subsidiary”
means any Subsidiary of any person incorporated or organised in the United
States or any state or territory thereof or the District of Columbia.      
“Utilisation” means a utilisation of a Letter of Credit.       “Utilisation
Date” means the date on which a Letter of Credit is issued.       “Utilisation
Request” means a notice substantially in the form set out in Schedule 3 (Form of
Utilisation Request).       “Wholly-Owned Subsidiary” means, as to any person:

  (A)   any corporation 100% of whose capital stock is at the time owned by such
person and/or one or more Wholly-Owned Subsidiaries of such person; and     (B)
  any partnership, limited liability company, association, joint venture or
other entity in which such person and/or one or more Wholly-Owned Subsidiaries
of such person has a 100% equity interest at such time,

    (other than, in the case of a Non-U.S. Subsidiary of the Parent, with
respect to the preceding clauses (A) and (B), directors’ qualifying shares
and/or other nominal amounts of shares required to be held by persons other than
the Parent and its Subsidiaries under applicable law).

1.2   Unless a contrary indication appears, any reference in this Agreement to:

  1.2.1   the “Bank”, the “Parent” the “Company”, “Collateral Agent”, “Hess
Limited” or any “Party” shall be construed so as to include its successors in
title, permitted assigns and permitted transferees;     1.2.2   the singular
includes the plural and vice versa;     1.2.3   the word “including” is without
limitation;

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  1.2.4   “assets” includes present and future properties, revenues and rights
of every description;     1.2.5   a “Finance Document” or any other agreement or
instrument is a reference to that Finance Document or other agreement or
instrument as amended, novated, supplemented, extended or restated;     1.2.6  
“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;     1.2.7   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);     1.2.8   a “regulation” includes any regulation, rule, official
directive, request or guideline (whether or not having the force of law) of any
governmental, intergovernmental or supranational body, agency, department or of
any regulatory, self-regulatory or other authority or organisation;     1.2.9  
an amount borrowed includes any amount utilised by way of Letter of Credit;    
1.2.10   amounts outstanding under this Agreement include amounts outstanding
under or in respect of any Letter of Credit;     1.2.11   an outstanding amount
of a Letter of Credit at any time is the maximum amount that is or may be
payable by the Company in respect of that Letter of Credit at that time (without
regard to any cash cover provided in relation to such Letter of Credit);    
1.2.12   the Company “repaying” or “prepaying” a Letter of Credit means:

  (A)   the Company providing cash cover for that Letter of Credit;     (B)  
the maximum amount payable under the Letter of Credit being reduced in
accordance with its terms; or     (C)   the Bank being satisfied that it has no
further liability under that Letter of Credit,

    and the amount by which a Letter of Credit is repaid or prepaid under
paragraphs (A) and (B) above is the amount of the relevant cash cover or, as the
case may be, relevant reduction;

  1.2.13   the Company providing “cash cover” for a Letter of Credit means the
Company paying an amount in the currency of the Letter of Credit as Cash
Collateral in accordance with the terms of Clause 6 (Cash Collateral);    
1.2.14   a provision of law is a reference to that provision as amended or
re-enacted; and     1.2.15   a time of day is a reference to London time.

1.3   Section, Clause and Schedule headings are for ease of reference only.

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1.4   Any reference to a Section, Clause or Schedule shall be to a Section,
Clause or Schedule of this Agreement unless expressly stated.   1.5   Unless a
contrary indication appears, a term used in any other Finance Document or in any
notice given under or in connection with any Finance Document has the same
meaning in that Finance Document or notice as in this Agreement.   1.6   A
Default is “continuing” if it has not been remedied or waived.   2.   THE
FACILITY       Subject to the terms of this Agreement, the Bank makes available
to the Company a letter of credit facility in an aggregate amount equal to the
Commitment.   3.   PURPOSE       The Company shall utilise each Letter of Credit
issued under this Agreement at its request in support of, or as a means of
guaranteeing its obligations and liabilities pursuant to the Hess Contracts.  
4.   CONDITIONS PRECEDENT   4.1   Initial conditions precedent       The Company
may not deliver the first Utilisation Request under this Agreement unless the
Bank has received all of the documents and other evidence listed in Part I of
Schedule 2 (Conditions Precedent) in form and substance satisfactory to the
Bank. The Bank shall notify the Company promptly upon being so satisfied.   4.2
  Further conditions precedent       The Bank will only be obliged to comply
with Clause 5.5 (Issue) if:

  4.2.1   in the case of a Renewal Letter of Credit, no Event of Default is
continuing or would result from the proposed Utilisation and, in the case of any
other Utilisation, no Default is continuing or would result from the proposed
Utilisation; and     4.2.2   the Repeating Representations are true in all
respects.

4.3   Maximum number of Utilisations       The Company may not deliver a
Utilisation Request if as a result of the proposed Utilisation more than three
Letters of Credit would be outstanding.   5.   UTILISATION   5.1   Delivery of a
Utilisation Request for Letters of Credit       The Company may request for a
Letter of Credit to be issued by delivery to the Bank of a duly completed
Utilisation Request not later than 10 a.m. on the fifth Business Day prior to
the proposed Utilisation Date (or such later date as the Bank may agree).

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5.2   Completion of a Utilisation Request for a Letter of Credit

  5.2.1   Each Utilisation Request for a Letter of Credit is irrevocable and
will not be regarded as having been duly completed unless:

  (A)   the proposed Utilisation Date is a Business Day within the Availability
Period;     (B)   the currency and amount of the Letter of Credit comply with
Clause 5.3 (Currency and amount);     (C)   the form of the Letter of Credit is
attached (and is in the same form set out in Schedule 4 (Form of Letter of
Credit)) or in such other form as may be agreed between the Company and the
Bank;     (D)   the proposed Expiry Date of the Letter of Credit falls on or
before the Business Day prior to the last day of the Availability Period;    
(E)   the delivery instructions for the Letter of Credit are specified;     (F)
  it has been duly signed by an Authorised Officer of the Company; and     (G)  
the beneficiary of the Letter of Credit is Hess Limited or such other
beneficiary as has been approved by the Bank.

  5.2.2   Only one Letter of Credit may be requested in each Utilisation Request
delivered under this Clause 5.2 (Completion of a Utilisation Request for Letters
of Credit).

5.3   Currency and amount

  5.3.1   The currency specified in a Utilisation Request must be Sterling.    
5.3.2   The amount of the proposed Letter of Credit, when aggregated with the
amount of any outstanding Letters of Credit, must not exceed the Commitment.

5.4   Renewal of a Letter of Credit

  5.4.1   The Company may request any Letter of Credit issued on its behalf to
be renewed by delivery to the Bank of a Utilisation Request no earlier than
thirty-five Business Days before the Expiry Date of the relevant Letter of
Credit and no later than 10.00 a.m. on the fifth Business Day prior to the
Expiry Date of the relevant Letter of Credit.     5.4.2   Each Utilisation
Request relating to the renewal of a Letter of Credit is irrevocable and will
not be regarded as having been duly completed unless:

  (A)   it specifies that it is for the renewal of a Letter of Credit;     (B)  
the proposed Utilisation Date is a Business Day within the Availability Period;
    (C)   the currency and amount of the Letter of Credit comply with Clause 5.3
(Currency and amount);     (D)   a copy of the relevant Letter of Credit to be
renewed is attached;

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  (E)   the proposed new Expiry Date of the Letter of Credit falls on or before
the Final Maturity Date; and     (F)   the delivery instructions for the Letter
of Credit are specified;     (G)   it has been duly signed by an Authorised
Officer of the Company.

  5.4.3   The terms of each renewed Letter of Credit shall be the same as those
of the relevant Letter of Credit immediately prior to its renewal, except that:

  (A)   its amount may be less than the amount of the Letter of Credit
immediately prior to its renewal; and     (B)   its Term shall start on its
Utilisation Date and shall end on the proposed Expiry Date specified in the
relevant Utilisation Request relating to its renewal.

  5.4.4   Only one Letter of Credit may be requested in each Utilisation Request
delivered under this Clause 5.4 (Renewal of a Letter of Credit).

5.5   Issue       If the conditions set out in this Agreement have been met, the
Bank shall issue or, as the case may be, amend, each Letter of Credit on its
proposed Utilisation Date.   5.6   Counter Indemnity       The Company, in
respect of each Letter of Credit issued or deemed issued under this Agreement on
its behalf, unconditionally and irrevocably:

  5.6.1   authorises and directs the Bank to pay any demand which appears on its
face to be in order made pursuant to and in accordance with any such Letter of
Credit on first request or demand being made and to pay all amounts which the
Bank is requested or demanded to pay pursuant to and in accordance with any such
Letter of Credit without requiring proof of the agreement of the Company that
the amounts so demanded or paid are or were due and notwithstanding that the
Company may dispute the validity of any such request, demand or payment;    
5.6.2   undertakes to keep the Bank indemnified immediately on demand against
all costs, liabilities, losses, damages, demands, expenses (including legal
expenses) or actions which the Bank may suffer or incur or which may be made
against the Bank under or in connection with any demand made pursuant to and in
accordance with or any dispute relating to such Letter of Credit (otherwise than
by reason of the Bank’s gross negligence or wilful misconduct);     5.6.3  
authorises the Bank to exercise the rights and powers conferred on it by any
such Letter of Credit and confirms that the Bank shall be entitled to pay any
demand which appears on its face to be in order and agrees that in respect of
any such Letter of Credit the Bank deals in documents only and that the Bank
shall not be concerned with the legality of the claim or any underlying
transaction or any set-off, counterclaim or defence as between the Company and
any other person. This Clause shall apply in respect of amounts so paid without
regard to any other condition, the sufficiency, accuracy or genuineness of any
such request or demand or any certificate or statement in connection therewith
or any incapacity

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      of or limitation upon the powers of any person signing, or issuing such
request, demand or certificate. The Bank shall not be obliged to enquire as to
any such matters and may assume that any such request, demand, certificate or
statement is correct and properly made. If the Bank pays any demand which is not
legally payable such amount shall nevertheless be regarded as having been
properly paid for the purposes of this Agreement; and

  5.6.4   agrees that the obligations of the Company under this Clause 5
(Utilisation) shall not be affected by any act, omission, matter or thing which
but for this provision might operate to release, prejudice or otherwise
exonerate the Company from its obligations under this Agreement in whole or in
part, including without limitation and whether or not known to the Company:

  (A)   any time or waiver granted to or composition with the Bank, the
beneficiary of any such Letter of Credit or any other person;     (B)   the
release of the Company or any other person under the terms of any composition or
arrangement with any creditor or the Parent and any of its Subsidiaries;     (C)
  any taking, variation, compromise, exchange, renewal or release of, or refusal
or neglect to perfect, take-up or enforce, any rights, remedies or securities
available to the Bank or any other person or arising under any such Letter of
Credit;     (D)   any variation or extension of or increase in liabilities under
any such Letter of Credit made with the prior written consent of the Company, so
that references in this Agreement to the same shall include each such variation,
extension and variation;     (E)   any invalidity or irregularity in respect of
any of the obligations of the Company under this Clause 5 (Utilisation);     (F)
  any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of any beneficiary under a Letter
of Credit or any other person;     (G)   any unenforceability, illegality or
invalidity of any obligation of any person under any Finance Document, any
Letter of Credit or any other document or security; or     (H)   any insolvency
or similar proceedings.

5.7   Demands under Letters of Credit       If the Bank receives a demand for
payment under a Letter of Credit, the Bank shall notify the Company of the
amount demanded and the date on which it is payable and the Company shall within
five Business Days of demand pay to the Bank an amount equal to the amount of
the demand less the amount of any cash cover paid to the Bank specifically in
respect of the relevant Letter of Credit and the Company authorises the Bank to
set-off the Cash Collateral with such amounts. Payment of all commission which
has accrued in connection with the Letter of Credit will be made at the same
time by the Company.

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5.8   Cash-out of Letters of Credit

  5.8.1   If the Bank pays an amount to the beneficiary under a Letter of Credit
pursuant to Clause 22.14.5 (Acceleration) the Bank shall notify the Company of
the amount so paid and the Company shall within five Business Days following
demand pay to the Bank an amount equal to the amount paid to the beneficiary
less any amount of cash cover held with the Bank specifically in respect of that
Letter of Credit and the Company authorises the Bank to set-off the Cash
Collateral with such amounts. Payment of all commission which has accrued in
connection with the Letter of Credit will be made at the same time by the
Company.     5.8.2   If at any time the Company is required to provide cash
cover in respect of any Letter of Credit under this Agreement and the payment of
such cash cover, when aggregated with any existing cash cover, would exceed the
amount of cash cover the Company is permitted to pay to the Bank under paragraph
(w) of section 8.01 (Liens) of the Cyan Facility Agreement, then, in lieu of the
Company paying such cash cover the Bank may pay to the beneficiary of that
Letter of Credit, as a disbursement under such Letter of Credit an amount equal
to such excess (the “Bank Payment”), whereupon the Company shall promptly pay to
the Bank, in satisfaction of its reimbursement obligation, an amount equal to
the Bank Payment. Payment of all commission which has accrued in connection with
the Letter of Credit will be made at the same time by the Company.

5.9   Rights of Contribution and Subrogation       The Company shall not, by
virtue of any payment made by it under this Clause 5 (Utilisation) or otherwise,
be subrogated to any rights, security or moneys held or received by the Bank or
be entitled at any time to exercise, claim or have the benefit or any right of
contribution or subrogation or similar right against the Bank. All rights of
contribution or similar rights against the Bank in relation to this Agreement
are hereby waived by the Company.   5.10   Continuing Obligations       The
obligations of the Company under this Clause 5 (Utilisation) shall be
continuing, shall extend to the ultimate balance of the obligations and
liabilities of the Company under this Clause 5 (Utilisation) and shall continue
in force notwithstanding any intermediate payment in part of such obligations or
liabilities. The obligations of the Company under this Clause 5 (Utilisation)
shall be in addition to and shall not be in any way prejudiced by any cash cover
(unless otherwise expressly stated in this Clause 5 (Utilisation)) or other
Security now or hereafter held by the Bank as security or any lien to which the
Bank may be entitled. No invalidity or unenforceability of all or any part of
this Clause 5 (Utilisation) shall affect any rights of indemnity or otherwise
which the Bank would or may have in the absence of or in addition to this Clause
5 (Utilisation).   6.   CASH COLLATERAL   6.1   The Company shall procure that
all amounts of cash cover that it elects or is required hereunder to provide in
relation to any Letter of Credit are paid to the account of the Bank specified
in the Cash Collateral Agreement.   6.2   The Company shall, on each Letter of
Credit Fee Payment Date prior to the Cyan Facility Discharge Date and following
notice from the Bank in accordance with Clause 6.4, pay to

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    the Bank pursuant to the Cash Collateral Agreement the Cash Collateral
Amount so as to ensure, subject to Clause 6.3, that on each Letter of Credit Fee
Payment Date prior to the Cyan Facility Discharge Date, the balance of the Cash
Collateral held by the Bank is equal to the Cash Collateral Amount for that
Letter of Credit Fee Payment Date.

6.3   Unless the Bank otherwise consents, the Company may only request the
withdrawal of monies in respect of the Cash Collateral:

  6.3.1   in such amounts as are required to pay the Bank amounts due and
payable to it under this Agreement in respect of the Letters of Credit until no
amount is or may be outstanding under the Letters of Credit; or     6.3.2  
provided that no Event of Default is continuing, on any Letter of Credit Fee
Payment Date to the extent that the amount of cash cover for the Letters of
Credit on that date exceeds the amount required to be maintained as the Cash
Collateral in accordance with this Clause 6 (the “Excess”), an amount not
exceeding such Excess, provided that the Company may (unless an Event of Default
is continuing) request the return of the Excess from the Cash Collateral on any
Business Day if such Excess is the result of a reduction in the amount
outstanding under any Letter of Credit arising from a repayment or prepayment of
that Letter of Credit other than by the provision of cash cover (and the Bank
shall effect any such withdrawal request on either (i) the same Business Day as
that withdrawal request is made (if the Bank has received the request in writing
before 9 a.m. on that Business Day) or (ii) otherwise on the next following
Business Day after that withdrawal request is made).

6.4   The Bank shall, no later than 3 Business Days before a Letter of Credit
Fee Payment Date prior to the Cyan Facility Discharge Date notify the Company of
any adjustment to the Cash Collateral Amount for that Letter of Credit Fee
Payment Date.   6.5   No later than 30 June 2013, the Company shall pay to the
Bank pursuant to the Cash Collateral Agreement an amount equal to the Cash
Collateral Discharge Amount (less any amount held by the Bank as Cash
Collateral) in cleared funds, and such amount shall remain with the Bank as Cash
Collateral unless:

  6.5.1   applied to pay the Bank amounts due and payable to it under this
Agreement in respect of the Letters of Credit; or     6.5.2   provided that no
Event of Default is continuing, upon a request by the Company on any Business
Day the amount of cash cover for the Letters of Credit which exceeds the Cash
Collateral Discharge Amount (in which case the Bank shall effect any such
withdrawal request on either (i) the same Business Day as that withdrawal
request is made (if the Bank has received the request in writing before 9 a.m.
on that Business Day) or (ii) otherwise on the next following Business Day after
that withdrawal request is made).

7.   CASH COLLATERAL DISCHARGE DATE   7.1   As soon as practicable following the
occurrence of the Cash Collateral Discharge Date, the Bank shall notify the
Company and the Parent of such occurrence.   7.2   Subject at all times to
Clause 7.4 below, following the occurrence of the Cash Collateral Discharge
Date, the provisions of this Agreement which are expressed to apply only prior

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    to the Cash Collateral Discharge Date shall cease to apply, and the
remaining provisions of this Agreement and the other Finance Documents shall be
construed accordingly.

7.3   Subject at all times to Clause 7.4 below, as soon as practicable after the
Cash Collateral Discharge Date, the Bank shall enter into such agreements as are
necessary to release and reassign all right, title and interest of the Bank (in
its capacity as provider of the Facility under this Agreement) in respect of
Security created in favour of the Bank (in its capacity as provider of the
Facility under this Agreement) other than any Security created under the Cash
Collateral Agreement (the “Released Security”). For the avoidance of doubt the
release of any Security by the Bank in its capacity as provider of the Facility
under this Agreement pursuant to this Clause 7.3 shall not operate to release or
reassign any right, title or interest in such Security created in favour of the
Bank in its capacity as a Hedging Counterparty under any Secured Hedging
Agreement.   7.4   If following the occurrence of the Cash Collateral Discharge
Date, the rights or claims of the Bank in respect of any cash cover provided by
Company which triggered the occurrence of the Cash Collateral Discharge Date are
avoided or reduced as a result of insolvency or any similar event affecting the
Company or any other member of the Group:

  7.4.1   the liabilities of the grantors in respect of the Released Security
shall continue as if the release, re-assignment, avoidance or reduction of the
Released Security had not occurred;     7.4.2   the Bank’s rights, title and
interest in respect of the Released Security shall be reinstated in full as if
the release, re-assignment, avoidance or reduction had not occurred; and    
7.4.3   the provisions of this Agreement which are expressed to apply on prior
to the Cash Collateral Discharge Date shall be reinstated in full, and the
provisions of this Agreement and the other Finance Documents shall be construed
accordingly,

    and each Obligor agrees to take all reasonable steps requested by the Bank,
at the cost of Parent (which Parent hereby agrees to pay), to enable such
reinstatement.

8.   CYAN FACILITY DISCHARGE DATE   8.1   Release of Security in respect of the
Cyan Facility Agreement       With effect from the date (the “Cyan Facility
Discharge Date”) which is the later to occur of:

  (A)   the date on which the Borrower confirms to the Bank (with supporting
evidence satisfactory to the Bank, acting reasonably) that all amounts
outstanding under the Cyan Facility Agreement have been fully repaid and the
obligations of each Credit Party under each Credit Document (as such terms are
defined in the Cyan Facility Agreement) have been discharged in full (excluding
Contingent Obligations expressly surviving the repayment of amounts outstanding
under the Cyan Facility Agreement and in respect of which no claim is
outstanding);     (B)   the date on which the Bank has been appointed as
Collateral Agent pursuant to the terms of the Intercreditor Agreement;

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  (C)   the date on which the Original Post-Cyan Security Documents are amended
(in form and substance satisfactory to the Bank) so that they are enforceable
upon the occurrence of an Event of Default; and     (D)   (if a Company Asset
Transfer has occurred) the date on which the member of the Group which is the
transferee in respect of that Company Asset Transfer (an “Additional Post-Cyan
Obligor”) has:

  (1)   acceded to this Agreement as an Additional Guarantor;     (2)   entered
into an Additional Post-Cyan Security Document (in form and substance
satisfactory to the Bank, acting reasonably) creating Security over its business
and assets in favour of the Bank; and     (3)   each holder of a direct Equity
Interest in that Additional Post-Cyan Obligor has entered into an Additional
Post-Cyan Security Document (in form and substance satisfactory to the Bank,
acting reasonably) creating Security over its Equity Interests in that
Additional Post-Cyan Obligor in favour of the Bank,

    the Bank, in its capacity as Collateral Agent shall, at the cost of the
Company:

  (A)   release all Security provided by each member of the Group under the Cyan
Security Documents (other than the Post-Cyan Security Documents); and     (B)  
release and discharge each Guarantor (other than the Parent and each Additional
Post-Cyan Obligor) from its guarantee obligations under this Agreement.

8.2   Application of amended and restated terms       Immediately upon the
occurrence of the Cyan Facility Discharge Date, Clauses 20 (Representations and
Warranties), 21 (Covenants) and 22 (Events of Default) shall be amended and
restated in the form set out in Schedule 13 (Form of Amended and Restated Terms)
and the amended and restated definitions set out in Schedule 13 (Form of Amended
and Restated Terms) shall apply for all purposes under the Finance Documents.  
8.3   Further assurance       The Bank, in its capacity as Collateral Agent and
on its own behalf, shall, at the request and at the cost of the Company, execute
such documents (and provide the execution by any of its nominees or delegates)
and do such reasonable deeds, acts and things as are necessary to give effect to
this Clause 8.   9.   PREPAYMENT AND CANCELLATION   9.1   Illegality       If it
becomes unlawful in any applicable jurisdiction for the Bank to issue or leave
outstanding any Letter of Credit, then:

  9.1.1   the Bank shall promptly notify the Company upon becoming aware of that
event and thereupon shall not be obliged to issue a Letter of Credit;     9.1.2
  the Company shall use its best endeavours to procure the release of each
Letter of Credit which has been issued and is outstanding at that time;

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  9.1.3   the Facility shall cease to be available for the issue of Letters of
Credit; and     9.1.4   the Company shall promptly upon demand provide full cash
cover in respect of the outstanding Letters of Credit.

9.2   Voluntary cancellation       The Company may, if it gives the Bank not
less than five Business Days’ (or such shorter period as the Bank may agree)
prior notice, cancel the whole or any part (being a minimum of £1,000,000 of the
Commitment.

9.3     Voluntary prepayment of Utilisations

  9.3.1   The Company may, if it gives the Bank not less than five Business
Days’ (or such shorter period as the Bank may agree) prior notice, prepay the
whole or any part of a Utilisation (but, if in part, being an amount that
reduces the Utilisation by a minimum of £500,000).     9.3.2   If the whole or
any part of a Letter of Credit is prepaid pursuant to Clause 9.3.1 (other than
by the provision of Cash Cover), the Cash Collateral Amount and the Cash
Collateral Discharge Amount shall be reduced accordingly.

9.4   Restrictions

  9.4.1   Any notice of cancellation or prepayment given by the Company under
this Clause 9 shall be irrevocable and, unless a contrary indication appears in
this Agreement, shall specify the date or dates upon which the relevant
cancellation or prepayment is to be made and the amount of that cancellation or
prepayment.     9.4.2   Any prepayment under this Agreement shall be made
without premium or penalty.     9.4.3   Unless a contrary indication appears in
this Agreement, any part of the Facility which is prepaid may be reborrowed in
accordance with the terms of this Agreement.     9.4.4   The Company shall not
repay or prepay all or any party of the Utilisations or cancel all or any part
of the Commitment except at the times and in the manner expressly provided for
in this Agreement.     9.4.5   No amount of the Commitment cancelled under this
Agreement may be subsequently reinstated.

10.   DEFAULT INTEREST   10.1   Default interest

  10.1.1   If the Company or the Parent fails to pay any amount payable by it
under a Finance Document on its due date, interest shall accrue on the overdue
amount from the due date up to the date of actual payment (both before and after
judgment) at a rate which is two per cent. per annum over the cost to the Bank
of funding such sum (as certified by the Bank) from whatever source the Bank may
select. Such interest shall accrue from day to day and be payable on demand.

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  10.1.2   Default interest (if unpaid) arising on an overdue amount will be
compounded with the overdue amount at the end of each interest period (the
duration of such interest period to be notified by the Bank to the Company)
applicable to that overdue amount but will remain immediately due and payable.

10.2   Notification of rates of interest       The Bank shall promptly notify
the Company of the determination of a rate of interest under this Agreement.  
11.   FEES   11.1   Fee payable in respect of Letters of Credit

  11.1.1   The Company shall pay to the Bank a Letter of Credit fee (the “Letter
of Credit Fee”) in Sterling computed at the rate equal to 4.50 per cent. per
annum (on a daily basis) on the outstanding amount of each Letter of Credit
requested by the Company from the date of its issue until the Bank has confirmed
to the Company that it has determined, in its sole discretion (acting
reasonably), that it is under no actual or contingent liabilities in respect of
that Letter of Credit (the “Liability Expiry Date”).     11.1.2   The accrued
Letter of Credit Fee for each Letter of Credit shall be payable in arrears on
the last Business Day of each of the months of January, April, July and October
starting on the last Business Day of October 2011 (each a “Letter of Credit Fee
Payment Date”) or such shorter time as shall end on the Liability Expiry Date
for that Letter of Credit.

11.2   Commitment fee

  11.2.1   The Company shall pay to the Bank a commitment fee in sterling
computed at the rate of 2.25 per cent. per annum on the unutilised Commitment
for the Availability Period.     11.2.2   The accrued commitment fee is payable
on each Letter of Credit Fee Payment Date which occurs prior to the expiry of
the Availability Period, on the last day of the Availability Period and, if
cancelled in full, on the cancelled amount of the unutilised Commitment at the
time the cancellation is effective.

11.3   Establishment fee       The Company shall pay to the Bank an
establishment fee in Sterling computed at the rate of 1 per cent. of the
Commitment as at the date of this Agreement. This fee is payable on the earlier
of the first Utilisation Date and a date which is five Business Days after the
date of this Agreement.   11.4   Technical bank fee       The Company shall pay
to the Bank a technical bank fee in Sterling in the amount of £35,000 per annum.
This fee is payable annually in advance until the Final Discharge Date, with the
first fee payment being payable on the earlier of the first Utilisation Date and
a date which is five Business Days after the date of this Agreement and each
subsequent fee payment being payable on each anniversary of the date of this
Agreement (or, if that date is not a Business Day, on the next occurring
Business Day).

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11.5   Other fees and expenses       The Company shall pay to the Bank the
amount of all out-of-pocket costs and expenses (including any legal, postage,
courier, SWIFT and any similar fees or costs), stamp duty and other charges and
registration costs reasonably incurred by the Bank, in connection with the
issuance or administration of any Letter of Credit.   12.   TAX GROSS UP AND
INDEMNITIES   12.1   Tax gross-up       All payments due from any Obligor under
any Finance Document shall be made free and clear of Taxes unless required by
law. In the event that an Obligor is compelled by the laws of any applicable
jurisdiction (or by an order of any regulatory authority in such jurisdiction)
to make any deduction or withholding for or on account of any Taxes, that
Obligor shall notify the Bank and the relevant payment under such Finance
Document shall be increased to an amount which (after making any deduction or
withholding for Taxes) leaves an amount equal to the payment which would have
been due if no such deduction or withholding had been required.   12.2   Tax
indemnity

  12.2.1   Each Obligor shall, within five Business Days of demand by the Bank,
pay to the Bank an amount equal to the loss, liability or cost which the Bank
determines will be or has been (directly or indirectly) suffered for or on
account of Taxes paid by the Bank in respect of a Finance Document.     12.2.2  
Clause 12.2.1 shall not apply:

  (A)   with respect to any Taxes assessed on the Bank under the law of the
jurisdiction in which the Bank is incorporated or, if different, the
jurisdiction (or jurisdictions) in which the Bank is treated as resident for tax
purposes, if that Tax is imposed on or calculated by reference to the net income
received or receivable (but not any sum deemed to be received or receivable) by
the Bank; or     (B)   to the extent a loss, liability or cost is compensated
for by an increased payment under Clause 12.1 (Tax gross-up).

12.3   Stamp taxes       Each Obligor shall pay and, within five Business Days
of demand, indemnify the Bank against any cost, loss or liability that the Bank
incurs in relation to all stamp duty, registration and other similar Taxes
payable in respect of any Finance Document.   12.4   Value added tax

  12.4.1   All amounts set out or expressed in a Finance Document to be payable
by an Obligor to the Bank 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 any such supply or supplies, and
accordingly, if VAT is or becomes chargeable on any supply made by Bank to the
applicable Obligor under a Finance Document, that party shall pay to the Bank
(in addition to and at the

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      same time as paying any other consideration for such supply) an amount
equal to the amount of such VAT (and the Bank shall promptly provide an
appropriate VAT invoice to such party).

  12.4.2   Where a Finance Document requires an Obligor to reimburse or
indemnify the Bank for any cost or expense, that party shall reimburse or
indemnify (as the case may be) the Bank for the full amount of such cost or
expense, including such part thereof as represents VAT, save to the extent that
the Bank reasonably determines that it is entitled to credit or repayment in
respect of such VAT from the relevant tax authority.     12.4.3   Any reference
in this Clause 12.4 (Value added tax) to any party shall, at any time when such
party is treated as a member of a group for VAT purposes, include (where
appropriate and unless the context otherwise requires) a reference to the
representative member of such group at such time (the term “representative
member” to have the same meaning as in the Value Added Tax Act 1994).

13.   INCREASED COSTS   13.1   Increased costs

  13.1.1   Subject to Clause 13.2 (Exceptions), each Obligor shall, within five
Business Days of a demand by the Bank, pay for the account of the Bank the
amount of any Increased Costs incurred by the Bank or any of its Affiliates as a
result of (i) the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation or (ii) compliance with
any law or regulation made after the date of this Agreement.     13.1.2   In
this Agreement “Increased Costs” means:

  (A)   a reduction in the rate of return from the Facility or on the Bank’s (or
its Affiliate’s) overall capital;     (B)   an additional or increased cost; or
    (C)   a reduction of any amount due and payable under any Finance Document,

      which is incurred or suffered by the Bank or any of its Affiliates to the
extent that it is attributable to the Bank having entered into this Agreement or
funding or performing its obligations under any Finance Document or Letter of
Credit.

13.2   Exceptions

  13.2.1   Clause 13.1 (Increased costs) does not apply to the extent any
Increased Cost is:

  (A)   attributable to a Tax Deduction required by law to be made by the
Company or the Parent;     (B)   compensated for by Clause 12.2 (Tax indemnity)
(or would have been compensated for under Clause 12.2 (Tax indemnity) but was
not so compensated solely because any of the exclusions in Clause 12.2.2 (Tax
indemnity) applied); or

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  (C)   attributable to the wilful breach by the Bank or its Affiliates of any
law or regulation.

  13.2.2   In this Clause 13.2 (Exceptions), a reference to a “Tax Deduction”
means a deduction or withholding for or on account of Tax from a payment under a
Finance Document.

14.   OTHER INDEMNITIES   14.1   Currency indemnity

  14.1.1   If any sum due from an Obligor under the Finance Documents (a “Sum”),
or any order, judgment or award given or made in relation to a Sum, has to be
converted from the currency (the “First Currency”) in which that Sum is payable
into another currency (the “Second Currency”) for the purpose of:

  (A)   making or filing a claim or proof against that Obligor;     (B)  
obtaining or enforcing an order, judgment or award in relation to any litigation
or arbitration proceedings,

      each Obligor shall as an independent obligation, within five Business Days
of demand, indemnify the Bank against any cost, loss or liability arising out of
or as a result of the conversion including any discrepancy between (A) the rate
of exchange used to convert that Sum from the First Currency into the Second
Currency and (B) the rate or rates of exchange available to that person at the
time of its receipt of that Sum.

  14.1.2   Without prejudice to Clause 14.1.1, each Obligor shall as an
independent obligation, within five Business Days of demand, indemnify the Bank
against any cost, loss or liability which the Bank incurs as a result of
receiving an amount in respect of an Obligor’s liability under any Finance
Document in a currency other than the currency in which that liability is
expressed to be payable under that Finance Document.     14.1.3   Each Obligor
waives any right it may have in any jurisdiction to pay any amount under the
Finance Documents in a currency or currency unit other than that in which it is
expressed to be payable.

14.2   Other indemnities       Each Obligor shall, within five Business Days of
demand, indemnify the Bank against any cost, loss or liability incurred by the
Bank as a result of:

  14.2.1   the occurrence of any Event of Default;     14.2.2   a failure by an
Obligor to pay any amount due under a Finance Document on its due date;    
14.2.3   issuing or making arrangements to issue a Letter of Credit requested by
a Company in a Utilisation Request but not issued by reason of the operation of
any one or more of the provisions of this Agreement;

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  14.2.4   acting or relying on any notice, request or instruction which it
reasonably believes to be genuine, correct and appropriately authorised;    
14.2.5   a Utilisation (or part of a Utilisation) not being prepaid in
accordance with a notice of prepayment given by the Company;     14.2.6   the
release of any Security constituted by any Finance Document;     14.2.7   any
Environmental Contamination (where such cost, loss or liability (i) has arisen
as a result of the Bank being a party to this Agreement or any other Finance
Document and (ii) is not caused by the gross negligence or wilful default of the
Bank);     14.2.8   any Environmental Claim against the Bank arising as a result
of the Bank being a party to this Agreement or any other Finance Document save
to the extent that such cost, loss or liability is caused by the gross
negligence or wilful default of the Bank;     14.2.9   any abandonment of any
Petroleum asset in which the Parent or any of its Subsidiaries has an interest
(where such cost, loss or liability (i) has arisen as result of the Bank being a
party to this Agreement or any other Finance Document and (ii) is not caused by
the gross negligence or wilful default of the Bank)     14.2.10   any
investigation, litigation or other proceedings (whether or not the Bank is a
party thereto and whether or not such investigation, litigation or other
proceeding is brought by or on behalf of any Obligor) related to entering into
and/or the use of the proceeds of any Utilisation hereunder or the consummation
of any transaction contemplated in any Finance Document.

15.   MITIGATION BY THE BANK   15.1   Mitigation

  15.1.1   The Bank shall, in consultation with the Company, take all reasonable
steps to mitigate any circumstances which arise and which would result in any
amount becoming payable under or pursuant to, or cancelled pursuant to, any of
Clause 9.1 (Illegality), Clause 12 (Tax gross-up and indemnities) or Clause 13
(Increased costs) including (but not limited to) transferring its rights and
obligations under the Finance Documents to another Affiliate.     15.1.2  
Clause 15.1.1 above does not in any way limit the obligations of any Obligor
under the Finance Documents.

15.2   Limitation of liability

  15.2.1   The Company shall promptly indemnify the Bank for all costs and
expenses reasonably incurred by the Bank as a result of steps taken by it under
Clause 15.1 (Mitigation).     15.2.2   The Bank is not obliged to take any steps
under Clause 15.1 (Mitigation) if, in the opinion of the Bank (acting
reasonably), to do so might be prejudicial to it.

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16.   COSTS AND EXPENSES   16.1   Transaction expenses

  16.1.1   Subject to Clause 16.1.2 and 16.1.3 below, each Obligor shall, within
five Business Days of demand, pay the Bank the amount of all costs and expenses
(including legal fees) reasonably incurred by it in connection with:

  (A)   the negotiation, preparation, printing and execution of:

  (1)   this Agreement and any other documents referred to in this Agreement;  
  (2)   any other Finance Documents executed after the date of this Agreement;

  (B)   the delivery of any legal opinion that the Bank may reasonably require
in connection with the entry into of any Finance Document after the date of this
Agreement; and/or     (C)   the completion of the transactions contemplated by
any Finance Document and/or the perfection of the Security intended to be
created pursuant to the Security Documents.

      (each such cost being a “Transaction Expense”).

  16.1.2   The Bank shall only incur a Transaction Expense in respect of legal
fees or a Transaction Expense (excluding legal fees) that is in excess of
$1,000, with the prior written consent of the Company (such consent not to be
unreasonably withheld or delayed).     16.1.3   If the Bank incurs a Transaction
Expense without the consent of the Company in accordance with the terms of
Clause 16.1.2 above, the Company shall not be liable for the payment of such
Transaction Expense incurred by the Bank under the Finance Documents.

16.2   Amendment costs       If an Obligor requests an amendment, waiver or
consent to any Finance Document, or the release of any Security constituted by
any Finance Document, that Obligor shall, within five Business Days of demand,
reimburse the Bank for the amount of all costs and expenses (including legal
fees) reasonably incurred by the Bank in responding to, evaluating, negotiating
or complying with that request or requirement.   16.3   Enforcement costs      
Each Obligor and the Parent shall, within five Business Days of demand, pay to
Bank the amount of all costs and expenses (including legal fees) incurred by the
Bank in connection with the enforcement of, or the preservation of any rights
under, any Finance Document.   16.4   Advisers’ fees

  16.4.1   The Bank may appoint any legal adviser, insurance adviser,
environmental consultant, engineering consultant or other independent expert or
adviser (each, a “Bank’s Adviser”) in connection with the exercise of the Banks’
rights and

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      discretions, or the performance of its duties and obligations, under the
Finance Documents, provided that (save where such appointment is made in
circumstances where a Default has occurred and is continuing) the Bank shall
consult with the Company prior to making any such appointment.

  16.4.2   The Obligors shall allow the Bank and/or such Bank’s Adviser access
to the Group’s premises, books and records for the purposes of (without
limitation) regularly monitoring engineering data and title information covering
all Oil and Gas Property of the Obligors.     16.4.3   Each Obligor shall,
within five Business Days of demand by the Bank pay, or reimburse the Bank for
any payments that it has made in relation to, the fees, costs and expenses of
any Bank’s Adviser appointed by the Bank where (i) such Bank’s Adviser has been
appointed in circumstances where the Bank (acting reasonably) suspects that a
Default has occurred and is continuing or (ii) such fee, costs and expenses have
been incurred pursuant to Clause 16.2 (Amendment costs) or Clause 16.3
(Enforcement costs)).

17.   WAIVER OF CERTAIN RIGHTS   17.1   Each Obligor hereby unconditionally and
irrevocably waives and agrees not to interpose or assert against the Bank, any
claim, defence, right of set-off, counterclaim or deduction of any kind now
existing or hereafter arising which that Obligor may have against the Bank or
against any other relevant party under or in respect of any Finance Document
(save in the case of gross negligence, wilful default or fraud on the part of
the Bank) or in the exercise of the Bank’s rights under or in respect thereof
(save in the case of gross negligence, wilful default or fraud on the part of
the Bank), including but not limited to the Bank’s rights in respect of any
release by the Bank of any collateral and any reimbursement under any Finance
Document.   17.2   No Obligor shall assert, and hereby waives, any claim against
the Bank, in any theory of liability, for special, indirect, consequential or
incidental damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of this Agreement, any other Finance Document,
any other agreement contemplated thereby or any Utilisation or the use of
proceeds thereof.   17.3   The Bank shall not be liable for any damages arising
from the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Finance
Documents of the transactions contemplated thereby, except to the extent that
the liability of the Bank results from its gross negligence or wilful misconduct
(as determined by a court of competent jurisdiction in a final and
non-appealable decision.   18.   DISCLOSURE OF INFORMATION   18.1   The Bank
agrees to keep all information relating to the Obligors and the transactions
contemplated by this Agreement (including this Agreement the Finance Documents
and any other document contemplated therein (such information being
“Confidential Information") in whatever form received (including information
given orally and/or as electronic files), confidential and not to disclose it to
any person or entity, save to the extent permitted by Clause 18.2 below, and to
ensure that all Confidential Information is protected with security measures and
a degree of care that would apply to its own

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    confidential information.

18.2   The Bank may:

  18.2.1   disclose Confidential Information in circumstances where:

  (A)   such documents, information or records are publicly available;     (B)  
such disclosure is in connection with any legal or arbitration proceedings;    
(C)   the Bank is required to do so under any law or regulation;     (D)   such
disclosure is made to a governmental, banking, taxation or other regulatory
authority;     (E)   the Bank is enforcing remedies pursuant to this Agreement
and/or any other Finance Document, to the extent that such disclosure is
necessary, in the Bank’s opinion (acting reasonably), for the completion of such
enforcement;     (F)   such disclosure is made to the Bank’s professional
advisers (provided that they are under a professional duty not to disclose any
confidential information);or     (G)   such disclosure is made with the
agreement of the relevant Obligor; and

  18.2.2   proceed with any notification or registration as the Bank deems
appropriate in connection with any dispute involving the Bank, an Obligor or any
third party for the purpose of preserving or enforcing any of the Bank’s rights
under this Agreement or any other agreement contemplated hereby or collecting
any amount owing to the Bank or in connection with any proposed sale, transfer,
assignment or other disposal of the Bank’s rights under this Agreement or any
other agreement contemplated hereby.

18.3   This provision shall prevail over any other disclosure provision
contained in any contract to which the Bank or an Obligor are parties and no
Obligor shall have any recourse against the Bank in relation to such disclosure
permitted under this Clause 18.

19.   GUARANTEE AND INDEMNITY   19.1   Guarantee and indemnity       Each
Guarantor irrevocably and unconditionally jointly and severally:

  19.1.1   guarantees to the Bank punctual performance by each other Obligor of
all that Obligor’s obligations under the Finance Documents;     19.1.2  
undertakes with the Bank that whenever another Obligor does not pay any amount
when due under or in connection with any Finance Document, that Guarantor shall
immediately on demand pay that amount as if it was the principal obligor; and  
  19.1.3   indemnifies the Bank immediately on demand against any cost, loss or
liability suffered by the Bank if any obligation guaranteed by it is or becomes
unenforceable, invalid or illegal. The amount of such cost, loss or liability
shall

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      be equal to the amount which the Bank would otherwise have been entitled
to recover.

19.2   Continuing guarantee       This guarantee is a continuing guarantee and
will extend to the ultimate balance of sums payable by any Obligor under the
Finance Documents, regardless of any intermediate payment or discharge in whole
or in part.   19.3   Reinstatement       If any payment by an Obligor or any
discharge given by the Bank (whether in respect of the obligations of any
Obligor or any security for those obligations or otherwise) is avoided or
reduced as a result of insolvency or any similar event:

  19.3.1   the liability of each Obligor shall continue as if the payment,
discharge, avoidance or reduction had not occurred; and     19.3.2   the Bank
shall be entitled to recover the value or amount of that security or payment
from each Obligor, as if the payment, discharge, avoidance or reduction had not
occurred.

19.4   Waiver of defences       The obligations of each Guarantor under this
Clause 19 (Guarantee and indemnity) will not be affected by (and the intention
of each Guarantor is that its obligations shall continue in full force and
effect notwithstanding) an act, omission, matter or thing which, but for this
Clause 19.4, would reduce, release or prejudice any of its obligations under
this Clause 19 (Guarantee and indemnity) (without limitation and whether or not
known to it or the Bank) including:

  19.4.1   any time, waiver or consent granted to, or composition with, any
Obligor or other person;     19.4.2   the release of any Obligor or any other
person under the terms of any composition or arrangement with any creditor of
any Obligor or other person;     19.4.3   the taking, variation, compromise,
exchange, renewal or release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any Obligor or other
person or any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise the full
value of any security;     19.4.4   any incapacity or lack of power, authority
or legal personality of or dissolution or change in the members or status of an
Obligor or any other person;     19.4.5   any amendment, novation, supplement,
extension, restatement (however fundamental and whether or not more onerous) or
replacement of any Finance Document or any other document or security including
without limitation any change in the purpose of, any extension of or any
increase in any facility or the addition of any new facility under any Finance
Document or other document or security;

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  19.4.6   any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or security; or    
19.4.7   any insolvency or similar proceedings.

19.5   Immediate recourse       Each Guarantor waives any right it may have of
first requiring the Bank (or any trustee or agent on its behalf) to proceed
against or enforce any other rights or security or claim payment from any person
before claiming from that Guarantor under this Clause 19 (Guarantee and
indemnity). This waiver applies irrespective of any law or any provision of a
Finance Document to the contrary.   19.6   Appropriations       Until all
amounts which may be or become payable by the Obligors under or in connection
with the Finance Documents have been irrevocably paid in full, the Bank (or any
trustee or agent on its behalf) may:

  19.6.1   refrain from applying or enforcing any other moneys, security or
rights held or received by the Bank (or any trustee or agent on its behalf) in
respect of those amounts, or apply and enforce the same in such manner and order
as it sees fit (whether against those amounts or otherwise) and no Guarantor
shall be entitled to the benefit of the same; and     19.6.2   hold in an
interest-bearing suspense account any moneys (bearing interest at market rate)
received from any Guarantor or on account of any Guarantor’s liability under
this Clause 19 (Guarantee and indemnity).

19.7   Deferral of Guarantors’ rights       Until all amounts which may be or
become payable by the Obligors under or in connection with the Finance Documents
have been irrevocably paid in full and unless the Bank otherwise directs, no
Guarantor will exercise any rights which it may have by reason of performance by
it of its obligations under the Finance Documents:

  19.7.1   to be indemnified by an Obligor;     19.7.2   to claim any
contribution from any other guarantor of any Obligor’s obligations under the
Finance Documents;     19.7.3   to take the benefit (in whole or in part and
whether by way of subrogation or otherwise) of any rights of the Bank under the
Finance Documents or of any other guarantee or security taken pursuant to, or in
connection with, the Finance Documents by the Bank; and/or     19.7.4   to claim
any set-off or counterclaim against any other Obligor or any other person liable
or claim or prove in competition with the Bank in the bankruptcy or liquidation
of any other Obligor or any other person liable or have the benefit of, or share
in, any payment from or composition with, any other Obligor or any other person
liable or any other Security now or hereafter held by the Bank in respect of the
obligations of any other Obligor under the Finance Documents or for the
obligations or liabilities of any other person liable but so that, if so
directed by the Bank, it will prove for the whole or any part of its claim in
the

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      liquidation or bankruptcy of any other Obligor on terms that the benefit
of such proof and of all of the money received by it in respect thereof shall be
held on trust for the Bank and applied in or towards discharge of the
obligations of the Obligors under the Finance Documents in such manner as the
Bank shall deem appropriate.

19.8   Bank’s authority       If any Obligor fails to claim or prove in the
liquidation or bankruptcy of any other Obligor promptly upon being directed to
do so by the Bank as contemplated by Clause 19.7.4:

  19.8.1   the Bank may, and is irrevocably authorised on behalf of such Obligor
to, file any claims or proofs in such liquidation or bankruptcy on its behalf;
and     19.8.2   the trustee in bankruptcy, liquidator, assignee or other person
distributing the assets of any Obligor or their proceeds is directed to pay
distributions on the obligations or liabilities of such Obligor direct to the
Bank until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in full.

19.9   Additional security       This guarantee is in addition to and is not in
any way prejudiced by any other guarantee or security now or subsequently held
by the Bank.   19.10   Further assurance       Each Guarantor agrees that it
shall promptly, at the direction of the Bank, execute and deliver at its own
expense any document (executed as a deed or under hand as the Bank may direct)
and do any act or thing in order to confirm or establish the validity and
enforceability of the guarantee and indemnity intended to be created by it under
this Clause 19.   19.11   Limitation — Dutch Subsidiaries       The guarantee of
any Dutch Subsidiary shall be deemed to have been given only to the extent that
such guarantee does not violate the prohibition on financial assistance
contained in Sections 2:98c and 2:207c of the Dutch Civil Code (Burgerlijk
Wetboek).   20.   REPRESENTATIONS AND WARRANTIES       Subject to Clause 8 (Cyan
Facility Discharge Date), each of the Obligors hereby represents and warrants to
the Bank on the date hereof, and in accordance with Clause 20.28 (Repetition),
as follows:   20.1   Company Status       Each member of the Group:

  20.1.1   is a Business duly incorporated or formed, as applicable, and validly
existing under the laws of its jurisdiction of incorporation or formation, as
applicable;     20.1.2   has the 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

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  20.1.3   is duly qualified and is authorised to do business 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 authorised which, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, and     20.1.4  
no certifications by any Governmental Authority are required for operation of
its business 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.

20.2   Binding obligations       The obligations expressed to be assumed by it
in each Finance Document to which it is a party are, subject to any general
principles of law limiting its obligations which are specifically referred to in
any legal opinion delivered pursuant to Clause 4.1 (Initial conditions
precedent), legal, valid, binding and enforceable obligations.   20.3   Power
and authority

  20.3.1   Each Obligor has the power and authority to execute, deliver and
perform the terms and provisions of each of the Finance Documents to which it is
party and has taken all necessary action to authorise the execution, delivery
and performance by it of each of such Finance Documents.     20.3.2   Each
Obligor has duly executed and delivered each of the Finance Documents to which
it is party, and each of such Finance Documents constitutes its legal, valid and
binding obligation enforceable in accordance with its terms.

20.4   Non-conflict with other obligations       The entry into and performance
by it of, and the transactions contemplated by, the Finance Documents do not and
will not conflict with:

  20.4.1   any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or Governmental Authority applicable to it;     20.4.2  
the constitutional documents of any Obligor; or     20.4.3   any agreement or
instrument binding upon any Obligor or any of their respective assets (or
constitute a default or termination event under any such agreement or
instrument),

  or result in any breach of any of the terms, covenants, conditions or
provision of, or constitute a default under or result in the creation or
imposition of (or the obligation to create or impose) any Security (except
pursuant to the Security Documents) upon any of the property or assets of any
Obligor or any Subsidiary of an Obligor 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 Obligor or
any Subsidiary of an Obligor is a party or by which it or any of its property or
assets is bound or to which it may be subject.

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20.5   Approvals       No order, consent, approval, licence, authorisation or
validation of, or filing, recording or registration with (except filings which
are necessary to perfect the security interests created or intended to be
created under the Security Documents), or exemption by, any Governmental
Authority is required to be obtained or made by, or on behalf of, any Obligor or
any Subsidiary of an Obligor to authorise, or is required to be obtained or made
by, or on behalf of, any Obligor or any Subsidiary of an Obligor in connection
with:

  20.5.1   the execution, delivery and performance of any Finance Document; or  
  20.5.2   the legality, validity, binding effect or enforceability of any such
Finance Document.

20.6   Governing law and enforcement

  20.6.1   The relevant law chosen as the governing law of each of the Finance
Documents to which it is a party will be recognised and enforced in its
jurisdiction of incorporation.     20.6.2   The submission by it to the
jurisdiction of the courts of England under any relevant Finance Document to
which it is a party and any undertaking given in any Finance Document by it not
to claim any immunity, in each case, is legal, valid and binding under the law
of its jurisdiction of incorporation.     20.6.3   Any judgment obtained in
England in relation to a Finance Document to which it is a party will be
recognised and enforced in its jurisdiction of incorporation.

20.7   Deduction of Tax       It is not required to make any deduction for or on
account of Tax from any payment it may make under any Finance Document.   20.8  
No filing or stamp taxes       Except as specifically referred to in any legal
opinion delivered pursuant to Clause 4.1 (Initial conditions precedent), under
the law of its jurisdiction of incorporation it is not necessary that the
Finance Documents be filed, recorded or enrolled with any court or other
authority in that jurisdiction or that any stamp, registration or similar Tax be
paid on or in relation to the Finance Documents or the transactions contemplated
by the Finance Documents.   20.9   Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections

  20.9.1   The:

  (A)   audited balance sheets of the Company as at 31 December 2008 and 31
December 2009; and     (B)   consolidated audited balance sheets of the Parent
as at 31 December 2008, 31 December 2009 and 31 December 2010,

      and the related statements of income and cash flows and changes in
shareholders’ equity of the Company and the Parent (consolidated, in the case of
the Parent) for the fiscal years ended on such dates, in each case furnished to
the Bank on or

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      before the date of this Agreement, present fairly in all material respects
the respective financial positions of the Company and the Parent (consolidated,
in the case of the Parent) at the date of said financial statements and the
results for the respective periods covered thereby.

  20.9.2   The unaudited consolidated balance sheet of the Parent as at 31
March 2011 and the related statements of consolidated income and cash flows and
changes in shareholders’ equity of the Parent for the fiscal quarter of the
Parent ended on such date furnished to the Bank on or before the date of this
Agreement, present fairly in all material respects the consolidated financial
position of the Parent as at the date of said financial statements and the
results for the period covered thereby.     20.9.3   All financial statements
referred to in Clauses 20.9.1 and 20.9.2 have been prepared in accordance with
GAAP consistently applied except to the extent provided in the notes to said
financial statements (and except for the absence of footnotes in interim
financial statements).     20.9.4   Except as disclosed in the financial
statements referred to in Clause 20.9.1 and 20.9.2, and except for the
Indebtedness incurred and/or outstanding under this Agreement, there were as of
the date of this Agreement no liabilities or obligations with respect to any
member of the Group 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.  
  20.9.5   No Obligor knows of any basis for the assertion against it 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 Clauses 20.9.1
or 20.9.2 or referred to in Clause 20.9.4 which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.    
20.9.6   The Projections delivered to the Bank on or before the date of this
Agreement have been prepared in good faith and are based on assumptions believed
to be reasonable at the time made, and as of the date of this Agreement, and
there are no statements or conclusions in the Projections which are based upon
or include information known by any Obligor to be misleading in any material
respect or which fail to take into account material information known to any
Obligor regarding the matters reported therein.     20.9.7   Each of the Parent
and the Company believes that the Projections delivered to the Bank on or before
the date of this Agreement are reasonable and attainable, it being recognised by
the Bank, however, that projections as to future events are not to be viewed as
facts and that the actual results during the period or periods covered by the
Projections may differ materially from the projected results.     20.9.8  
Nothing has occurred that has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect since 31
December 2010.

20.10   No Default       No Default has occurred and is continuing or will
result from the execution and performance of any transaction contemplated by the
Finance Documents.

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20.11   No Litigation       There are no actions, suits or proceedings pending
or, to the knowledge of any Obligor, threatened:

  20.11.1   with respect to any Finance Document; or     20.11.2   that has had,
or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.

20.12   True and Complete Disclosure       All factual information (taken as a
whole) furnished by or on behalf of any Obligor to the Bank (including, without
limitation, all information contained in the Finance Documents) for the purposes
of or in connection with this Agreement, the other Finance Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of any
Obligor in writing to the Bank 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, it being
understood and agreed that for purposes of this Clause 20.12, such factual
information shall not include the Projections or any pro forma financial
information.   20.13   Tax Returns and Payments

  20.13.1   Each member of the Group has timely filed or caused to be timely
filed with the appropriate taxing authority all material returns, statements,
forms and reports for Taxes (the “Returns”) required to be filed by, or with
respect to the income, properties or operations of any member of the Group. The
Returns accurately reflect in all material respects all liability for Taxes of
each member of the Group, as applicable, for the periods covered thereby. Each
member of the Group has paid all Taxes and assessments payable by it which have
become due, other than:

  (A)   those that are being contested in good faith and adequately disclosed
and for which adequate reserves have been established in accordance with GAAP;
and     (B)   immaterial amounts of Taxes or assessments that no member of the
Group is aware are due; provided that upon the relevant member of the Group
becoming aware that such Taxes and assessments are due, such person shall
promptly pay all such Taxes and assessments, together with any interest and
additional charges thereon.

  20.13.2   There is no action, suit, proceeding, investigation, audit or claim
now pending or, to the knowledge of any Obligor, threatened (in writing) by any
authority regarding any taxes relating to any member of the Group.     20.13.3  
No member of the Group has entered into an agreement or waiver or been requested
to enter into an agreement or waiver extending any statute of limitations
relating to the payment or collection of Taxes of any member of the Group, or is
aware of any circumstances that would cause the taxable years or other taxable
periods of any member of the Group not to be subject to the normally applicable
statute of limitations.

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  20.13.4   No member of the Group has incurred, nor will any of them incur, any
material Tax liability in connection with the Finance Documents or any other
transactions contemplated hereby (it being understood that the representation
contained in this sentence does not cover any future Tax liabilities of any
member of the Group arising as a result of the operation of their businesses in
the ordinary course of business) or any Tax liability resulting from
indemnification (or yield protection provisions) under this Agreement).

20.14   Security Documents       The provisions of each Security Document are
effective to create in favour of the Collateral Agent or (as applicable) Bank a
legal, valid and enforceable security interest of the type that it purports to
create in all right, title and interest of the Obligors in the Collateral
described therein, and the Collateral Agent and (in relation to the Cash
Collateral Agreement) the Bank has a fully perfected security interest in all
right, title and interest in all of the Collateral described therein, subject to
no other Security other than Permitted Security and subject to the same provisos
as are set out in Section 6.11(a) of the Cyan Facility Agreement.   20.15  
Properties

  20.15.1   All Oil and Gas Properties owned or leased by any member of the
Group (other than Oil and Gas Properties:

  (A)   which are not developed;     (B)   which have no reserves; or     (C)  
in which none of the Parent or any of its Subsidiaries have any material working
interests),

      are reflected in the Reserve Report as of 31 December 2010 or are
otherwise set forth in Schedule 5 (Oil and Gas Properties).

  20.15.2   Each member of the Group, 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 Part I of Schedule 2 (Conditions Precedent)
or Clause 21.1.4 (Reserve Report), as the case may be, free from all Security,
claims and title imperfections, except for:

  (A)   such imperfections of title as do not in the aggregate detract from the
value thereof to, or the use thereof in, the business of the applicable
member(s) of the Group in any material respect;     (B)   Oil and Gas Properties
disposed of since the date of the most recent Reserve Report as permitted by
Clause 21.18 (Consolidation, Merger, Purchase or Sale of Assets, etc.); and    
(C)   the Permitted Security.

  20.15.3   The quantum and nature of the interest of each member of the Group
in and to the Oil and Gas Properties as set forth in each Reserve Report
includes or will include the entire interest of the Group in such Oil and Gas
Properties as of the date of such Reserve Report and:

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  (A)   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 the Group in such Oil and Gas Properties in any
material respect, except as expressly set forth or given effect to in such
Reserve Report; and     (B)   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, no member of
the Group 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.

  20.15.4   Each member of the Group has complied with all obligations under all
licences, leases, subleases and:

  (A)   term mineral interests in their respective Oil and Gas Properties and
all such licences, leases, subleases and term mineral interests are valid,
subsisting and in full force and effect, and no member of the Group has
knowledge that a default exists under any of the terms or provisions, express or
implied, of any of such licences, 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;     (B)   all of the Oil and Gas Contracts and obligations of such
member of the Group that relate to the Oil and Gas Properties are in full force
and effect and constitute legal, valid and binding obligations of such member of
the Group (as applicable), except to the extent any inaccuracy in the foregoing
could not reasonably be expected to result in a Material Adverse Effect;     (C)
  no member of the Group or, to the knowledge of any member of the Group, any
other party to any licences, 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 licences or lease
in the Oil and Gas Properties or any Oil and Gas Contract; and     (D)   each
member of the Group enjoys peaceful and undisturbed possession under all such
licences, leases, subleases and term mineral interests.

  20.15.5   Each member of the Group has complied with all obligations under all
Authorisations, and to the best knowledge of the Obligors, no steps have been
taken for the revocation, variation or refusal of any Authorisation, 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.

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20.16   Capitalisation       On and as of the date of this Agreement:

  20.16.1   the authorised capital stock of the Company consists of 10,000
ordinary shares of common stock, £0.10 par value per ordinary share;     20.16.2
  the outstanding Equity Interests of the Company have been duly authorised and
validly issued (to the extent applicable) and have been issued free of
pre-emptive rights and the Company Shareholder owns legally and beneficially all
of the Equity Interests in the Company free and clear of any Security (other
than Permitted Security);     20.16.3   the Company does not have outstanding
any securities convertible into or exchangeable for its respective Equity
Interests or outstanding any rights to subscribe for or to purchase, or any
options 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 Equity Interests or any equity-related appreciation
or similar rights.

20.17   Subsidiaries

  20.17.1   The Parent has no Subsidiaries other than those Subsidiaries listed
on Part I of Schedule 6 (Subsidiaries). Part I of Schedule 6 (Subsidiaries) sets
forth the percentage ownership (direct and indirect) of the Parent in each class
of capital stock or other Equity Interests of each of its Subsidiaries and also
identifies the direct owner thereof. Part II of Schedule 6 (Subsidiaries) sets
forth the Parent and its Subsidiaries in diagrammatic format.     20.17.2   All
outstanding shares of Equity Interests of the Parent and each Subsidiary of the
Parent have been duly and validly issued, are fully paid and non-assessable and
have been issued free of pre-emptive rights.     20.17.3   Other than as set
forth on Schedule 6 (Subsidiaries), no Subsidiary of the Parent has outstanding
any securities convertible into or exchangeable for its Equity Interests 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 Equity Interests or any appreciation or similar
rights.     20.17.4   100% of the Equity Interests of the Company are owned
directly or indirectly by the Parent and the Company Shareholder.

20.18   Compliance with Statutes, etc.

  20.18.1   Each member of the Group 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 Authorisations 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 Clause 20.19 (Environmental Matters), except such
non-compliances as could not, either

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      individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

  20.18.2   Each member of the Group is in compliance with all bonding
requirements for the ownership and operation of its Oil and Gas Properties.

20.19   Environmental Matters       Except as could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect:

  20.19.1   each member of the Group is in compliance with all applicable
Environmental Law 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 any Obligor, threatened
to revoke or rescind any such permit;     20.19.2   there are no claims,
proceedings, investigations or notices of violation pending or, to the knowledge
of any Obligor, threatened against any member of the Group under any
Environmental Law;     20.19.3   no Security, other than a Permitted Security,
has been recorded or, to the knowledge of any Obligor, threatened under any
Environmental Law with respect to any Real Property currently owned by any
member of the Group;     20.19.4   no member of the Group has contracted to
assume or accept responsibility for any liability of any non-affiliated person
under any Environmental Law; and     20.19.5   there are no facts,
circumstances, conditions or occurrences with respect to the past or present
business or operations of any member of the Group or any of their respective
predecessors, any Real Property or facility at any time owned, leased or
operated by any member of the Group 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 any Obligor under any
Environmental Law.

20.20   Employment and Labour Relations       No labour disputes which could
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect have been started or (to the best of each Obligor’s
knowledge and belief) threatened against any member of the Group, nor are there
any circumstances likely to give rise to any such disputes.   20.21  
Intellectual Property, etc.       Each member of the Group owns or has the right
to use all the patents, trademarks, permits, domain names, service marks, trade
names, copyrights, licences, 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, or rights
with respect to the foregoing, and has obtained assignments of all leases,
licences 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.

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20.22   Indebtedness       Schedule 7 (Existing Indebtedness) sets forth a list
of all Indebtedness (including Contingent Obligations) of each member of the
Group and which is to remain outstanding after the date of this Agreement
(excluding the Obligations) in each case showing the aggregate principal amount
thereof and the name of the respective borrower and any person that directly or
indirectly guarantees such debt.   20.23   Insurance       Schedule 8
(Insurances) sets forth a list of all insurance maintained by the Group as of
the date of this Agreement, with the amounts insured (and any deductibles) set
forth therein.   20.24   Pari Passu Ranking       Its payment obligations under
the Finance Documents rank at least pari passu with the claims of all its other
unsecured and unsubordinated creditors, except for obligations mandatorily
preferred by laws applying to companies generally.   20.25   Payment of debts  
    It is not unable and has not admitted its inability to pay its debts as they
fall due and has not been deemed or declared to be unable to pay its debts under
any applicable law and has not suspended making payments on any of its debts.  
20.26   Insolvency       No member of the Group has taken any steps, and (after
due and careful enquiry) it is not aware of any steps having been taken for:

  20.26.1   the winding-up, administration, or dissolution of any member of the
Group (or any of its respective assets);     20.26.2   the appointment of any
Insolvency Officer in relation to any member of the Group or any of its assets,

  or any analogous step in any jurisdiction.   20.27   No agency       In
relation to the Finance Documents, each of the Obligors is dealing as principal
and on its own account, and not as agent or trustee in any other capacity
whatsoever on behalf of any third party.   20.28   Repetition       The
Repeating Representations shall be deemed repeated on:

  20.28.1   each Letter of Credit Fee Payment Date prior to the Final Discharge
Date; and     20.28.2   on the day on which a Subsidiary of the Parent becomes
an Additional Guarantor (or it is proposed that the company becomes an
Additional Guarantor) to the extent that the relevant Repeating Representation
is applicable to such Additional Guarantor,

    in each case by reference to the facts and circumstances then existing.

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21.   COVENANTS       Subject to Clause 8 (Cyan Facility Discharge Date) each
Obligor makes the covenants in this Clause 21 and agrees that they shall remain
in force from the date of this Agreement for so long as any amount is
outstanding under the Finance Documents or any Commitment is in force.   21.1  
Information Covenants       The Parent and the Company will furnish to the Bank:

  21.1.1   Monthly Reports         within 30 days after the end of each fiscal
month of the Parent, the consolidated balance sheet of the Parent as at the end
of such fiscal month and the related consolidated statements of income and
statement of cash flows for such fiscal month and for the elapsed portion of the
fiscal year ended with the last day of such fiscal month, in each case:

  (A)   setting forth comparative figures for the corresponding fiscal month in
the prior fiscal year and comparable forecast figures for such fiscal month as
set forth in the respective forecast delivered pursuant to Clause 21.1.5
(Projections); and     (B)   in the form prepared for the Parent’s and its
Subsidiaries’ monthly internal management reporting package;

  21.1.2   Quarterly Financial Statements         within 45 days after the close
of each quarterly accounting period (excluding the last quarterly accounting
period) in each fiscal year of the Parent:

  (A)   the consolidated balance sheet of the Parent as at the end of such
quarterly accounting period and the related consolidated statements of income
and retained earnings and consolidated 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     (B)
  management’s discussion and analysis of the important operational and
financial developments during such quarterly accounting period,        
certified by an Authorised Officer of the Parent that they fairly present in all
material respects in accordance with GAAP the consolidated financial condition
of the Parent 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;

  21.1.3   Annual Financial Statements         within:

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  (A)   90 days after the close of each fiscal year of the Parent, the
consolidated balance sheet of the Parent as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and
consolidated statements of cash flows for such fiscal year, setting forth
comparative figures for the preceding fiscal year, and certified by KPMG LLP or
another independent certified public accountants of recognised national standing
reasonably acceptable to the Bank, 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
    (B)   274 days after the close of each fiscal year of the Company, the
audited consolidated balance sheet of the Company as at the end of such fiscal
year,

      with the Parent’s consolidated balance sheet including management’s
discussion and analysis of the important operational and financial developments
during the immediately preceding fiscal year of the Parent.

21.1.4   Reserve Report

      prior to the Cash Collateral Discharge Date and prior to or concurrently
with any delivery of the Parent’s financial statements under Clause 21.1.3 and,
solely as to each quarter ending on 30 June, under Clause 21.1.1 (or more
frequently at the Company’s option):

  (A)   a Reserve Report (which shall be:

  (1)   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     (2)   a semi-annual Reserve Report (as so described) in the
case of a Reserve Report delivered in connection with quarterly financial
statements for the fiscal quarter ended 30 June) setting forth, among other
things:

  (a)   the Oil and Gas Properties owned by each member of the Group and covered
by such Reserve Report;     (b)   the Proved Reserves and Probable Reserves
attributable to such Oil and Gas Properties; and     (c)   a projection of the
rate of production and cash flows of such Proved Reserves and Probable Reserves
as of the date as of which the information set forth in such Reserve Report is
provided,

      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 utilising such operating cost and
other assumptions as proposed by the Company); and

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  (B)   a certificate of an Authorised Officer showing any additions to or
deletions from the Oil and Gas Properties made by each member of the Group 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;

  21.1.5   Projections         prior to the Cash Collateral Discharge Date, no
later than the 15th day after the end of each fiscal year of the Parent,
projections of the Group’s and the Company’s fiscal performance in form
satisfactory to the Bank (including forecasted statements of income, cash flow
statement and balance sheets for the Company and the Parent (consolidated, in
the case of the Parent)) for each of the twelve months of each succeeding fiscal
year to the Final Discharge Date, in each case setting forth, with appropriate
discussion, the principal assumptions upon which such projections are based (the
“Projections”);     21.1.6   Compliance Certificate         at the time of the
delivery of the financial statements provided for in Clauses 21.1.2 (Quarterly
Financial Statements) and 21.1.3 (Annual Financial Statements), compliance
certificates from the chief financial officer of, respectively, the Company and
the Parent in the form of Schedule 9 (Form of Compliance Certificate) (a
“Compliance Certificate”) certifying on behalf of the Company or (as applicable)
the Parent 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, and, prior to the Cash Collateral Discharge Date, each Compliance
Certificate shall set forth in reasonable detail the calculations required to
establish whether the Company is in compliance with Clause 21.26 (Minimum Asset
Coverage Ratio).     21.1.7   Notice of Default, Litigation and Material Adverse
Effect         promptly, and in any event within three Business Days after any
officer of an Obligor obtains knowledge thereof, notice of:

  (A)   the occurrence of any event which constitutes a Default or an Event of
Default;     (B)   any litigation or governmental investigation or proceeding
pending or labour dispute against any member of the Group:

  (1)   which, either individually or in the aggregate, has had, or could
reasonably be expected to have, a Material Adverse Effect; or     (2)   with
respect to any Finance Documents; or

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  (C)   any other event, change or circumstance that has had, or could
reasonably be expected to have, a Material Adverse Effect;

  21.1.8   Other Reports and Filings         promptly after the filing or
delivery thereof, copies of all financial information, proxy materials and
reports, if any, which any member of the Group shall:

  (A)   publicly file with the SEC; or     (B)   deliver to holders (or any
trustee, agent or other representative therefor) of any Qualified Preferred
Stock, any Junior Financing or any other material Indebtedness, in each case
pursuant to the terms of the documentation governing the same;

  21.1.9   Environmental Matters         promptly after any officer of any
member of the Group 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:

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  (A)   any pending or threatened Environmental Claim, proceeding, investigation
or notice of breach issued under or pursuant to any Environmental Law against
any member of the Group or any Real Property, facility or Oil and Gas Property
owned, leased or operated by any member of the Group;     (B)   any condition or
occurrence on or arising from any Real Property, facility or Oil and Gas
Property owned, leased or operated by any member of the Group that could
reasonably be expected to form the basis of an Environmental Claim, proceeding,
investigation, action or notice of breach against any member of the Group or any
such Real Property or facility under any Environmental Law;     (C)   issuance
under any Environmental Law of any liens or restrictions on the ownership,
lease, occupancy, use or transferability by any member of the Group of any Real
Property, facility or Oil and Gas Property owned, operated or leased by any
member of the Group; and     (D)   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 any member of the Group;

      All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action and
any member of the Group’s response thereto.     21.1.10   Other Information    
    from time to time, such other information or documents (financial or
otherwise, and including without limitation Project Documents and amendments
thereto) with respect to any member of the Group as the Bank may reasonably
request.

    Notwithstanding the foregoing, the obligations in Clause 21.1.2 (Quarterly
Financial Statements), 21.1.3 (Annual Financial Statements) and 21.1.8 (Other
Reports and Filings), may be satisfied with respect to financial information
(or, in the case of Clause 21.1.8 (Other Reports and Filings), other
information) of the Parent by filing the Parent’s Form 10-K or 10-Q, as
applicable (or, in the case of Clause 21.1.8 (Other Reports and Filings) such
other applicable filing) with the SEC or by making such information available on
the Parent’s website, in each case to the extent the Parent has notified the
Bank of such filing or that such information is available on such website;
provided that to the extent such information is in lieu of information required
to be provided under Clause 21.1.3 (Annual Financial Statements), the Parent
separately delivers to the Bank a report and opinion of KPMG LLP or any other
independent certified public accounting firm acceptable to the Bank, which
report and opinion shall be prepared in accordance with generally acceptable
auditing standards and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit.   21.2   Books, Records and Inspections; Annual Meetings

  21.2.1   The Parent will, and will cause each other member of the Group to,
keep proper books of record and accounts in which full, true and correct entries
in conformity

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      with GAAP and all requirements of law shall be made of all dealings and
transactions in relation to its business and activities. The Parent will, and
will cause each other member of the Group to, permit officers and designated
representatives of the Bank:

  (A)   to visit and inspect, under guidance of officers of such member of the
Group, any of the properties of such member of the Group; and     (B)   to
examine the books of account of such member of the Group and discuss the
affairs, finances and accounts of such member of the Group 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 Bank may reasonably request.

  21.2.2   At the request of the Bank, the Parent will within 120 days after the
close of each fiscal year of the Parent, hold a meeting (which may be by
conference call or teleconference), at a time and place selected by the Parent
and reasonably acceptable to the Bank, with the Bank, to review the financial
results of the previous fiscal year and the financial condition of the Group and
the Company and the budgets presented for the current fiscal year of the Group
and the Company.

21.3   “Know your customer” checks

  21.3.1   If:

  (A)   the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation made after the date of
this Agreement; or     (B)   any change in the status of an Obligor after the
date of this Agreement,

    obliges the Bank to comply with “know your customer” or similar
identification procedures in circumstances where the necessary information is
not already available to it, each Obligor shall promptly upon the request of the
Bank supply, or procure the supply of, such documentation and other evidence as
is reasonably requested by the Bank in order for the Bank to carry out and be
satisfied it has complied with all necessary “know your customer” or other
similar checks under all applicable laws and regulations pursuant to the
transactions contemplated in the Finance Documents.

  21.3.2   The Company shall, by not less than 10 Business Days’ prior written
notice to the Bank, notify the Bank that a Subsidiary of the Company is intended
to become an Additional Guarantor pursuant to Clause 23 (Additional Guarantors).
    21.3.3   Following the giving of any notice pursuant to Clause 21.3.2 above,
if the accession of such Additional Guarantor obliges the Bank to comply with
“know your customer” or similar identification procedures in circumstances where
the necessary information is not already available to it, the Company shall
promptly upon the request of the Bank supply, or procure the supply of, such
documentation and other evidence as is reasonably requested by the Bank in order
for the Bank to carry out and be satisfied it has complied with all necessary

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      “know your customer” or other similar checks under all applicable laws and
regulations pursuant to the accession of such Subsidiary to this Agreement as an
Additional Guarantor.

21.4   Maintenance of Property Insurance

  21.4.1   Prior to the Cash Collateral Discharge Date, the Company will:

  (A)   keep all property necessary to the business of the Company in good
working order and condition, ordinary wear and tear excepted and subject to the
occurrence of casualty events;     (B)   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 the Group; and     (C)   furnish to the Bank, 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 Clause 21.4 shall be deemed supplemental to, but
not duplicative of, the provisions of any Security Documents that require the
maintenance of insurance.

  21.4.2   The Company will at all times keep its property insured in favour of
the Collateral Agent.     21.4.3   If the Company shall fail to maintain
insurance in accordance with this Clause 21.4, the Bank shall have the right
(but shall be under no obligation) to procure such insurance, and the Obligors
jointly and severally agree to reimburse the Bank for all costs and expenses of
procuring such insurance.

21.5   Existence; Franchises; Oil and Gas Properties

  21.5.1   Prior to the Cash Collateral Discharge Date, the Parent will, and
will cause each other member of the Group 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, licences, permits, copyrights, trademarks and
patents and pay all royalties when due; provided, however, that nothing in this
Clause 21.5 shall prevent:

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  (A)   sales of assets and other transactions by any member of the Group in
accordance with Clause 21.18 (Consolidation, Merger, Purchase or Sale of Assets,
etc.); or     (B)   the withdrawal by any Obligor 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.

  21.5.2   Prior to the Cash Collateral Discharge Date, the Parent will, and
will cause each other member of the Group to:

  (A)   comply in all material respects with the terms and provisions of all oil
and gas leases and licences relating to the Oil and Gas Properties of each
member of the Group and all contracts and agreements relating thereto or to the
production and sale of Hydrocarbons therefrom; provided that a member of the
Group shall have the right to abandon Oil and Gas Properties in the exercise of
the relevant member of the Group’s reasonable judgment, in each case in
compliance with the relevant Oil and Gas Contracts governing such Oil and Gas
Properties; and     (B)   with respect to any such Oil and Gas Properties or oil
and gas gathering assets that are operated by operators other than any member of
the Group, 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.

21.6   Compliance with Statutes, etc.

  21.6.1   The Parent will, and will cause each other member of the Group 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 Clause 21.7 (Compliance
with Environmental Laws)), except such non-compliances as could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.     21.6.2   The Parent will, and will cause each other member
of the Group to, maintain and comply with the terms and conditions of any
material Authorisation required under any law or regulation (including
Environmental Law):

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  (A)   to enable it to perform its obligations and/or exercise its rights
under, or the validity or enforceability of, each Finance Document and Project
Document; and     (B)   to enable it to conduct the Oil and Gas Business in
which has an interest,

      except, in the case of preceding paragraph (B) 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.

21.7   Compliance with Environmental Laws

  21.7.1   The Parent will, and will cause each other member of the Group to:

  (A)   comply, with all Environmental Law 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 any Obligor,
except such non-compliances as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;     (B)  
promptly pay or cause to be paid all costs and expenses for which any member of
the Group is legally obligated that are incurred in connection with such
compliance;     (C)   keep or cause to be kept all such Real Property,
facilities and Oil and Gas Properties free and clear of any Security imposed
pursuant to such Environmental Law;     (D)   to generate, use, treat, store,
Release and dispose of, and 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 any member
of the Group, 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 any member of the Group as would
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

  21.7.2   Upon:

  (A)   the receipt by the Bank of any notice from the Company of the type
described in Clause 21.1.9 (Environmental Matters);     (B)   a reasonable
determination that any member of the Group is not in compliance with Clause
21.7.1; or     (C)   the exercise by the Bank of any of the remedies pursuant to
Clause 22.14 (Acceleration),         each Obligor will (in each case)
collectively, or if any Obligor so desires, individually, provide, upon the
request of the Bank at the sole expense of the

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      Obligors, as applicable, an environmental site assessment report
concerning any Real Property or facilities owned, leased or operated by any
member of the Group, prepared by an environmental consulting firm reasonably
acceptable to by the Bank, 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 any Obligor fails to provide the same within 30 days
after such request was made, the Bank may order the same, the cost of which
shall be borne by the non-responsive party; and each of the Obligors shall grant
and hereby grants to the Bank and its respective agents access to such Real
Property and specifically grant the Bank an irrevocable non-exclusive licence,
subject to the rights of tenants, to undertake such an assessment at any
reasonable time upon reasonable notice to the Parent and the Company, all at the
sole expense of each of the Obligors.

21.8   End of Fiscal Years; Fiscal Quarters       The Parent will cause:

  21.8.1   its and each of its Subsidiaries’ fiscal years to end on 31 December
of each calendar year; and     21.8.2   its and each of its Subsidiaries’ fiscal
quarters to end on 31 March, 30 June, 30 September and 31 December,

    provided that nothing in this Clause 21.8 shall prohibit any Subsidiary of
the Parent from maintaining a tax year that does not end on December 31.

21.9   Performance of Obligations       The Parent will, and will cause each
other member of the Group 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.   21.10   Payment of
Taxes       The Parent will pay and discharge, and will cause each other member
of the Group to pay and discharge, all 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 Security or charge upon
any properties of any member of the Group not otherwise permitted under Clause
21.17.3(C) (Negative Pledge); provided that no member of the Group 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.   21.11   Further
assurances

  21.11.1   The Parent will, and will cause each other Obligor to, grant to the
Collateral Agent for the benefit of the Secured Creditors security interests and
Mortgages in such assets and Real Property of the Parent and such other Obligor
(including, without limitation, Oil and Gas Properties and other properties of
the Parent and

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      such other Obligor acquired subsequent to the first Utilisation Date) as
are not covered by the original Security Documents and as may be reasonably
requested from time to time by the Bank (collectively, the “Additional Security
Documents”). All such security interests and Mortgages 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
parties and enforceable against third parties and subject to no other Security
except for Permitted Security. The Additional Security Documents or instruments
related thereto 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 Security in favour 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. It is understood
and agreed that, notwithstanding anything to the contrary above in this Clause
21.11.1, neither the Parent nor any of its Subsidiaries will be required
pursuant to this Clause 21.11.1 to:

  (A)   grant a security interest in or mortgage on any Oil and Gas Property
that would not otherwise be required under Section 7.12(g) of the Cyan Facility
Agreement;     (B)   grant a security interest in or mortgage on any leased Real
Property that is not an Oil and Gas Property; or     (C)   grant a security
interest in or mortgage on any owned Real Property that is not an Oil and Gas
Property unless:

  (1)   any such item of Real Property individually has a Fair Market Value of
at least $2,500,000; or     (2)   the aggregate Fair Market Value of such Real
Property that would otherwise be excluded from the requirements of this Clause
21.11.1 would exceed $10,000,000.

  21.11.2   Each Obligor will, at the expense of the Obligors, make, execute,
endorse, acknowledge, file and/or deliver to the Bank 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 Bank may reasonably require. Furthermore, the Obligors
will deliver to the Bank such opinions of counsel, title insurance and other
related documents as may be reasonably requested by the Bank to assure itself
that this Clause 21.11 has been complied with.     21.11.3   The Obligors agree
that each action required under this Clause 21.11 shall be completed as soon as
possible, but in no event later than 60 days after such action is requested to
be taken by the Bank; provided that, in no event will any Obligor be required to
take any action, other than using its commercially reasonable efforts, to obtain
consents from third parties with respect to its compliance with this Clause
21.11.

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21.12   Ownership of Subsidiaries; etc.       Prior to the Cash Collateral
Discharge Date (without prejudice to Clause 22.12 (Change of Control), except
pursuant to a Permitted Acquisition consummated in accordance with the terms
hereof, the Parent will, and will cause each of its Subsidiaries to, own,
directly or indirectly, 100% of the Equity Interests of each of their
Subsidiaries (other than, in the case of a Non-U.S. Subsidiary of the Parent,
directors’ qualifying shares and/or other nominal amounts of shares required to
be held by local nationals, in each case to the extent required by applicable
law).   21.13   Maintenance of Company Separateness       Each Obligor will
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. No Obligor shall take any
action, or conduct its affairs in a manner, which is likely to result in the
Business existence of any Obligor being ignored, or in the assets and
liabilities of any Obligor being substantively consolidated with those of any
other person in a bankruptcy, reorganisation or other insolvency proceeding.  
21.14   Permitted Acquisitions

  21.14.1   Subject to the provisions of this Clause 21.14 and the requirements
contained in the definition of Permitted Acquisition, any member of the Group
may from time to time effect Permitted Acquisitions so long as, in the case of
Permitted Acquisitions prior to the Cash Collateral Discharge Date (in each case
except to the extent the Bank otherwise specifically agrees in writing in the
case of a specific Permitted Acquisition):

  (A)   no Default or Event of Default shall have occurred and be continuing at
the time of the consummation of the proposed Permitted Acquisition or
immediately after giving effect thereto;     (B)   the Parent shall have given
to the Bank at least 10 Business Days’ prior written notice of any Permitted
Acquisition (or such shorter period of time as may be reasonably acceptable to
the Bank), which notice shall describe in reasonable detail the principal terms
and conditions of such Permitted Acquisition;     (C)   drafts of the definitive
documentation for each such Permitted Acquisition shall, if so requested by the
Bank, have been delivered to the Bank at least five Business Days’ prior to the
consummation thereof (with subsequent drafts to be delivered to the Bank as and
when such drafts become available to the Parent);     (D)   in the case of any
Material Permitted Acquisition, calculations are made by the Parent with respect
to the financial covenants contained in Clauses 21.24 (Maximum Total Leverage
Ratio) to 21.26 (Minimum Asset Coverage Ratios), inclusive, for the respective
Calculation Period on a Pro Forma Basis as if the respective Material Permitted
Acquisition (together with all other Material Permitted Acquisitions theretofore
consummated after the first day of such Calculation Period) had occurred on the
first day of such Calculation Period, and such

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      calculations shall show that such financial covenants would have been
complied with as of the last day of such Calculation Period;

  (E)   in the case of any Material Permitted Acquisition, based on good faith
projections prepared by the Parent for the period from the date of the
consummation of the respective Material Permitted Acquisition to the date which
is one year thereafter, the level of financial performance measured by the
financial covenants set forth in Clauses 21.24 (Maximum Total Leverage Ratio) to
21.26 (Minimum Asset Coverage Ratios), inclusive, shall be better than or equal
to such level as would be required to provide that no Default or Event of
Default would exist under the financial covenants contained in such Clauses
21.24 (Maximum Total Leverage Ratio) to 21.26 (Minimum Asset Coverage Ratios),
inclusive, as compliance with such financial covenants would be required through
the date which is one year from the date of the consummation of the respective
Material Permitted Acquisition;     (F)   all representations and warranties
contained herein and in the other Finance Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Permitted Acquisition
(both before and after giving effect thereto), unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date;     (G)  
such Permitted Acquisition is permitted under, and is consummated in accordance
with, Clauses 21.18.14, 21.18.15 and 21.18.16 (Consolidation, Merger, Purchase
or Sale of Assets, etc); and     (H)   the Parent shall have delivered to the
Bank a certificate executed by an Authorised Officer of the Parent, certifying
to the best of such officer’s knowledge, compliance with the requirements of
preceding clauses (A) to (G), inclusive, and containing the calculations (in
reasonable detail) required by preceding sub-clauses (D), (E) and (G).

  21.14.2   Prior to the Cash Collateral Discharge Date, at the time of each
Permitted Acquisition involving the creation or acquisition of a Subsidiary, or
the acquisition of capital stock or other Equity Interest of any person, the
capital stock or other Equity Interests thereof created or acquired in
connection with such Permitted Acquisition shall be pledged in favour of the
Collateral Agent pursuant to (and to the extent required by) the applicable
Security Document.     21.14.3   Prior to the Cash Collateral Discharge Date,
the consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by each of the Parent and the Company that the
certifications pursuant to this Clause 21.14 are true and correct and that all
conditions thereto have been satisfied and that same is permitted in accordance
with the terms of this Agreement, which representation and warranty shall be
deemed to be a representation and warranty for all purposes hereunder,
including, without limitation, Clause 20 (Representations and Warranties) and 22
(Events of Default).

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21.15   Project Documents, etc.       Prior to the Cash Collateral Discharge
Date, each Obligor shall:

  21.15.1   ensure that none of its rights under or in respect of any Project
Document are at any time cancelled, terminated, suspended or limited if the same
would be reasonably likely to result in a Material Adverse Effect;     21.15.2  
not agree to any waiver, amendment, termination or cancellation of any Project
Document if the same would be reasonably likely to result in Material Adverse
Effect;     21.15.3   duly and properly perform, in all material respects, its
obligations under the Project Documents (except to the extent, if any, that such
performance is inconsistent with its obligation under the Finance Documents or
any such failure to perform as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect);    
21.15.4   exercise its rights, under and in respect of the Project Documents
consistently with its obligations under the Finance Document; and     21.15.5  
not enter into any Project Document which would be reasonably likely to result
in a Material Adverse Effect.

21.16   Oil and Gas Properties       Prior to the Cash Collateral Discharge
Date, each Obligor shall:

  21.16.1   exercise such votes and other rights as it may have under the
Project Documents with a view to ensuring (so far as able) that each Oil and Gas
Property in which any member of the Group 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 the Project Documents;     21.16.2   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 any Obligor has an interest unless the Bank has granted
its prior written consent;     21.16.3   not exercise its rights on any
operating or similar committee in a manner that would be materially prejudicial
to the interests of any Obligor or the Bank; and     21.16.4   maintain full and
proper technical and financial records in relation to each Oil and Gas Property
in which any member of the Group has an interest and ensure (so far as it is
able) that the Bank (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.

21.17   Negative Pledge

  21.17.1   The Company will not create, incur or assume any Security upon or
with respect to the Cash Collateral other under than the Finance Documents.    
21.17.2   Subject to Clause 21.17.3, and until the later of the Cash Collateral
Discharge Date and the date on which all liabilities of the Company under the
Secured

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      Hedging Agreements have been fully discharged, no Obligor shall, and the
Parent shall ensure that no other member of the Group will:

  (A)   create, incur, assume or suffer to exist any Security upon or with
respect to any property or assets (real or personal, tangible or intangible) of
the Parent or any of its Subsidiaries, whether now or hereafter acquired;    
(B)   sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of accounts receivable with recourse to the Parent or any of its Subsidiaries);
or     (C)   permit the registration of any security interest on any relevant
register with respect to a member of the Group.

  21.17.3   The provisions of Clause 21.17.2 shall not prevent the creation,
incurrence, assumption or existence of the following (Security described below
is herein referred to as “Permitted Security”):

  (A)   Security pursuant to the BNPP LC Facility, provided that such Security
is released on or before the first Utilisation Date;     (B)   Security in
existence on the date of this Agreement listed in Schedule 11 (Existing
Security) and the property subject thereto and any renewal, replacement or
extension of such Security, provided that (i) the aggregate principal amount of
the Indebtedness, if any, secured by such Security does not increase from that
amount outstanding at the time of any such renewal, replacement or extension and
(ii) any such renewal, replacement or extension does not encumber any additional
assets or properties of the Parent or any of its Subsidiaries;     (C)  
inchoate Security for Taxes, assessments or governmental charges or levies not
yet due or Security for Taxes, assessments or governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP;     (D)   Security in
respect of property or assets of any member of the Group imposed by law and
which were incurred in the ordinary course of business and do not secure
Indebtedness for borrowed money, and:

  (1)   which do not in the aggregate materially detract from the value of the
property or assets of that member of the Group or materially impair the use
thereof in the operation of the business of that member of the Group; or     (2)
  which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
or assets subject to any such Security;

  (E)   Security created by or pursuant to this Agreement and the Security
Documents;

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      (F)

  (1)   licences, sublicences, leases or subleases granted by a member of the
Group to other persons not materially interfering with the conduct of the
business of that member of the Group; and     (2)   any interest or title of a
lessor, sublessor or licensor under any lease or licence agreement permitted by
this Agreement to which a member of the Group is a party;

  (G)   Security upon assets of any member of the Group subject to Capitalised
Lease Obligations to the extent such Capitalised Lease Obligations are permitted
by Clause 21.20 (Indebtedness); provided that:

  (1)   such Security only serve to secure the payment of Indebtedness arising
under such Capitalised Lease Obligation; and     (2)   the Security encumbering
the asset giving rise to the Capitalised Lease Obligation does not encumber any
other asset of the Parent or any of its Subsidiaries;

  (H)   Security placed upon equipment or machinery acquired after the first
Utilisation Date and used in the ordinary course of business of any member of
the Group and placed at the time of the acquisition thereof by that member of
the Group or within 90 days thereafter to secure Indebtedness incurred to pay
all or a portion of the purchase price thereof or to secure Indebtedness
incurred solely for the purpose of financing the acquisition of any such
equipment or machinery or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount; provided that:

  (1)   the Indebtedness secured by such Security is permitted by Clause 21.20
(Indebtedness); and     (2)   in all events, the Security encumbering the
equipment or machinery so acquired does not encumber any other asset of the
Parent or such Subsidiary;

  (I)   easements, rights-of-way, restrictions, encroachments and other similar
charges or encumbrances, and minor title deficiencies, in each case not securing
Indebtedness and not materially interfering with the conduct of the business of
any member of the Group;     (J)   Security arising from precautionary UCC
financing statement filings regarding leases entered into in the ordinary course
of business;     (K)   Security arising out of the existence of judgments or
awards in respect of which a member of the Group shall in good faith be
prosecuting an appeal or proceedings for review and in respect of which there
shall have been secured a subsisting stay of execution pending such appeal or
proceedings; provided that the aggregate amount of all cash and the Fair Market
Value of all other property subject to such Security does not exceed $7,500,000
at any time outstanding;

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  (L)   statutory and common law landlords’ liens under leases to which member
of the Group is a party;     (M)   Security incurred in the ordinary course of
business in connection with workers compensation claims, unemployment insurance
and social security benefits and Security securing the performance of bids,
tenders, leases and contracts in the ordinary course of business, statutory
obligations, surety bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business and consistent with past
practice (exclusive of obligations in respect of the payment for borrowed
money);     (N)   Security arising out of any conditional sale, title retention,
consignment or other similar arrangements for the sale of goods entered into by
a member of the Group in the ordinary course of business to the extent such
Security do not attach to any assets other than the goods subject to such
arrangements;     (O)   Security:

  (1)   incurred in the ordinary course of business in connection with the
purchase, processing or shipping of goods or assets (or the related assets and
proceeds thereof), which Security is in favour of the seller or shipper of such
goods or assets and only attach to such goods or assets; and     (2)   in favour
of customs and revenue authorities arising as a matter of law to secure payment
of customs duties in connection with the importation of goods;

  (P)   bankers’ liens, rights of setoff and other similar Security existing
solely with respect to cash and Cash Equivalents on deposit in one or more
accounts maintained by a member of the Group, in each case granted in the
ordinary course of business in favour of the bank or banks with which such
accounts are maintained, securing amounts owing to such bank or banks with
respect to cash management and operating account arrangements;     (Q)  
Security on insurance proceeds securing the payment of financed insurance
premiums;     (R)   Security arising in the ordinary course of business under
rig deposits, operating agreements, joint venture agreements, partnership
agreements, oil and gas leases, Oil and Gas Contracts, overriding royalty
agreements, farm-out and farm-in agreements, division orders, contracts for the
sale, transportation or exchange of oil or natural gas, unitisation and pooling
declarations and agreements, area of mutual interest agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements and other agreements that are
customary in the Oil and Gas Business, provided that:

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  (1)   the amount of any obligations secured thereby that are delinquent, that
are not diligently contested in good faith and for which adequate reserves are
not maintained by a member of the Group, do not exceed, at any time outstanding,
the amount owing by a member of the Group, as applicable, for two months’ billed
operating expenses or other expenditures attributable to such person’s interest
in the property covered thereby;     (2)   the obligations secured thereby do
not constitute obligations in respect of borrowed money; and     (3)   any such
Security referred to in this Clause 21.17.3(R) does not materially impair the
use of the property affected by such Security or the purposes for which such
property is held by a member of the Group or materially impair the value of such
property;

  (S)   Security reserved in leases or licences of Oil and Gas Properties and in
Oil and Gas Contracts for royalties, bonus or rental payments and for compliance
with the terms of such leases, provided, that the amount of any obligations
secured thereby that are delinquent, that are not diligently contested in good
faith and for which adequate reserves are not maintained by a member of the
Group do not exceed, at any time outstanding, the amount owing by a member of
the Group for two months’ payments as due thereunder;     (T)   Security
securing Permitted Junior Debt, provided that the Permitted Junior Debt Notes
Representative in respect of such Permitted Junior Debt and the Collateral Agent
have executed and delivered the Permitted Junior Debt Intercreditor Agreement;  
  (U)   Security on pipeline or pipeline facilities that arise under operation
of law;     (V)   Security not securing any obligation arising from UCC
financing statements (and similar filings) filed inadvertently or with malicious
intent, which the Company diligently seeks to remove and terminate (or causes to
be removed or terminated) promptly upon, and in any event no later than 120 days
following, its discovery of the same;     (W)   Security on property or assets
acquired pursuant to a Permitted Acquisition, or on property or assets of a
Subsidiary of the Parent in existence at the time such Subsidiary is acquired
pursuant to a Permitted Acquisition, provided that:

  (1)   any Indebtedness that is secured by such Security is permitted to exist
under Clause 21.20.1(G); and     (2)   such Security that is secured in
connection with, or in contemplation or anticipation of, such Permitted
Acquisition and do not attach to any other asset of the Parent or any of its
Subsidiaries;

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  (X)   Security on property or assets acquired after the date of this Agreement
provided that:

  (1)   any Indebtedness that is secured by such Security is permitted under
this Agreement; and     (2)   such Security is not incurred in connection with,
or in contemplation or anticipation of, such acquisition and do not attach to
any other assets of the Company; and

  (Y)   Security created to secure the Company’s liabilities under Secured
Hedging Agreements.

      In connection with the granting of Security of the type described in
sub-Clauses (G), (H), and (Q) of this Clause 21.17 (Negative Pledge) by the
Company, the Bank shall, to the extent requested by (and at the expense of) the
Company, provide appropriate instructions and consents to the Collateral Agent
to execute appropriate lien releases or lien subordination agreements in favour
of the holder or holders of such Security, in each case in form and substance
satisfactory to the Bank and solely with respect to the item or items of
equipment or other assets subject to such Security.

21.18   Consolidation, Merger, Purchase or Sale of Assets, etc.       The Parent
and the Company will not, and (prior to the Cash Collateral Discharge Date) the
Parent will not permit any of its Subsidiaries (other than the Company) to, wind
up, liquidate or dissolve its affairs, and (prior to the Cash Collateral
Discharge Date) the Parent will not and will not permit any of its Subsidiaries
to enter into any partnership, joint venture, or transaction of merger or
consolidation, or convey, sell, lease, assign or otherwise dispose of all or any
part of its property or assets, or enter into any sale-leaseback transactions,
or purchase or otherwise acquire (in one or a series of related transactions)
any part of the property or assets (including Oil and Gas Properties) but
excluding purchases or other acquisitions of Hydrocarbons and other inventory,
materials and equipment in the ordinary course of business) of any person,
except that:

  21.18.1   Capital Expenditures shall be permitted to the extent not in
violation of Clause 21.23 (Capital Expenditures);     21.18.2   the Parent and
its Subsidiaries may sell Hydrocarbons and other inventory in the ordinary
course of business;     21.18.3   the Parent and its Subsidiaries may liquidate
or otherwise dispose of obsolete, uneconomic or worn-out property in the
ordinary course of business;     21.18.4  

  (A)   Investments may be made to the extent permitted by Clause 21.21
(Advances, Investments and Loans);     (B)   Security may be granted to the
extent permitted by Clause 21.17 (Negative Pledge); and     (C)   Dividends may
be made to the extent permitted by Clause 21.19 (Dividends);

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  21.18.5   the Parent and its Subsidiaries may sell assets (other than the
capital stock or other Equity Interests of the Company or of any other
Wholly-Owned Subsidiary, unless all of the capital stock or other Equity
Interests of such Wholly-Owned Subsidiary (other than the Company or any
Relevant Holding Company) are sold in accordance with this Clause 21.18.5), so
long as:

  (A)   no Default or Event of Default then exists or would result therefrom;  
  (B)   each such sale is in an arm’s-length transaction and the Parent or the
respective Subsidiary receives at least Fair Market Value;     (C)   the
consideration received by the Parent or such Subsidiary consists of at least 90%
cash and is paid at the time of the closing of such sale; and     (D)   the
aggregate amount of the cash and non-cash proceeds received from all assets sold
pursuant to this Clause 21.18.5 shall not exceed $25,000,000 in any fiscal year
of the Parent (for this purpose, using the Fair Market Value of property other
than cash);

  21.18.6   the Parent and its Subsidiaries may sell, in one or more
transactions, up to 50% of the 2P Reserves located in the North Sea listed in
the Parent’s Reserve Report delivered pursuant to Clause 4.1 (Initial conditions
precedent) so long as:

  (A)   no Default or Event of Default is continuing or would result therefrom;
    (B)   each such sale is in an arm’s-length transaction and the Parent and
its Subsidiaries receive at least Fair Market Value; and     (C)   the
consideration received by the Parent and its Subsidiaries consists of at least
90% cash and is paid at the time of closing of such sale; and     (D)   if the
Fair Market Value of the Oil and Gas Properties to be disposed exceeds
$5,000,000, at least five Business Days prior to the proposed date of disposal a
revised Projection is delivered to the Bank containing calculations made by the
Parent with respect to the financial covenants contained in Clauses 21.24
(Maximum Total Leverage Ratio) to 21.26 (Minimum Asset Coverage Ratio) inclusive
for the respective Calculation Period on a Pro Forma Basis as if the relevant
transaction(s) had occurred on the first day of such Calculation Period and such
calculations show that such financial covenants would have been complied with as
of the last day of such Calculation Period.

  21.18.7   the Parent and its Subsidiaries may dispose of Oil and Gas
Properties and acquire Oil and Gas Properties in contemporaneous exchanges;
provided that:

  (A)   such acquired Oil and Gas Properties have a comparable or higher value
as reasonably determined by the Parent;     (B)   the only consideration paid
for such acquisition is the Oil and Gas Property disposed of in connection with
such acquisition or other consideration independently permitted under any other
clause of this Clause 21.18;

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  (C)   if the Fair Market Value of the Oil and Gas Properties to be disposed
exceeds $50,000,000, the Parent shall obtain a resolution of its Board of
Directors approving such exchange and deliver such resolutions to the Bank; and
    (D)   if the Fair Market Value of the Oil and Gas Properties to be disposed
exceeds $5,000,000, at least five Business Days prior to the proposed date of
disposal a revised Projection is delivered to the Bank containing calculations
made by the Parent with respect to the financial covenants contained in Clauses
21.24 (Maximum Total Leverage Ratio) to 21.26 (Minimum Asset Coverage Ratio)
inclusive for the respective Calculation Period on a Pro Forma Basis as if the
relevant transaction(s) had occurred on the first day of such Calculation Period
and such calculations show that such financial covenants would have been
complied with as of the last day of such Calculation Period.

  21.18.8   the Parent and its Subsidiaries may lease (as lessee) or licence (as
licensee) real or personal property other than Oil and Gas Properties, so long
as any such lease or licence does not create a Capitalised Lease Obligation
except to the extent permitted by Clause 21.20 (Indebtedness);     21.18.9   the
Parent and its Subsidiaries may sell or discount, in each case without recourse
and in the ordinary course of business, accounts receivable arising in the
ordinary course of business, but only in connection with the compromise or
collection thereof and not as part of any financing transaction;     21.18.10  
the Parent and its Subsidiaries may grant licences, sublicences, leases or
subleases to other persons not materially interfering with the conduct of the
business of the Parent or any of its Subsidiaries, in each case so long as no
such grant otherwise affects the Bank’s security interest in the asset or
property subject thereto;     21.18.11   the Parent and its Subsidiaries may
convey, sell or otherwise transfer all or any part of its business, properties
and assets to the Parent or any Subsidiary of the Parent, so long as any
security interests granted to the Collateral Agent pursuant to the Security
Documents in the assets so transferred shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to such
transfer) and all actions required to maintain said perfected status have been
taken.     21.18.12   the Parent and its Subsidiaries may merge or consolidate
with and into, or be dissolved or liquidated into, the Parent or any other
Subsidiary of the Parent, so long as:

  (A)   in the case of any such merger, consolidation, dissolution or
liquidation involving the Parent, the Parent is the surviving or continuing
entity of any such merger, consolidation, dissolution or liquidation;     (B)  
in the case of any such merger, consolidation, dissolution or liquidation
involving the Company, the Company is the surviving or continuing entity of any
such merger, consolidation, dissolution or liquidation; and

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  (C)   any security interests granted to the Collateral Agent or (as
applicable) the Bank pursuant to the Security Documents in the assets of the
Parent or such Subsidiary shall remain in full force and effect and perfected
(to at least the same extent as in effect immediately prior to such merger,
consolidation, dissolution or liquidation) and all actions required to maintain
said perfected status have been taken;

  21.18.13   each of the Parent and its Subsidiaries may liquidate or otherwise
dispose of Cash Equivalents in the ordinary course of business, in each case for
cash at Fair Market Value;     21.18.14   the Parent and its Subsidiaries may
make Permitted Business Investments and consummate Permitted Acquisitions
pursuant to this Clause 21.18.14 so long as the sum of the aggregate amount paid
in respect of such Permitted Business Investments and the Aggregate
Consideration paid in respect of Permitted Acquisitions, in each case made
pursuant to this Clause 21.18.14, when added to the aggregate amount of Capital
Expenditures made pursuant to Clause 21.23.5 (Capital Expenditures), does not
exceed $50,000,000;     21.18.15   the Parent and its Subsidiaries may make
Permitted Business Investments and consummate Permitted Acquisitions pursuant to
this Clause 21.18.15; provided that the Aggregate Consideration paid in
connection with such Permitted Business Investments plus the Aggregate
Consideration paid in connection with such Permitted Acquisitions, in each case
made pursuant to this Clause 21.18.15, in any fiscal year does not exceed 5% of
2P Reserve Value based on the most recently delivered annual Reserve Report;    
21.18.16   the Parent and its Subsidiaries may make Permitted Business
Investments and consummate Permitted Acquisitions pursuant to this Clause
21.18.16 with:

  (A)   Net Sale Proceeds from Asset Sales made in accordance with Clauses
21.18.5 and 21.18.6 (Consolidation, Merger, Purchase or Sale of Assets, etc); or
    (B)   the Net Sale Proceeds from the Cygnus Disposal;

  21.18.17   the Parent and its Subsidiaries may enter into contractual joint
venture arrangements with third parties pursuant to Oil and Gas Contracts;
provided that such arrangements do not result in, or constitute the formation
of, a Business in which the Parent or any of its Subsidiaries acquire Equity
Interests not otherwise permitted by Clause 21.21 (Advances, Investments and
Loans); and     21.18.18   The Parent and its Subsidiaries may dispose of
Hydrocarbon Interests in exchange for a commitment of the transferee to bear a
disproportionate share of the costs attributable to the Oil and Gas Properties
to which such Hydrocarbon Interests relate; and     21.18.19   The Parent and
its Subsidiaries may complete the Marcellus Acquisition.

    To the extent the Bank waives the provisions of this Clause 21.18 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Clause 21.18 (other than to the Parent or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Security created by the Security
Documents, and the Bank shall execute appropriate

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    releases (including instructions to the Collateral Agent) in order to effect
the foregoing to the extent requested by (and at the expense of) the Company.
For the avoidance of doubt, Parent’s and its Subsidiaries’ use of cash and Cash
Equivalents to acquire assets in accordance with this Clause 21.18 shall not
constitute a conveyance, sale, lease or other disposition of property or assets
that is subject to the restrictions set forth in this Clause 21.18.

21.19   Dividends

  21.19.1   Except as provided in Clauses 21.19.2 and 21.19.3 below, prior to
the later of the Cash Collateral Discharge Date and the date on which all
liabilities of the Company under the Secured Hedging Agreements have been fully
discharged, the Parent will not (subject to this Clause 21.19) authorise,
declare or pay any Dividends with respect to the Parent while a Default is
continuing without the prior written consent of the Bank.     21.19.2   The
Parent may pay regularly scheduled Dividends on its Qualified Preferred Stock
pursuant to the terms thereof solely through the issuance of additional units of
such Qualified Preferred Stock (but not in cash); provided that in lieu of
issuing additional units of such Qualified Preferred Stock as Dividends, the
Parent may increase the liquidation preference of the units of Qualified
Preferred Stock in respect of which such Dividends have accrued.     21.19.3  
The Parent may pay regularly scheduled cash Dividends on all outstanding shares
of its Class C Convertible Preferred Stock.

21.20   Indebtedness

  21.20.1   Prior to the Cash Collateral Discharge Date, the Parent will not,
and will not permit any of its Subsidiaries to, create, incur, assume or suffer
to exist any Indebtedness except for Indebtedness referred to in Clauses
21.20.1(A) to (M) below (the “Permitted Indebtedness”):

  (A)   Indebtedness incurred pursuant to this Agreement and the other Finance
Documents;     (B)   Existing Indebtedness outstanding on the first Utilisation
Date and listed on Schedule 7 (Existing Indebtedness) (as reduced by any
repayments of principal thereof), plus extensions, renewals or refinancings
thereof (“Refinancing Debt”); provided that:

  (1)   the aggregate principal amount of the Indebtedness to be extended,
renewed or refinanced (“Refinanced Debt”) does not increase from that amount
outstanding at the time of any such extension, renewal or refinancing;     (2)  
the weighted average life to maturity of such Refinancing Debt is greater than
or equal to that of the related Refinanced Debt;     (3)   the final stated
maturity of such Refinancing Debt shall be no earlier than the maturity date
applicable to the related Refinanced Debt; and

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  (4)   no Refinancing Debt shall have greater security than the related
Refinanced Debt;

  (C)   Indebtedness of any member of the Group under Hedging Agreements so long
as such Hedging Agreements are entered into in the course of normal treasury
management of that member of the Group and are not for speculative purposes;    
(D)   Indebtedness of any member of the Group evidenced by Capitalised Lease
Obligations (to the extent permitted pursuant to Clause 21.23 (Capital
Expenditures) and purchase money Indebtedness described in Clause 21.17.3(H)
(Negative Pledge); provided that in no event shall the sum of the aggregate
principal amount of all Capitalised Lease Obligations and purchase money
Indebtedness permitted by this paragraph (D) exceed $5,000,000 at any time
outstanding;     (E)   Indebtedness constituting Intercompany Loans to the
extent permitted by Clauses 21.21 (Advances, Investments and Loans);     (F)  
Indebtedness consisting of guarantees by the Obligors of any other Obligor’s
Indebtedness and lease and other contractual obligations permitted under this
Agreement;     (G)   Indebtedness of any member of the Group acquired pursuant
to an acquisition of an asset after the date of this Agreement (or Indebtedness
assumed at the time of such acquisition of an asset securing such Indebtedness),
provided that:

  (1)   such Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition; and     (2)   such
Indebtedness does not constitute debt for borrowed money, it being understood
and agreed that Capitalised Lease Obligations and purchase money Indebtedness
shall not constitute debt for borrowed money for the purposes of this provision;

  (H)   Indebtedness arising from the honouring by a bank or other financial
institution of a cheque, draft or similar instrument inadvertently (except in
the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business, so long as such Indebtedness is extinguished within
four Business Days of the incurrence thereof;     (I)   Indebtedness of any
member of the Group with respect to letters of credit, performance bonds, surety
bonds, appeal bonds or customs bonds, or obligations in respect of letters of
credit posted in lieu of, or to secure, any such bonds, required in the ordinary
course of business or in connection with the enforcement of rights or claims of
a member of the Group or in connection with judgments that do not result in a
Default or an Event of Default, provided that:

  (1)   the aggregate outstanding amount of all such letters of credit,
performance bonds, surety bonds, appeal bonds, customs bonds and letters of
credit issued in lieu of any such bonds permitted by

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      this Clause 21.20.1(H) shall not at any time exceed $60,000,000; and    
(2)   all Indebtedness under this Clause 21.20.1(I) shall be unsecured, except
as permitted under Clause 21.17 (Negative Pledge);

  (J)   Indebtedness of any member of the Group which may be deemed to exist in
connection with agreements providing for indemnification, purchase price
adjustments and similar obligations in connection with the acquisition or
disposition of assets in accordance with the requirements of this Agreement, so
long as any such obligations are those of the person making the respective
acquisition or sale, and are not guaranteed by any other person except as
permitted by Clause 21.20.1(F);     (K)   Indebtedness consisting of the
financing of insurance premiums;     (L)   Permitted Junior Debt; and     (M)  
so long as no Default or Event of Default then exists or would result therefrom,
additional Indebtedness other than Clauses 21.20.1(A) to 21.20.1(L) above, of
the Group in an aggregate principal amount not to exceed $10,000,000 at any time
outstanding.

21.21   Advances, Investments and Loans       Prior to the later of the Cash
Collateral Discharge Date and the date on which all liabilities of the Company
under the Secured Hedging Agreements have been fully discharged, the Parent will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
lend money or credit or make advances to any person, or purchase or acquire any
stock, obligations or securities of, or any other Equity Interest in, or make
any capital contribution to, any other person, or purchase or own a futures
contract or otherwise become liable for the purchase or sale of currency or
other commodities at a future date in the nature of a futures contract, or hold
any cash or Cash Equivalents (each of the foregoing an “Investment” and,
collectively, “Investments”), except:

  21.21.1   a member of the Group may make intercompany loans and advances to
any other member of the Group (each an “Intercompany Loan”) provided that:

  (A)   other than:

  (1)   loans and advances to any Subsidiary that is not an Obligor in an
aggregate outstanding amount that does not exceed $1,000,000 at any time; and  
  (2)   loans and advances to the Dutch Subsidiaries pursuant to Holdings’ tax
planning and cash management policies consistent with past practice (so long as
within one Business Day following receipt by any Dutch Subsidiary of the
proceeds of such loans and advances, the same are contributed, loaned or
advanced to a Qualified Obligor to the extent that the aggregate amount of cash
and Cash Equivalents held by all the Dutch Subsidiaries would otherwise exceed
$2,500,000),

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      any such Intercompany Loans made by an Obligor shall be made to another
Obligor and any such Intercompany Loan made by a Qualified Obligor shall be made
to another Qualified Obligor;

  (B)   to the extent any such Intercompany Loan made by an Obligor is evidenced
by a note issued on or after the first Utilisation Date, such note shall be
evidenced by a promissory note evidencing an Intercompany Loan which shall be
pledged to the Collateral Agent pursuant to the applicable Security Documents;  
  (C)   each Intercompany Loan made to an Obligor by any Subsidiary of the
Parent that is not an Obligor shall be subject to subordination provisions
reasonably acceptable to the Bank; and     (D)   any Intercompany Loan made to
any Obligor or any Qualified Obligor pursuant to this Clause 21.21.1 shall cease
to be permitted by this Clause 21.21.1 if such Obligor or such Qualified Obligor
ceases to constitute an Obligor or a Qualified Obligor, as the case may be;

  21.21.2   the Parent and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms of the Parent or such Subsidiary;     21.21.3   subject to the limitations
set forth in Clause 21.21.1 the Parent and its Subsidiaries may acquire and hold
cash and Cash Equivalents;     21.21.4   the Parent and its Subsidiaries may
hold the Investments held by them on the first Utilisation Date and described in
Schedule 10 (Investments); provided that any additional Investments made with
respect thereto shall be permitted only if permitted under the other provisions
of this Clause 21.21;     21.21.5   the Parent and its Subsidiaries may acquire
and own investments (including debt obligations) received in connection with the
bankruptcy or reorganisation of suppliers and customers and in good faith
settlement of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;     21.21.6   the Parent
and its Subsidiaries may make loans and advances to their officers, employees
and consultants for moving, relocation and travel expenses and other similar
expenditures, in each case in the ordinary course of business in an aggregate
amount not to exceed $2,500,000 at any time (determined without regard to any
write-downs or write-offs of such loans and advances);     21.21.7   any member
of the Group may acquire and hold obligations of their officers, employees and
consultants in connection with such officers’, employees’ and consultants’
acquisition of shares of Parent Common Stock (so long as no cash is actually
advanced by any member of the Group in connection with the acquisition of such
obligations);     21.21.8   subject to Clause 21.30 (Limitation on Commodity
Hedging), the Parent and its Subsidiaries may enter into Hedging Agreements to
the extent permitted by 21.20.1(C) (Indebtedness);

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  21.21.9   the Parent or any of its Subsidiaries may make capital contributions
to, or acquire Equity Interests of, any other Subsidiary of the Parent;    
21.21.10   the Parent and its Subsidiaries may own the Equity Interests of their
respective Subsidiaries created or acquired in accordance with the terms of this
Agreement (so long as all amounts invested in such Subsidiaries are
independently justified under another provision of this Clause 21.21);    
21.21.11   Contingent Obligations permitted by Clause 21.20 (Indebtedness), to
the extent constituting Investments, shall be permitted;     21.21.12   The
Parent or any of its Subsidiaries may acquire and hold non-cash consideration
issued by the purchaser of assets in connection with a sale of such assets to
the extent permitted by Clause 21.18.4 (Consolidation, Merger, Purchase or Sale
of Assets etc.); and     21.21.13   Permitted Acquisitions shall be permitted in
accordance with the requirements of Clause 21.14 (Permitted Acquisitions).

21.22   Transactions with Affiliates       Prior to the Cash Collateral
Discharge Date, the Parent will not, and will not permit any of its Subsidiaries
to, enter into any transaction or series of related transactions with any
Affiliate of the Parent or any of its Subsidiaries, other than in the ordinary
course of business and on terms and conditions substantially as favourable to
the Parent or such Subsidiary as would reasonably be obtained by the Parent or
such Subsidiary at that time in a comparable arm’s-length transaction with a
person other than an Affiliate, except that the following in any event shall be
permitted:

  21.22.1   Dividends may be paid to the extent provided in Clause 21.19
(Dividends);     21.22.2   loans may be made and other transactions may be
entered into by the Parent and its Subsidiaries to the extent permitted by
Clauses 21.18 (Consolidation, Merger, Purchase or Sale of Assets etc.), 21.20
(Indebtedness) and 21.21 (Advances, Investments and Loans);     21.22.3  
customary fees, indemnities and reimbursements may be paid to non-officer
directors or managers of the Parent and its Subsidiaries;     21.22.4   the
Parent may issue Parent Common Stock and Qualified Preferred Stock (and options,
warrants and rights with respect thereto);     21.22.5   the Parent and its
Subsidiaries may enter into, and may make payments under, employment agreements,
employee benefits plans, stock compensation plans, indemnification provisions
and other similar compensatory arrangements with officers, employees, managers
and directors of the Parent and its Subsidiaries in the ordinary course of
business; and     21.22.6   members of the Group may pay management fees,
licensing fees and similar fees to other members of the Group.

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21.23   Capital Expenditures

  21.23.1   Prior to the Cash Collateral Discharge Date, the Parent will not,
and will not permit any of its Subsidiaries to, make any Capital Expenditures,
except that during any fiscal year of the Parent set forth below (taken as one
accounting period), the Parent and its Subsidiaries may make Capital
Expenditures so long as the aggregate amount of all such Capital Expenditures
does not exceed in any fiscal year of the Parent set forth below the amount set
forth opposite such fiscal year below:

          Fiscal Year Ending   Amount
December 31, 2011
  $ 224,014,928  
December 31, 2012
  $ 350,000,000  
December 31, 2013
  $ 175,000,000  

  21.23.2   In addition to the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by the Parent and its Subsidiaries
pursuant to Clause 21.23.1 above in any fiscal year of the Parent is greater
than the amount of Capital Expenditures actually made by the Parent and its
Subsidiaries during such fiscal year, such excess may be carried forward and
utilised to make Capital Expenditures in the immediately succeeding fiscal year
(with any such carried forward amounts being deemed utilised first for the
purposes of determining utilisation of the amount of Capital Expenditures
permitted under Clause 21.23.1 in such succeeding fiscal year); provided that:

  (A)   no amounts once carried forward pursuant to this Clause 21.23.2 may be
carried forward to any fiscal year of the Parent thereafter;     (B)   for the
fiscal year of the Parent ending on December 31, 2011, not more than
$200,000,000 may be carried forward to any fiscal year of the Parent thereafter;
    (C)   for any fiscal year of the Parent, the aggregate amount of Capital
Expenditures that would otherwise be permitted in such fiscal year pursuant to
Clauses 21.23.1 and 21.23.2 may be increased by an amount not to exceed 100% of
the scheduled amount permitted for the next succeeding fiscal year (the “CapEx
Pull-Forward Amount”); and     (D)   the actual CapEx Pull-Forward Amount in
respect of any such fiscal year shall reduce, on a dollar-for-dollar basis, the
amount of Capital Expenditures pursuant to Clause 21.23.1 that are permitted to
be made in the immediately succeeding fiscal year.

  21.23.3   In addition to the foregoing, the Parent and its Subsidiaries may
make additional Capital Expenditures (which Capital Expenditures will not be
included in any determination under Clauses 21.23.1 and 21.23.2) with the amount
of Net Sale Proceeds received by the Parent or any of its Subsidiaries from any
Asset Sale.     21.23.4   In addition to the foregoing, the Parent and its
Subsidiaries may make additional Capital Expenditures (which Capital
Expenditures will not be included in any determination under Clauses 21.23.1 and
21.23.2) with the amount of Net

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      Insurance Proceeds received by the Parent or any of its Subsidiaries from
any Recovery Event.     21.23.5   In addition to the foregoing, the Parent and
its Subsidiaries may make additional Capital Expenditures (which Capital
Expenditures will not be included in any determination under Clauses 21.23.1 and
21.23.2) so long as the amount aggregate amount of such Capital Expenditures,
when added to the Aggregate Consideration paid in respect of all Permitted
Acquisitions consummated pursuant to Clause 21.18 (Consolidation, Merger,
Purchase or Sale of Assets, etc.) and the aggregate amount of Permitted Business
Investments made pursuant to Clause 21.18 (Consolidation, Merger, Purchase or
Sale of Assets, etc.), does not exceed $50,000,000.

21.24   Maximum Total Leverage Ratio       Prior to the Cash Collateral
Discharge Date, the Parent will not permit the Total Leverage Ratio for any Test
Period ending on the last day of any fiscal quarter of the Parent set forth
below to be greater than the ratio set forth opposite such fiscal quarter below:

          Fiscal Quarter Ending   Ratio
June 30, 2011
    6.50:1.00  
September 30, 2011
    5.75:1.00  
December 31, 2011
    5.00:1.00  
March 31, 2012
    4.25:1.00  
June 30, 2012
    3.75:1.00  
September 30, 2012
    3.25:1.00  
December 31, 2012 and each fiscal quarter thereafter
    3.00:1.00  

21.25   Minimum EBITDAX       Prior to the Cash Collateral Discharge Date, the
Parent will not permit Consolidated EBITDAX for any Test Period ending on the
last day of any fiscal quarter of the Parent set forth below to be less than the
amount set forth opposite such fiscal quarter below:

          Fiscal Quarter Ending   Amount
June 30, 2011
  $ 60,000,000  
September 30, 2011
  $ 70,000,000  
December 31, 2011
  $ 90,000,000  
March 31, 2012
  $ 100,000,000  
June 30, 2012
  $ 120,000,000  
September 30, 2012
  $ 140,000,000  
December 31, 2012
  $ 180,000,000  
March 31, 2013
  $ 200,000,000  
June 30, 2013
  $ 200,000,000  

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21.26   Minimum Asset Coverage Ratios

  21.26.1   Prior to the Cash Collateral Discharge Date, the Parent will not
permit the Reserve Coverage Ratio as of the last day of any fiscal quarter of
the Parent ending after the first Utilisation Date to be less than 3.00:1.00.  
  21.26.2   Prior to the Cash Collateral Discharge Date, the Parent will not
permit the PDP Coverage Ratio as of the last day of any fiscal quarter ending:

  (A)   after the first Utilisation Date and on or prior to 31 December 2011, to
be less than 0.25:1.00; and     (B)   after 31 December, to be less than
0.50:1.00.

21.27   Issuance of Equity Interests       Prior to the Cash Collateral
Discharge Date, the Company will not issue any capital stock or other Equity
Interests (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, capital stock or other
Equity Interests unless the issuance will not result in a Change of Control and
the Equity Interests are subject to Security in favour of the Collateral Agent.
  21.28   Business

  21.28.1   The Parent will not, and will not permit any of its Subsidiaries to,
engage directly or indirectly in any business other than the Oil and Gas
Business.     21.28.2   Prior to the Cash Collateral Discharge Date,
notwithstanding the foregoing or anything else in this Agreement to the
contrary, the Parent will not:

  (A)   have any material liabilities other than:

  (1)   liabilities arising under the Finance Documents, any Class C Convertible
Preferred Stock and any Junior Financing;     (2)   other liabilities which are
permitted by this Agreement and are incurred in connection with the financing
and operation of the Parent and its Subsidiaries’ businesses; and     (3)  
Taxes and other liabilities arising under any applicable law; or

  (B)   own any material assets or engage in any operations or business (other
than:

  (1)   its direct or indirect ownership of its Subsidiaries; and     (2)  
investments permitted under 21.21 (Advances, Investments and Loans)).

  21.28.3   Prior to the Cash Collateral Discharge Date, the Company will ensure
that Endeavour North Sea Limited will be dormant and will not own any material
assets or engage in any operations or business or incur any material liabilities
other than its liabilities as at the date of this Agreement and any Taxes and
other liabilities arising under applicable law.

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21.29   Limitation on Creation of Subsidiaries

  21.29.1   Subject to Clause 21.29.2 below, the Company will not, and will not
permit any of its Subsidiaries to, establish, create or acquire after the first
Utilisation Date and prior to the Cash Collateral Discharge Date, any
Subsidiary.     21.29.2   The Company and its Subsidiaries may establish, create
and, to the extent permitted by this Agreement, acquire Subsidiaries so long as,
in each case:

  (A)   at least ten days’ prior written thereof is given to the Bank (or such
shorter period of time as is acceptable to the Bank in any given case); and    
(B)   any capital stock issued by the new or (as applicable) newly-acquired
Subsidiary held by the Company or any other member of the Group is promptly
pledged as Security in favour of the Collateral Agent.

21.30   Limitation on Commodity Hedging

  21.30.1   Without prejudice to Clauses 21.20.1(C) (Indebtedness) and 21.21.8
(Advances, Investments and Loans), the Parent shall not and shall ensure that no
other member of the Group shall, enter into any Contingent Hedge unless such
Contingent Hedge is entered into in accordance with Clause 21.30.2 below.    
21.30.2   Any member of the Group may enter into any Commodity Hedging Agreement
for the purposes of hedging its exposure to fluctuations in Hydrocarbon prices
provided that upon execution of any Contingent Hedge the notional volume of
Hydrocarbons from 2P Reserves located in the North Sea which are hedged pursuant
to such Contingent Hedge (when aggregated with the notional volume of
Hydrocarbons from 2P Reserves located in the North Sea which are hedged pursuant
to any other Contingent Hedges at that time) shall not at any time exceed 70 per
cent. of the production of Hydrocarbons from 2P Reserves located in the North
Sea that are projected in the then most recent Reserves Report delivered to the
Bank under this Agreement.

22.   EVENTS OF DEFAULT       Each of the events or circumstances set out in
this Clause 22 is an Event of Default (other than Clause 22.14 (Acceleration)).

22.1   Payments

  22.1.1   Any Obligor:

  (A)   defaults in the payment when due of any principal under any Finance
Document; or     (B)   defaults, and such default continues unremedied for three
or more Business Days, in a payment when due of any interest or any Fees or any
other amounts owing hereunder or under any other Finance Document.

  22.1.2   No Event of Default shall occur under Clause 22.1.1(A) if the Company
fails to pay an amount due to the Bank under Clause 5.7 (Demands under Letters
of Credit) solely as a result of a technical or administrative failure outside
of the

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      control of the Company and any other member of the Group and such payment
is made no later than 8 Business Days following a demand made under Clause 5.7
(Demands under Letters of Credit).

22.2   Representations, etc.       Any representation, warranty or statement
made or deemed made by any Obligor herein or in any other Finance Document or in
any certificate delivered to the Bank pursuant hereto or thereto is or proves to
be untrue in any material respect on the date as of which made or deemed made.  
22.3   Covenants       Any Obligor:

  22.3.1   defaults in the due performance or observance by it of any term,
covenant or agreement contained in Clauses 21.1.1, 21.1.3 and 21.1.6
(Information Covenants), Clause 21.4.1 (Maintenance of Property Insurance),
Clause 21.5 (Existence; Franchises, Oil and Gas Properties), Clause 21.12
(Ownership of Subsidiaries, etc.), Clause 21.14 (Permitted Acquisitions) and
Clause 21.17 (Negative Pledge) to Clause 21.30 (Limitation on Commodity
Hedging); or     22.3.2   defaults in the due performance or observance by it of
any other term, covenant or agreement contained in any Finance Document (other
than those set forth in Clauses 22.1 and 22.2 (Events of Default)) and such
default shall continue unremedied for a period of 30 days following the earlier
of:

  (A)   any Obligor’s actual knowledge of such default; and     (B)   written
notice from the Bank specifying such default.

22.4   Default Under Other Agreements

  22.4.1   Prior to the Cash Collateral Discharge Date, any member of the Group:

  (A)   defaults in any payment of any Indebtedness (other than the Obligations)
beyond the period of grace, if any, provided in an instrument or agreement under
which such Indebtedness was created; or     (B)   defaults in the observance or
performance of any agreement or condition relating to any Indebtedness (other
than the Obligations) 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, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause (determined without regard to whether
any notice is required), any such Indebtedness to become due prior to its stated
maturity; or

  22.4.2   Prior to the Cash Collateral Discharge Date, any Indebtedness (other
than the Obligations) of any Obligor is declared to be (or becomes) 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 22.4 unless the aggregate principal
amount of all

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      Indebtedness as described in preceding clauses 22.4.1(A) and 22.4.1(B) is
at least $10,000,000.

22.5   Insolvency

      22.5.1

  (A)   The Parent or any of its Subsidiaries (other than any Immaterial
Subsidiary) commences a voluntary case concerning itself under Title 11 of the
United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any
successor thereto (the “Bankruptcy Code”); or     (B)   an involuntary case is
commenced against the Parent or any of its Subsidiaries (other than any
Immaterial Subsidiary), 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 the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Parent or any of its Subsidiaries
(other than any Immaterial Subsidiary), to operate all or any substantial
portion of the business of the Parent or any of its Subsidiaries (other than any
Immaterial Subsidiary).

  22.5.2   Without prejudice to Clause 22.5.1, the Parent or any of its
Subsidiaries (other than any Immaterial Subsidiary):

  (A)   is, or is deemed for the purposes of any law to be, unable to pay its
debts as they fall due or is insolvent;     (B)   admits its inability to pay
its debts as they fall due;     (C)   suspends making payments on any of its
debts or announces an intention to do so;     (D)   by reason of actual or
anticipated financial difficulties, begins negotiations with any creditor for
the rescheduling of any of its indebtedness; or     (E)   has a moratorium is
declared in respect of any of its indebtedness.

  22.5.3   Except as provided in Clause 22.5.1 or 22.5.2, any of the following
occurs in respect of the Parent or any of its Subsidiaries (other than any
Immaterial Subsidiary):

  (A)   any step is taken with a view to a composition, assignment or similar
arrangement with any of its creditors;     (B)   a meeting of it is convened for
the purpose of considering any resolution for (or to petition for) its
winding-up, administration, or dissolution or any such resolution is passed;    
(C)   any person presents a petition, files an application or takes any other
analogous steps for its winding-up, administration, or dissolution;     (D)   an
order for its winding-up, administration, or dissolution is made;     (E)   any
Insolvency Officer is appointed in respect of it or any of its assets; or

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  (F)   any other analogous step or procedure is taken in any jurisdiction.

  22.5.4   Clause 22.5.3 does not apply to:

  (A)   a petition for winding-up presented by a creditor which is being
contested in good faith and with due diligence and is discharged or struck out
within 14 days; or     (B)   any petition, action, proceeding or step which is
demonstrated by the Company to the reasonable satisfaction of the Bank to be
frivolous, vexatious or otherwise an abuse of process of court.

22.6   Security Documents

  22.6.1   Any of the Security Documents ceases to be in full force and effect,
or ceases to give the Bank or (as applicable) the Collateral Agent the Security,
rights, powers and privileges purported to be created thereby (including,
without limitation, a perfected security interest in, and Security on, all of
the Collateral (other than any immaterial portion thereof), in favour of the
Bank or (as applicable) the Collateral Agent, subject to no other Security
(except Permitted Security).     22.6.2   Any Obligor defaults 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.     22.6.3   Upon and
following the Cash Collateral Discharge Date (but subject at all times to Clause
7.4) this Clause 22.6 shall apply only to the Cash Collateral Agreement.

22.7   Creditors’ process       Any expropriation, attachment, sequestration,
distress or execution affects any asset or assets of any Obligor.   22.8  
Repudiation       An Obligor or the Company Shareholder rescinds or repudiates a
Finance Document or evidences an intention to rescind or repudiate a Finance
Document.   22.9   Judgments       One or more judgments or decrees is entered
against the Parent or any Subsidiary of the Parent involving in the aggregate
for the Parent and its Subsidiaries a liability (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, and the aggregate amount of all such judgments equals or exceeds
$7,500,000.

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22.10   Nationalisation       Prior to the Cash Collateral Discharge Date, all
or any part of the interest of the Parent or any of its Subsidiaries in any Oil
and Gas Property (or any Hydrocarbons or revenues or other monies arising in
respect of it) is:

  22.10.1   nationalised, expropriated, compulsorily acquired or seized by any
Governmental Authority; or     22.10.2   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.

22.11   Project Documents

  22.11.1   Prior to the Cash Collateral Discharge Date, all or any part of any
Project Document is not, or ceases to be, a legal, valid and binding obligation
of any person party thereto in any circumstance which is reasonably likely to
have a Material Adverse Effect.     22.11.2   Prior to the Cash Collateral
Discharge Date, any party to any Project Document defaults under such Project
Document in the circumstances which are reasonably likely to result in a
Material Adverse Effect.     22.11.3   Prior to the Cash Collateral Discharge
Date, all or any part of any Project Document is suspended, terminated or
revoked in circumstances which are reasonably likely to result in a Material
Adverse Effect.

22.12   Change of Control       A Change of Control occurs.   22.13   Cash
Collateral       The Company fails to pay an amount of Cash Collateral in
accordance with Clause 6 (Cash Collateral).   22.14   Acceleration       If any
Event of Default occurs and while the same is continuing, the Bank may, by
written notice to the Company, take any or all of the following actions, without
prejudice to the rights of the Bank to enforce its claims against any Obligor
(provided that, if an Event of Default specified in Clause 22.5 (Insolvency)
shall occur with respect to the Company, the result which would occur upon the
giving of written notice by the Bank as specified in Clauses 22.14.1 and 22.14.2
below, shall occur automatically without the giving of any such notice):

  22.14.1   declare the Commitment terminated, whereupon the Commitment shall
forthwith terminate immediately without any other notice of any kind;    
22.14.2   declare the principal of and any accrued interest in respect of all
Obligations owing under the Finance Documents 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 Obligor;

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  22.14.3   declare that full cash cover in respect of each Letter of Credit is
immediately due and payable whereupon it shall become immediate due and payable;
    22.14.4   enforce all Security and security interests created pursuant to
the Security Documents; and     22.14.5   pay an amount up to the face value of
any Letter of Credit to the beneficiary under such Letter of Credit.

23.   ADDITIONAL GUARANTORS   23.1   Subject to compliance with the provisions
of Clauses 21.3.2 and 21.3.3 (“Know your customer” checks), a wholly-owned
Subsidiary of the Parent may become an Additional Guarantor. Any Subsidiary
which is required by this Agreement to become an Additional Guarantor, shall
become an Additional Guarantor if:

  23.1.1   the Company delivers to the Bank a duly completed and executed
Accession Letter; and     23.1.2   the Bank has received all of the documents
and other evidence listed in Part II of Schedule 2 (Conditions precedent) in
relation to that Additional Guarantor, each in form and substance satisfactory
to the Bank.

23.2   The Bank shall notify the Company promptly upon being satisfied that it
has received (in form and substance satisfactory to it) all the documents and
other evidence listed in Part II of Schedule 2 (Conditions precedent).   24.  
STAMP AND REGISTRATION TAXES       The Company shall pay all stamp, registration
and other Taxes to which any Finance Document is or may at any time be subject
and shall, within five Business Days of demand, indemnify the Bank against any
liabilities, costs, claims and expenses that the Bank incurs in relation to all
stamp, registration and other Taxes payable in respect of any Finance Document.
  25.   RELEASE OF LIABILITIES       The Company shall ensure that all
obligations and liabilities, actual or contingent, present or future, of the
Bank under the Letters of Credit shall have expired or been released by no later
than 31 October 2013 (or such other date as agreed in writing with the Bank),
without prejudice to the Bank’s rights to indemnification or otherwise, accrued
at the date of expiry or release.   26.   CONTRACTS (RIGHTS OF THIRD PARTIES
ACT) 1999       Unless expressly provided to the contrary in a Finance Document,
a person who is not a party to that Finance Document has not right under the
Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of
any term of that Finance Document.

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27.   NOTICES   27.1   Any demand or other communication under a Finance
Document (unless otherwise stated in such Finance Document) must be in writing
and unless otherwise stated, may be given in person, or sent by facsimile, or
sent by way of letter sent by registered post.   27.2   Unless otherwise stated
in any Finance Document, any such demand under any Finance Document shall be
effective, if given in person, upon delivery, if sent by way of fax, upon
receipt of a correct transmission report, and if sent by way of registered
letter, three Business Days after being deposited in the post postage prepaid in
an envelope addressed to the recipient at the address specified below:       THE
COMPANY:

         
 
  Attention:   Mike Kirksey
 
      Mike.kirksey@endeavourcorp.com
 
       
 
  Address:   Endeavour Energy UK Limited
 
      114 St. Martin’s Lane, London WC2N 4BE, UK
 
       
 
  Telephone:   +44 (0) 207 451 2350
 
  Fax number   +44 (0) 207 451 2352
 
       
 
  Copy to:    
 
       
 
  Attention:   Cathy Stubbs
 
      Cathy.stubbs@endeavourcorp.com
 
       
 
      Mike Kirksey
 
      Mike.kirksey@endeavourcorp.com
 
       
 
  Address:   Endeavour International Corporation
 
      1001 Fannin, Suite 1600, Houston, TX 77002, USA
 
       
 
  Telephone:   +1 713-307-8788
 
  Fax number:   +1 713-307-8794
 
       
 
  THE BANK:    
 
       
 
  Attention:   Roy Nasse / Jimmy Smailes
 
       
 
  Address:   Senator House, 85 Queen Victoria Street, EC4V 4HA
 
       
 
  Telephone:   +44 (0) 20 7710 3930/ +44 (0) 20 7710 3969
 
       
 
  Fax number:   +44 (0) 20 7739 6611
 
       
 
  Copy to:   Alaster Long
 
       
 
  Telephone:   +44 (0) 20 7710 3938

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  Fax number:   +44 (0) 20 7739 6611

27.3   Any party may change its contact details by giving five Business Days’
notice to the other party.   28.   ASSIGNMENT   28.1   Neither the Company nor
the Parent may, without the Bank’s prior written consent, assign, transfer,
charge or deal in any other manner with this Agreement or any of its rights
under it, or purport to do any of the same.   28.2   An assignment or transfer
by the Bank of all or any of its rights or interests under the Finance Documents
shall be subject to the prior written consent of the Parent (such consent not to
be unreasonably withheld or delayed), provided that, where an Event of Default
is continuing, no such consent shall be required. The Parent will be deemed to
have given its consent five Business Days after the Bank has requested it unless
consent is expressly refused by the Parent within that time   29.   SET OFF    
  All payments required to be made by an Obligor under any Finance Document to
which it is party shall be calculated without reference to any set off or
counter claim and shall be made free and clear of and without any deduction for
or on account of any set off or counter claim. Each Obligor authorises the Bank
to apply any credit balance to which the that Obligor is entitled on any account
of that Obligor with the Bank in satisfaction of any sum due and payable from
that Obligor to the Bank under any Finance Document to which the Obligor is
party but unpaid; for this purpose, the Bank is authorised to purchase with the
monies standing to the credit of any such account such other currencies as may
be necessary to effect such application. The Bank shall not be obliged to
exercise any right given to it by this Clause 29 (Set off).   30.   AMENDMENTS  
    None of the terms of the Finance Documents may be amended or waived without
the written agreement of each of the Bank and the Company.   31.   PARTIAL
INVALIDITY       If, at any time, any provision of the Finance Documents is or
becomes illegal, invalid or unenforceable in any respect under any law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions nor the legality, validity or enforceability of such provision under
the law of any other jurisdiction will in any way be affected or impaired.   32.
  REMEDIES AND WAIVERS       No failure to exercise, nor any delay in
exercising, on the part of the Bank, any right or remedy under the Finance
Documents shall operate as a waiver, nor shall any single or partial exercise of
any right or remedy prevent any further or other exercise or the exercise of any
other right or remedy. The rights and remedies provided in this Agreement are

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    cumulative and not exclusive of any rights or remedies provided by law.

33.   COUNTERPARTS       Each Finance Document may be executed in any number of
counterparts, and this has the same effect as if the signatures on the
counterparts were on a single copy of the Finance Document.   34.   SURVIVAL    
  All indemnities set forth herein including without limitation, in Clauses
5.6.2 (Counter indemnity), 12.2 (Tax indemnity), 12.3 (Stamp taxes), 12.4 (Value
added tax), 14.1 (Currency indemnity), 14.2 (Other indemnities), 15.2.1
(Limitation of liability) and 19.1 (Guarantee and indemnity) shall survive the
execution, delivery and termination of this Agreement and the making and
repayment of the Obligations.   35.   GOVERNING LAW       This Agreement and any
dispute or claim arising out of or in connection with it or its subject matter,
existence, negotiation, validity, termination or enforceability (including any
non-contractual disputes or claims) shall be governed by and construed in
accordance with English law.   36.   ENFORCEMENT   36.1   Jurisdiction       The
courts of England have exclusive jurisdiction to settle any dispute arising out
of or in connection with this Agreement (including a dispute relating to the
existence, validity or termination of this Agreement or any non-contractual
obligation arising out of or in connection with this Agreement) (a “Dispute”).
The parties agree that the courts of England are the most appropriate and
convenient courts to settle Disputes and accordingly no party will argue to the
contrary. This Clause 36.1 (Jurisdiction) is for the benefit of the Bank only
and as a result the Bank shall not be prevented from taking proceedings relating
to a Dispute in any other courts with jurisdiction. To the extent allowed by
law, the Bank may take concurrent proceedings in any number of jurisdictions.  
36.2   Service of process       Without prejudice to any other mode of service
allowed under any relevant law, each Obligor (other than an Obligor incorporated
in England and Wales):

  36.2.1   irrevocably appoints the Company as its agent for service of process
in relation to any proceedings before the English courts in connection with any
Finance Document; and     36.2.2   agrees that failure by a process agent to
notify the relevant Obligor of the process will not invalidate the proceedings
concerned,

    and the Company hereby accepts its appointment by each Obligor.

This Agreement has been entered into by the parties on the date stated at the
beginning of this Agreement.

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SCHEDULE 1
ORIGINAL GUARANTORS

1)   Endeavour Energy North Sea LLC (Delaware)   2)   Endeavour Energy North
Sea, L.P. (Delaware)   3)   Endeavour Operating Corporation (Delaware)   4)  
Endeavour International Holding B.V. (with corporate seat in Amsterdam)   5)  
Endeavour Energy Netherlands B.V. (with corporate seat in Amsterdam)   6)  
Endeavour Energy New Ventures Inc. (Delaware)   7)   END Management Company
(Delaware)

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SCHEDULE 2
CONDITIONS PRECEDENT
PART I — INITIAL CONDITIONS PRECEDENT

1.   CORPORATE DOCUMENTS   1.1   Board resolutions of each Original Obligor:

  1.1.1   approving the terms of, and the transactions contemplated by, the
Finance Documents to which it is a party;     1.1.2   authorising a specified
person or persons to execute each such document on its behalf; and     1.1.3  
authorising a specified person or persons, on its behalf, to sign and/or
dispatch all other documents and notices to be signed and/or dispatched by it
under or in connection with any such document.

1.2   A specimen signature of each person authorised by such board resolution
referred to above.   1.3   A copy of the constitutional documents of each
Original Obligor.   1.4   A certificate of an authorised signatory of each
Original Obligor certifying on behalf of the relevant Original Obligor that:

  1.4.1   the borrowing (deemed or otherwise) or guaranteeing, as appropriate,
under this Agreement would not cause any breach of any limits binding on it to
be exceeded;     1.4.2   each copy document referred to in paragraphs 1.1, 1.2
and 1.3 for that Original Obligor above is correct, complete and in full force
and effect at a date no earlier than the date of this Agreement;     1.4.3   no
Default has occurred or is continuing; and     1.4.4   the representations and
warranties contained in Clause 20 (Representations and warranties) are true in
all material respects.

1.5   A certificate of good standing under the laws of the State of Nevada in
respect of the Parent.   2.   FINANCE DOCUMENTS       Originals of the following
documents duly executed by all parties to them and in full force and effect:  
2.1   this Agreement;   2.2   the Intercreditor Agreement; and   2.3   the Cash
Collateral Agreement.

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3.   LEGAL OPINIONS   3.1   Legal opinion of Woodburn & Wedge, Nevada legal
counsel to the Parent, in relation to the capacity and due authorisation of the
Parent to enter into the Finance Documents to which it is a party.   3.2   Legal
opinion of Herbert Smith LLP, English legal counsel to the Bank, as to the
enforceability of the Finance Documents which are governed by English law and
the capacity and authority of the Company to enter into the Finance Documents.  
3.3   Legal opinion of Vinson & Elkins LLP, Delaware counsel to the Parent, as
to the capacity and due authorisation of Endeavour Energy North Sea L.P. to
enter into the Finance Documents to which it is a party.   3.4   Legal opinion
of Bracewell & Giuliani LLP, New York, legal counsel to the Bank, as to the
enforceability of the Finance Documents which are governed by New York law.  
3.5   Legal opinion of De Brauw Blackstone Westbroek, legal counsel to the
Parent, as to the capacity and due authorisation of the Dutch Subsidiaries to
enter into this Agreement and the Intercreditor Agreement and as to the
enforceability of this Agreement and the Intercreditor Agreement, with respect
to the Dutch Subsidiaries, under Dutch law.   3.6   Reliance letter in respect
of the legal opinion provided by Nauta Dutilh, legal counsel to Cyan Partners
L.P., as to the enforceability of the Finance Documents which are governed by
Dutch law.   4.   OTHER DOCUMENTS AND EVIDENCE   4.1   The audited consolidated
balance sheet and related consolidated statements of income and cash flows and
changes in shareholder’s equity of the Parent as at 31 December 2008, 31
December 2009 and 31 December 2010.   4.2   The audited balance sheet and the
related statements of income and cash flows and changes in shareholder’s equity
of the Company as at 31 December 2008 and 31 December 2009.   4.3   Evidence
that the BNPP LC Facility and all letters of credit issued thereunder will be
terminated and all related security will be released upon first Utilisation.  
4.4   A copy of the latest Reserve Report dated 24 February 2011.   4.5   A copy
of the engagement letter in respect of the proposed borrowing base facility to
be entered into between the Parent and the Bank, duly executed by the Parent.  
4.6   Evidence of the Company’s authority to trade in relation to Secured
Hedging Agreements.   4.7   The initial Projection.   4.8   A copy of any other
authorisation or other document, opinion or assurance which the Bank has
notified to the Company is necessary or desirable in connection with the entry
into and performance of, and the transactions contemplated by, any Finance
Document to which it is party or for the validity or enforceability of any
Finance Document to which it is party.

103

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PART II
CONDITIONS PRECEDENT REQUIRED TO BE DELIVERED BY
AN ADDITIONAL GUARANTOR

1.   An Accession Letter, duly executed by the Additional Guarantor and the
Company.   2.   A copy of the constitutional documents of the Additional
Guarantor.   3.   A copy of a resolution of the board of directors or equivalent
body of the Additional Guarantor:

  (a)   approving the terms of, and the transactions contemplated by, the
Accession Letter and the Finance Documents and resolving that it execute the
Accession Letter and each Finance Document;     (b)   authorising a specified
person or persons to execute the Accession Letter and each Finance Document on
its behalf; and     (c)   authorising a specified person or persons, on its
behalf, to sign and/or despatch all other documents and notices to be signed
and/or despatched by it under or in connection with the Finance Documents.

4.   A specimen of the signature of each person authorised by the resolution
referred to in paragraph 3 above.   5.   In the case of an Additional Guarantor
incorporated in England and Wales, or if so required by the Bank, a copy of a
resolution signed by all the holders of the issued shares of the Additional
Guarantor, approving the terms of, and the transactions contemplated by, the
Finance Documents to which the Additional Guarantor is a party.   6.   A
certificate of the Additional Guarantor (signed by a director) confirming that
guaranteeing the Commitment would not cause any guaranteeing or similar limit
binding on it to be exceeded.   7.   A certificate of an authorised signatory of
the Additional Guarantor certifying that each copy document listed in this
Part II of Schedule 2 is correct, complete and in full force and effect as at a
date no earlier than the date of the Accession Letter.   8.   A copy of any
other Authorisation or other document, opinion or assurance which the Agent
considers to be necessary or desirable in connection with the entry into and
performance of the transactions contemplated by the Accession Letter or for the
validity and enforceability of any Finance Document.   9.   If available, the
latest audited financial statements of the Additional Guarantor.   10.   A legal
opinion of Herbert Smith LLP, legal advisers to the Bank in England.   11.   If
the Additional Guarantor is incorporated in a jurisdiction other than England
and Wales, a legal opinion of the legal advisers to the Bank in the jurisdiction
in which the Additional Guarantor is incorporated.

104

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12.   If the Additional Guarantor is incorporated in a jurisdiction other than
England and Wales, a legal opinion of the legal advisers to the Additional
Guarantor in the jurisdiction in which the Additional Guarantor is incorporated.
  13.   Confirmation from the Bank that it has received each of the following
documents in form and substance satisfactory to it:

  (a)   a copy of each of the following Additional Post-Cyan Security Documents,
duly executed by the parties to it:

  (A)   pledge (governed by the law of the place of incorporation of the
Additional Guarantor) over the entire issued share capital of the shares of the
Additional Guarantor;     (B)   fixed and floating security document over all
the Additional Guarantor’s present and future assets;

  (b)   a certificate of an authorised signatory of each Additional Guarantor
which is incorporated outside of the United Kingdom certifying either that
(i) it has no UK establishment registered at the UK Companies Registry, or
(ii) it has a UK establishment registered at the Companies Registry and
specifying the name and registered number under which it is registered as an
overseas company;     (c)   all title deeds and documents relating to real
property over which Security is expressed to be created by the Additional
Guarantor under any Additional Post-Cyan Security Document;     (d)   the share
certificates (and blank executed stock transfer forms or equivalent means of
transferring the shares) in relation to all shares of the Additional Guarantor
over which Security is expressed to be created;     (e)   a copy of all
insurance policies effected by the relevant Additional Guarantor and the
receipts for the most recent premium;     (f)   all Oil and Gas Contracts to
which the relevant Additional Guarantor is a party;     (g)   notices of charge
or assignment of bank accounts, book debts, Oil and Gas Contracts or insurances
signed by the relevant Additional Guarantor and an acknowledgement of each such
notice signed by the person to whom that notice was addressed, all as required
by the relevant Additional Post-Cyan Security Document;     (h)   all other
documentation, and/or evidence of all other steps, required to perfect the
Additional Post-Cyan Security Documents as advised to the Bank by its legal
advisers in each relevant jurisdiction.

14.   Confirmation from the Bank that it has received in form and substance
satisfactory to it:

  (a)   if the Additional Guarantor is incorporated in the same jurisdiction as
the Parent, the Company or an Original Guarantor, a copy of each Additional
Post-Cyan Security Document, duly executed by the parties to it, equivalent to
those provided by that Obligor; or

105

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  (b)   if the Additional Guarantor is not incorporated in such a jurisdiction,
such Security as the Bank may require,

    together with, in each case, all other documentation, and/or evidence of all
other steps, required to perfect those Additional Post-Cyan Security Documents
as advised to the Bank by its legal advisers in each relevant jurisdiction.  
15.   A copy of the constitutional documents of the Additional Guarantor, in the
form required by the Bank, together with any resolutions of the shareholders of
the Additional Guarantor adopting such changes to the constitutional documents
of the Additional Guarantor as the Bank requires to, among other things, remove
any restriction on any transfer of shares or partnership interests (or
equivalent) in the Additional Guarantor pursuant to any enforcement of any such
Additional Post-Cyan Security Document.   16.   If the Additional Guarantor is
incorporated in a jurisdiction other than England and Wales, evidence that the
process agent specified in Clause 36.2 (Service of process), if not an Obligor,
has accepted its appointment in relation to the proposed Additional Guarantor.  
17.   Evidence satisfactory to the Bank that it has carried out and is satisfied
with the results of all necessary “know your customer” or other similar checks
in relation to the Additional Guarantor and the Accession Letter under all
applicable laws and regulations pursuant to the transactions contemplated in the
Finance Documents.

106

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SCHEDULE 3
FORM OF UTILISATION REQUEST
To:
[•] 2011
Dear Sirs
Facility Agreement dated [     ] between among others;
Endeavour Energy UK Limited and Commonwealth Bank of Australia
(the “Agreement”)]

1.   We wish to arrange for a Letter of Credit to be issued on the following
terms:

     
Proposed Utilisation Date:
  [       ] (or if that is not a Business Day, the next Business Day)
Amount:
  [       ]
Expiry Date:
  [       ]
Beneficiary:
  [       ]

2.   We confirm that each condition specified in Clause 4 (Conditions Precedent)
of the Agreement is satisfied on the date of this Utilisation Request.   3.   We
attach a copy of the proposed Letter of Credit.   4.   The Letter of Credit once
issued is to be delivered to [specify delivery instructions].   5.   This
Utilisation Request is irrevocable.

Yours sincerely

     
 
For and on behalf of
   
ENDEAVOUR ENERGY UK LIMITED
   

107

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SCHEDULE 4
FORM OF LETTER OF CREDIT
To: Hess Limited

           (the “Beneficiary”)   [Date]

Dear Sirs,
Irrevocable Standby Letter of Credit no. [     ]
For the account and at the request of Endeavour Energy UK Limited, we
Commonwealth Bank of Australia (the “Issuing Bank”) hereby issue this
irrevocable standby letter of credit (“Letter of Credit”) [     ] in your favour
on the following terms and conditions:

1.   DEFINITIONS       In this Letter of Credit:       “Business Day” means a
day (other than a Saturday or a Sunday) on which banks are open for general
business in London.       “Demand” means a demand for a payment under this
Letter of Credit.       “Expiry Date” means [insert date].       “Total L/C
Amount” means [insert amount].   2.   ISSUING BANK’S AGREEMENT   2.1   The
Beneficiary may request a drawing or drawings under this Letter of Credit by
giving to the Issuing Bank a duly completed Demand. A Demand may not be given
after the Expiry Date.   2.2   A Demand must be received at the latest by the
Issuing Bank by 5.00 p.m. (London time) on any Business Day falling on or before
the Expiry Date.   2.3   Subject to the terms of this Letter of Credit, the
Issuing Bank unconditionally and irrevocably undertakes to the Beneficiary that,
within five Business Days of receipt by it of a Demand validly presented under
this Letter of Credit, it must pay to the Beneficiary the amount of the Demand.
Demand(s) in excess of the Total L/C Amount are acceptable, provided that the
Issuing Bank shall not be obliged to make a payment(s) hereunder exceeding in
aggregate the Total L/C Amount.   3.   EXPIRY   3.1   On 5.00 p.m. (London time)
on the Expiry Date the obligations of the Issuing Bank under this Letter of
Credit will cease with no further liability on the part of the Issuing Bank
except for any Demand validly presented under the Letter of Credit that remains
unpaid.   3.2   The Issuing Bank will be released from its obligations under
this Letter of Credit on the date prior to the Expiry Date (if any) notified by
the Beneficiary to the Issuing Bank as the date upon which the obligations of
the Issuing Bank under this Letter of Credit are released.

108

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3.3   The Issuing Bank may at any time without being required to do so pay to
the Beneficiary the Total LC Amount less any amount it may have already paid
under this Letter of Credit and thereupon the Issuing Bank’s obligations under
this Letter of Credit will immediately cease with no further liability on the
part of the Issuing Bank.   3.4   When the Issuing Bank is no longer under any
obligation under this Letter of Credit, the Beneficiary must return the original
of this Letter of Credit to the Issuing Bank.   4.   PAYMENTS   4.1   All
payments under this Letter of Credit must be made in GBP and for value on the
due date to the account nominated by the Beneficiary in the Demand.   4.2   All
issuing banking charges and commissions are for the account of the applicant.
All other charges are for Beneficiary’s account.   5.   DELIVERY OF DEMAND      
Each Demand must be presented at our offices:       COMMONWEALTH BANK OF
AUSTRALIA       SENATOR HOUSE       LEVEL 3, 85 QUEEN VICTORIA STREET      
LONDON EV4V 4HA       ATTENTION: IB SETTLEMENTS LONDON   6.   ASSIGNMENT      
The Beneficiary’s rights under this Letter of Credit may not be assigned or
transferred.   7.   ISP

Except to the extent it is inconsistent with the express terms of this Letter of
Credit, this Letter of Credit is subject to the International Standby Practices
(ISP 98).

8.   GOVERNING LAW       This Letter of Credit is governed by and shall be
construed in accordance with English law.   9.   JURISDICTION       The English
courts have exclusive jurisdiction to settle any dispute in connection with this
Letter of Credit.

Yours faithfully

     
 
For and on behalf of
   
COMMONWEALTH BANK OF AUSTRALIA
   

109

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SCHEDULE 5
OIL AND GAS PROPERTIES
Endeavour International Corporation
List of Properties

Source:   December 31, 2009 Reserve Report (Strip Pricing)
plus January 2010 reserve adds

Property Name
UK:

     
Alba
  *
Bacchus
  *
Bittern
  *
Columbus
  *
Enoch
  *
Goldeneye
  *
IVRRH
  *
Renee
  *
Rochelle
  *
Rubie
  *

US:

             
Austin 21 #1
  De Soto   Louisiana   *
Batchelor 3-1H
  Red River   Louisiana   *
Bazer, M L 20 #1D
  De Soto   Louisiana   *
Bazer, M L 20 #1D PNP
  De Soto   Louisiana   *
Bonomo Investment Co LLC 35 #1
  Caddo   Louisiana   *
Chiggero ETAL 14 #1-H
  Caddo   Louisiana   *
Davis 15 #1
  Red River   Louisiana   *
Desoto LP 17 #1
  De Soto   Louisiana   *
Dixie Farm 11-1H
  Red River   Louisiana   *
Fielder, Cyrus 15 #1
  Caddo   Louisiana   *
Fortson 3 #2
  De Soto   Louisiana   *
Indigo Minerals 3-1H
  Red River   Louisiana   *
International Paper 21 #1
  De Soto   Louisiana   *
Johnson, A S ET AL 10 #1
  De Soto   Louisiana   *
Jones, G C 22 #1
  De Soto   Louisiana   *
Jones, G C 22 #2
  De Soto   Louisiana   *
Jones, G C 23 #3
  De Soto   Louisiana   *
Little 11 #1
  Red River & Bienville   Louisiana   *
Madison, Clarence 2 #1
  Red River   Louisiana   *
Marks, Roy Est 10 #1
  Red River   Louisiana   *
McCoy 23 #1
  De Soto   Louisiana   *
Metcalf HNSVL 14 #5H
  Caddo   Louisiana   *
Russell, Mary 3 #1
  Red River   Louisiana   *
Smith, Lillie22 #1
  De Soto   Louisiana   *
Tracy 3 #1
  De Soto   Louisiana   *
Moore Cowbell
  Lea   New Mexico   *

110

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Lucky Penny
  Lea   New Mexico   *
Pardee & Curtain Lumber Co. C-4
  Cameron   Pennsylvania   *1
Pardee & Curtain Lumber Co. C-5
  Cameron   Pennsylvania   *1
Pardee & Curtain Lumber Co. C-7H
  Cameron   Pennsylvania   *1
Pardee & Curtain Lumber Co. C-9H
  Cameron   Pennsylvania   *1
Pardee & Curtain Lumber Co. C-10-H
  Cameron   Pennsylvania   *1
Cochran 1 (Garwood)
  Colorado   Texas   *
Cochran 2 (Garwood)
  Colorado   Texas   *
Cochran 3 (Garwood)
  Colorado   Texas   *
Cochran 4 (Garwood)
  Colorado   Texas   *
Cochran 5 (Garwood)
  Colorado   Texas   *
Cochran 6 (Garwood)
  Colorado   Texas   *
Tuttle #6H - 6 Stages
  Gregg   Texas   *
Tuttle #8H - 6 Stages
  Gregg   Texas   *
Tuttle AJ Gas Unit #5
  Gregg   Texas   *
Tuttle, A J #7H
  Gregg   Texas   *
Williams #3
  Gregg   Texas   *
Armour Runnels 1
  Matagorda   Texas   *

 

*   Mortgaged property   1   Acquired after December 31, 2009

111

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SCHEDULE 6
PART I — SUBSIDIARIES

                                                                      Percentage
        Class of                       of         Equity   Par   Number  
Certificate   outstanding Owner   Issuer   Interest   Value   of Shares   Number
  shares
Endeavour International Corporation
  Endeavour OperatingCorporation   Common   $ 0.001       100     2     100  
Endeavour Operating Corporation
  Endeavour International Holding B.V.   Ordinary   € 100       180    
Uncertificated     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 International Holding B.V.
  Endeavour Energy North Sea, L.P.   Limited Partnership Interest     N/A      
N/A     Uncertificated     99.9  
Endeavour International Holding B.V.
  Endeavour Energy Netherlands B.V.   Ordinary   € 100       180    
Uncertificated     100  
Endeavour International Holding B.V.
  Endeavour Energy Luxembourg S.a.r.l.   Ordinary     N/A       500    
Uncertificated     100  
Endeavour Energy UK Limited
  Endeavour North Sea Limited   Ordinary     31       44,250,002     5     100  
Endeavour Energy Netherlands B.V.
  Endeavour Energy North Sea LLC   Membership Interest     N/A       N/A    
Uncertificated     100  

112

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                                                                      Percentage
        Class of                       of         Equity   Par   Number  
Certificate   outstanding Owner   Issuer   Interest   Value   of Shares   Number
  shares
Endeavour Energy North Sea LLC
  Endeavour Energy North Sea, L.P.   General Partnership Interest     N/A/      
N/A     Uncertificated     0.1  
Endeavour Energy North Sea, L.P.
  Endeavour Energy UK Limited   Ordinary   £ 0.10       1,300     8, 9, 10 and
11     100  

113

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PART II — GROUP STRUCTURE CHART
() [h83989h8398901.gif]

114

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SCHEDULE 7
EXISTING INDEBTEDNESS

1.   Parent has Indebtedness pursuant to its 12.00% Senior Subordinated Notes
due 2014, under which a principal amount of $41,619,810.50 is outstanding, which
Indebtedness is guaranteed by all U.S. Subsidiaries of Parent.

2.   Parent has Indebtedness pursuant to the New 2016 Convertible Senior Notes
under which a principal amount of $135,000,000 is outstanding, which
Indebtedness is guaranteed by all U.S. Subsidiaries of Parent.

3.   Endeavour Energy Luxembourg S.a.r.l. has Indebtedness pursuant to its
11.50% Convertible Bonds due 2014, under which a principal amount of
$59,077,329.77 is outstanding, which Indebtedness is guaranteed by Parent.

4.   Series C Preferred Stock, issued by Parent, 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.

5.   The Company has the following outstanding Letters of Credit:

              Title   Amount   Borrower
Standby Letter of Credit (BNP Paribas)
  £ 11,900,000     Endeavour Energy UK Limited
 
           
Standby Letter of Credit (BNP Paribas)
  £ 6,600,000     Endeavour Energy UK Limited
 
           
Standby Letter of Credit (BNP Paribas)
  £ 2,100,000     Endeavour Energy UK Limited

6.   Endeavour International Holding B.V. has Indebtedness pursuant to a
revolving loan facility agreement dated as of October 31, 2006 between Endeavour
International Holding B.V., as borrower and Endeavour Operating Corporation as
lender, as amended, with an aggregate principal amount outstanding of
$99,000,068.00.   7.   Endeavour International Holding B.V. has Indebtedness
pursuant to a revolving loan facility dated as of January 23, 2008 between
Endeavour Energy Luxembourg S.a.r.l., as lender, and Endeavour International
Holding B.V., as borrower, as amended, with an aggregate principal amount
outstanding of $56,986,802.98.   8.   Endeavour Operating Corporation has
Indebtedness pursuant to a revolving loan facility dated as of January 1, 2010
between the Company as lender and Endeavour Operating Corporation as borrower,
as amended, with an aggregate principal amount outstanding of $57,249,878.87.  
9.   The Company has Indebtedness pursuant to the Cyan Facility Agreement with
an aggregate principal amount outstanding of $238,010,988.00.

115

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SCHEDULE 8
INSURANCES
() [h83989h8398902.gif]

116

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Financial Services Limits Graphic
 
(BAR GRAPH) [h83989h8398903.gif]

117

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Coverage Summary

                          Policy Period   Policy No.   Coverage   Limits/
Amounts   Carrier 11/01/I0-11   61SBARS0904   Property – Houston   Business
Personal Property   Hartford Lioyds Insurance
Company (Direct)
 
          $ 200,000     Replacement Cost                 Money and Securities  
 
 
          $ 10,000     Inside the Premises    
 
          $ 5,000     Outside the Premises                 Computers and Media  
 
 
          $ 350,000     12 Hour Waiting Period, $250 Deductible                
Deductibles:    
 
          $ 1,000     Per Occurrence    
 
                        11/01/10-11   6ISBAZK7082   Property— Denver   Business
Personal Property   Hartford Lioyds Insurance
Company (Direct)
 
          $ 120,000     Replacement Cost                 Money and Securities  
 
 
          $ 10,000     Inside the Premises    
 
          $ 5,000     Outside the Premises                 Computers and Media  
 
 
          $ 50,000     12 Hour Waiting Period, $250 Deductible                
Deductibles:    
 
          $ 1,000     Per Occurrence    
 
                       
11/01/10-11
  MU05541831   USA - General Liability   $ 2,000,000     General Aggregate   St.
Paul Surplus Lines Insurance Company (through J.H. Blades)
 
          $ 1,000,000     Products-Completed Operations Aggregate Limit    
 
          $ 1,000,000     Personal and Advertising Injury Limit    
 
          $ 1,000,000     Each Occurence Limit    
 
          $ 1,000,000     Hired and Non-Owned Auto Liability    
 
          $ 100,000     Damage To Premises Rented To You Limit (Any One Premise)
   
 
          $ 5,000     Medical Expenses Limit (Any One Person)                
Deductibles:    
 
          $ Nil     Each Event    
 
                       
11/01/10-11
  MU05578905   USA - Umbrella Liability   $ 25,000,000     General Aggregate  
St. Paul Surplus Lines Insurance Company (through J.H. Blades)
 
          $ 25,000,000     Products-Completed Operations Aggregate Limit    
 
          $ 25,000,000     Personal and Advertising Injury Limit    
 
          $ 25,000,000     Each Occurrence Limit                 Deductibles:  
 
 
          $ 10,000     Deductible (SIR)    
 
                        11/01/10-11   HU PI6 1699588 (12)   London/ Aberdeen
Office
Package / Computer   Property Section:   Hiscox Insurance Company Limited
(through Castle Cairn Insurance Brokers Ltd.)
 
          £ 150,000     Office Contents (excluding computers)    
 
          £ 100,000     Aberdeen Contents (excluding computers)    
 
          £ 10,000     Documents    
 
          £ 5,000     Goods in Transit    
 
          £ 5,000     Exhibitions in UK    
 
          £ 1,000     Replacement Locks    
 
          £ 500     Personal effects (per person)    
 
          £ 5,000     Pictures, Works of Art, etc (£500 AOI)    
 
          £ 5,000     Computers system records    
 
          £ 5,000     Loss of Metered Water                 Business
Interruption Section:    
 
          £ 250,000     Loss of Revenue and Increased Costs of Working    
 
          £ 5,000     Book Debts    
 
            12 Months     Indemnity Period                 Money Section:    
 
          £ 250,000     Loss of Money due to Crossed cheques    
 
          £ 1,500     Money In Safe out of Business Hours    
 
          £ 500     Money in the Private Dwelling of Partners, Directors or
Employees    
 
          £ 5,000     Money Any other loss    
 
        £ 10,000/£100 pw     Personal Injury following robbery or holdup    

118

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Coverage Summary

                      Policy period   Policy No.   Coverage   Limits/ Amounts  
Carrier 11/01/10-11   HU PI6 1699588(12)   London/Aberdeen Office
Package/   Legal Liability for Injury to Persons of damage to third party
Property:    
 
      Computer   £10,000,000   Injury to Employees    
 
      (Cont.)   £2,000,000   Injury to the Public and damage to Property        
        Commercial Legal Expenses Section:    
 
          £50,000   Limit per Insured Incident    
 
          £50,000   Annual Limit for Compensation Awards    
 
                                Computer Section    
 
          £250,000   Computer and ancillary equipment (London) Including
Portable Equipment Value £20,000    
 
          £113,000   Computer and ancillary equipment (Aberdeen) Including
Portable Equipment Value £20,000    
 
                   
5/06/11-4/5/13
  BM1103303   Third Party Liability   £25,000,000   Any one Accident of
Occurrence   Zurich Global Energy             Deductibles:   (Zurich Insurance
plc
UK Branch
 
          £150,000   Any one Accident of Occurrence    
 
                    5/06/11-4/5/13   BM1103302   Builder’s Risk   Up to a
maximum Estimated Final Contract Value of £158,872,332 (100%)    
 
          Schedule A:   £198,590,415 (representing 125% of the estimated final
contract Value.   Lloyd’s and Various
 
          Schedule B:   To be agreed Slip Leader, Agreement Parties and Lloyd’s
Syndicate 33 only by 15 June 2011.   Companies
 
                                Sub-Limits any one accident of occurrence & in
the aggregate for the duration of the project:    
 
          £5,000,000   Offshore Cancellation    
 
          £5,000,000   Expediting Expenses    
 
          £5,000,000   Forwarding Charges    
 
          £5,000,000   Evacuation Expenses    
 
          £5,000,000   Stand-by Charges    
 
          £5,000,000   Test Leak Damage Search Costs    
 
                                Above Sub-Limits are subject to an overall
aggregate Limit of £ 10,000,000 for the duration of the Project. Mobilisation
and Demobilisation costs limited to the originally contracted amounts    
 
                                Deductibles:    
 
          £150,000   any one accident or occurrence in respect of onshore
procurement and fabrication risks and all onshore works including transits.    
 
          £250,000   any one accident or occurrence in respect of marine
transit/ transportation including loading, lifting and unloading other than as
specified below.    
 
          £500,000   any one accident or occurrence in respect of installation
of surface facilities and maintained associated therewith.    
 
          £750,000   any one accident or occurrence in respect of subsea works
(other than pipeline) including maintenance associated therewith.    
 
          £1,250,000   any one accident or occurrence in respect of o” – 17.9”
diameter pipeline installations from commencement of lay operation until
completion including maintenance associated therewith.    
 
                   
5/06/11-4/5/13
  BM1103310   $50Mxs $25M Third Party
Liability   £50,000,000
Excess of: £25,000,000   any one accident or occurrence

any one accident of occurrence   33%- Arch Insurance Co
35% Liberty Mutual Ins
32%Loyd’s Syndicate
1919 (thru Starr
 
                   
5/06/11-4/5/13
  BM1103347   $25Mxs $75M Third Party
Liability   £25,000,000
Excess of: £75,000,000   any one accident or occurrence

any one accident of occurrence   40% — Zurich Global
Energy (Zurich Ins plc UK Branch)
25%- Lloyd’d 2007 thru
Novae)
35%- Loyd’s 1036 (then O’ Farrell

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Coverage Summary

                  Policy Period   Policy No.   Coverage   Limits/Amounts  
Carrier
11/01/10-11
  BM1002642   Energy Package   Section 1 (A) & (B) — Onshore & Offshore Property
(Platform and Pipelines)   Lloyds of London & Other
Companies (through JLT
Agnew Higgins)
 
               
 
          $67,157,750 FI value, as per worksheets attached to policy, any one
accident or occurrence sub-limited to $7,500,000 any one accident or occurrence
in respect of data reacquisition, reconstruction or reconstitution costs.
Plus additional 25% each item separately in respect of Sue and Labour expense,
General Average and Salvage Charges, Removal of Week / Debris and Expediting
Expense but not exceeding 50% in all.    
 
               
 
          Section 1(C) & (D) — Crude Oil / Cargo.    
 
               
 
          $8,500,000 each section any one shipment / loction.    
 
          Section 2 — Operators Extra Expense    
 
               
 
          In respect of the UK Sector of the North Sea:    
 
               
 
          $125,000,000 Combined Single Limit any one accident or occurrence.    
 
          $2,500,000 Sub-limit of any one accident or occurrence in respect of
Care, Custody & Control.    
 
          $250,000,000 any one occurrence in respect of OPOL.    
 
               
 
          In respect of Wells scheduled in the USA.    
 
               
 
          $20,000,000 Combined Single Limit any one accident or occurrence in
respect of all wells except Exploratory and Development Drilling Wells with dry
hole cost in excess of $8,000,000 (100%) or Total Measured Depth of more than
17,500 feet where the Combined Single Limit is increase to    
 
          $30,000,000 any one accident or occurrence, as scheduled. Any
additional onshore wells in excess of 17,500’ TMD (100%) or AFE in excess of
$8,000,000 (100%) to be agreed prior to spud. Slip Leader and Agreement Parties.
   
 
               
 
          $2,500,000 Sub-limit of any one accident or occurrence in respect of
Care, Custody and Control.    
 
               
 
          Section 3 — Liabilities    
 
               
 
          In respect of the UK Sector of the North Sea:    
 
               
 
          $125,000,000 any one accident or occurrence combined single limit over
sub-section A (onshore) and sub-section B (offshore).    
 
          Section 4 — War and Terrorism    
 
          Values and limits as Sections 1,2,3 and 5    
 
               
 
          Section 5 — Loss of Production Income    
 
          $25,661,325 per occurrence as per worksheet attached to policy as
scheduled in respect of the Insured’s interest in Goldeneye fields including
coverage in respect of dependency premises.
Standard Period: 180 Days.    
 
          Maximum Recovery Period: 730 days.    
 
          Deductibles (100%):    
 
               
 
          Section 1 (A) & (B) & (C)-Onshore & Offshore Property (Platform and
Pipelines & Oil in Store)    
 
               
 
          $1,500,000 any one accident or occurrence except on Increased Value /
Total Loss Only which shall be nil.    
 
               
 
          $100,000 any one accident or occurrence in respect of Data
Reacquisition, Reconstruction or Reconstitution Costs.    
 
          Section 1 (D) — Cargo (Excluding oil in Store)    
 
               
 
          $100,000 any one accident or occurrence any location / shipment but
0.5% of values any one accident or occurrence in respect of shortage.    
 
               
 
          Section 2 — Operator’s Extra Expense — (Excess)    
 
          Offshore:    

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\

Coverage Summary

                  Policy Period   Policy No.   Coverage   Limits/Amounts  
Carrier
11/01/10-11
  BM1002642   Energy Package(Cont’d)   $1,500,000 Combined Single Excess any one
accident or occurrence.    
 
          $1,500,000 any one accident or occurrence in respect of Care, Custody
and Control.    
 
               
 
          Subject to Offshore Pollution Liability Association (OPOL) stepdown as
is necessary for OPOL excess / deductible not to exceed $1,500,000 (or currency
equivalent ) any one accident or occurrence.    
 
               
 
          Onshore:    
 
               
 
          $250,000 Combined Single Excess any one accident or occurrence.    
 
          $100,000 any one accident or occurrence in respect of Care, Custody
and Control.    
 
               
 
          Section 3 — Liabilities — (Excess)    
 
               
 
          $150,000 any one accident or occurrence offshore and onshore except:
Sub-section B (offshore) only, where an excess in respect
of Charters Liability of $50,000 any one accident or occurrence
event shall apply, except that cargo claims shall be subject to a
single of $12,500 each single voyage.    
 
               
 
          Underlying amounts nil, but subject to minimum underlyings of
$5,000,000(or to be agred Slip Leader) in respect of statutory Employers
Liability/ Automobile Liability/ non-owned Aviation Liability.    
 
          Section 4 — War and Terrorism    
 
               
 
          As applicable to Section 1,2,3 and 5, all offshore only.    
 
          Section 5 — Loss of Production Income- (Excess)    
 
               
 
          45 days waiting period any one occurrence.    
 
               
 
          In the event of an accident or occurrence invoking more than one
Section (excluding Sections 3 & 5), then only the single highest deductible to
apply.    
 
               
 
          Nil deductible to apply in respect of Constructive / Actual Total
Losses, General Average/Salvage Charges and War ,except for Section 3 & 5 where
above deductibles to apply.    

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NAMED INSUREDS

      Named Insureds   Description of Operations
Endeavour International Corporation
  Public Holding Company
 
   
Endeavour Operating Corporation
  Holding Company
 
   
Endeavour Energy UK Limited
  Acquiring, exploring for and developing of natural gas and oil properties
 
   
Endeavour Energy New Ventures Inc.
Endeavour Energy New Ventures I, Ltd
Endeavour Energy North Sea L.P.
Endeavour Energy North Sea LLC
  New Ventures Holding Company
Inactive New Ventures Company
Investment Holding Partnership
General Partner of the LP
 
   
END Management Company
  Payroll management company
 
   
Endeavour International Holding B.V.
  Holding Company
 
   
Endeavour Energy Netherlands B.V.
  Acquiring, exploring for and developing of natural gas and oil properties
 
   
Endeavour North Sea Limited
  Acquiring, exploring for and developing of natural gas and oil properties
 
   
Endeavour Energy Luxembourg S.a.r.l.
  Financing Company

AND/OR SUBSIDIARY, ASSOCIATED, AFFILIATED COMPANIES OR OWNED AND CONTROLLED
COMPANIES, AS NOW OR HEREAFTER CONSTITUTED, INCLUDING PRINCIPALS, OFFICERS,
DIRECTORS, STOCKHOLDERS AND EMPLOYEES OF ALL NAMED INSUREDS WHILE ACTING WITHIN
THE SCOPE OF THEIR DUTIES AS SUCH AND AS THEIR INTERESTS MAY APPEAR.

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SCHEDULE 9
FORM OF COMPLIANCE CERTIFICATE
To: Commonwealth Bank of Australia (the “Bank”)
Date:
Dear Sirs,

1.   We refer to the letter of credit facility agreement dated [ ] 2011 (the
“Facility Agreement”) and made between the Bank, Endeavour International
Corporation (the “Parent”) and Endeavour Energy UK (the “Company”).   2.   Terms
defined in the Facility Agreement shall, unless otherwise expressly defined in
this Certificate have the same meaning in this Certificate.   3.   The
undersigned chief financial officers of the Company and the Parent, being duly
authorised to give this certificate, hereby certify the following matters:

  3.1   to the best of our knowledge and belief, after due inquiry, no Default,
or Event of Default has occurred or is continuing;     3.2   the aggregate
amount of cash and non-cash proceeds received from all assets sold [in the
current fiscal year] / [in the preceding fiscal year] is [•];     3.3   the
percentage of 2P reserves located in the North Sea disposed of to date is [•]%;
    3.4   in the [current] / [preceding] fiscal year, the sum of the aggregate
amount paid in respect of Permitted Business Acquisitions and the aggregate
amount of Capital Expenditures is equal to [•];     3.5   in the [current] /
[preceding] fiscal year:     3.5.1   the Aggregate Consideration paid in
connection with Permitted Business Investments [is] / [was] £[•]; and     3.5.2
  the Aggregate Consideration paid in connection with Permitted Acquisitions
[is] / [was] £[•],         and the sum of the amounts referred to in paragraphs
3.5.1 and 3.5.2 above is £[•] which is equal to [•]% of 2P Reserve Value based
on the most recently delivered annual Reserve Report.     3.6   the aggregate
amount outstanding constituting Indebtedness of the Company under all letters of
credit, performance bonds, surety bonds, appeal bonds or letters of credit
posted in lieu of or to secure any such bonds, required in the ordinary course
of business or in connection with the enforcement of rights or claims of a
member of the Group or in connection with judgments is £[•];

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  3.7   the amount of additional Indebtedness of the Company outstanding not
falling within Clauses 21.20.1(A) to 21.20.1(M) (Indebtedness) of the Facility
Agreement is £[•];     3.8   the Capital Expenditures of the Parent and its
Subsidiaries in the [current] / [preceding] fiscal year in aggregate are equal
to £[•];     3.9       3.9.1   the Consolidated Net Indebtedness on the last day
of the preceding fiscal quarter was [•]; and     3.9.2   the Consolidated
EBITDAX for the Test Period most recently ended on or prior to such date was
[•],         therefore the Total Leverage ratio for the Test Period ending on
the last day of the preceding fiscal quarter was [•];     3.10   the
Consolidated EBITDAX for the Test Period ending on the last day of the preceding
fiscal quarter was [•];     3.11   On the last day of the preceding fiscal
quarter:     3.11.1   the PV-10 Value was [•];     3.11.2   the Probable Reserve
Value was [•]; and     3.11.3   the Consolidated Net Secured Indebtedness was
[•],

therefore the Reserve Coverage Ratio on the last day of the preceding fiscal
quarter was [•]; and     3.12   On the last day of the preceding fiscal quarter:
    3.12.1   the PV-10 Value (determined by substituting the phase “from PDP
production on the Parent’s and each of its Subsidiaries’ Oil and Gas Properties”
for the phrase “from Proved Reserves on the Parent’s and each of its
Subsidiaries’ Oil and Gas Properties” appearing in the second line of the
definition thereof in the Facility Agreement) was [•]; and     3.12.2   the
Consolidated Net Secured Indebtedness was [•]         therefore, the PDP
Coverage Ratio on the last day of the preceding fiscal quarter was [•].

4.   [The Oil and Gas Properties acquired by a member of the Group with a value
in excess of $5,000,000 are listed in Schedule 1 (Oil and Gas Properties) to
this Certificate;]   5.   [the Real Property acquired by a member of the Group
with a value in excess of $5,000,000 are listed in Schedule 2 (Real Property) to
this Certificate.]   6.   We give the confirmations in this Certificate as at
the last day of the preceding fiscal quarter.

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Signed                                                     
  Signed                                                     
 
   
Chief Financial Officer for and on behalf of Endeavour International Corporation
  Chief Financial Officer for and on behalf of Endeavour Energy UK Limited

Schedule 1
OIL AND GAS PROPERTIES

                  Owner   Property Description   Value

Schedule 2
REAL PROPERTY

                  Owner   Property Description   Value

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SCHEDULE 10
INVESTMENTS
This Schedule 10 incorporates relevant information from Schedule 6
(Subsidiaries).

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SCHEDULE 11
EXISTING SECURITY

                      Secured               Location of     Party   Debtor  
File Number   File Date   Filing   Collateral
Dell Financial Services L.L.C.
  Endeavour
International
Corporation   2010013574-3   05/28/2010   Secretary of State of Nevada  
Computer Equipment
 
                   
Independent
Television News
Limited
  Endeavour Energy UK
Limited   525752/13   06/20/2005   Companies House UK   Funds in Secured Party’s
deposit account specifically designated to secure rent owing to landlord
pursuant to London office lease

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SCHEDULE 12
FORM OF ACCESSION LETTER

    To: Commonwealth Bank of Australia (the “Bank”)       From: [Subsidiary] and
[Company]

Dated:
Dear Sirs
Endeavour Energy UK Limited — £20,600,000 Letter of Credit Facility Agreement
dated [          ] 2011 (the “Agreement”)

1.   We refer to the Agreement. This is an Accession Letter. Terms defined in
the Agreement have the same meaning in this Accession Letter unless given a
different meaning in this Accession Letter.   2.   [Subsidiary] agrees:

  (a)   to become an Additional Guarantor and to be bound by the terms of the
Agreement as an Additional Guarantor pursuant to Clause 23 (Additional
Guarantors) of the Agreement; and     (b)   to be bound by the terms of the
Intercreditor Agreement as an Additional Guarantor.

3.   [Subsidiary] is a company duly incorporated under the law of [name of
relevant jurisdiction].   4.   The Company confirms that no Default is
continuing or would occur as a result of [Subsidiary] becoming an Additional
Guarantor.   5.   [Subsidiary’s] administrative details are as follows:      
Address:       Fax No:       Attention:   6.   This Accession Letter and any
non-contractual obligations arising out of or in connection with it are governed
by English law.

This Accession Letter has been delivered as a deed on the date stated at the
beginning of this Accession Letter.

     
[Company]
  [Subsidiary]

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SCHEDULE 13
FORM OF AMENDED AND RESTATED TERMS
For the purposes of the amended and restated terms contained in this
Schedule 13, the following terms shall be defined as follows:
“Company Indebtedness” means, at any time, the sum of (without duplication):

(A)   all Indebtedness of the Company and any Additional Post-Cyan Obligor as
would be required to be reflected as debt or Capitalised Lease Obligations on
the liability side of a balance sheet of the Company or (as applicable) any
Additional Post-Cyan Obligor in accordance with GAAP;   (B)   all Indebtedness
of Company and any Additional Post-Cyan Obligor of the type described in clauses
(B), (G) and (H) of the definition of Indebtedness; and   (C)   all Contingent
Obligations of the Company and any Additional Post-Cyan Obligor in respect of
Indebtedness of any third person of the type referred to in preceding clauses
(A) and (B),

provided that the amount of any Indebtedness in respect of Hedging Agreements
shall be at any time the unrealised net loss position (taking into account all
Hedging Agreements), of the Company and any Additional Post-Cyan Obligor
thereunder on a marked-to-market basis determined as of the most recently ended
fiscal quarter; provided further, that if at any time when Company Indebtedness
is being determined, the net position across all the Company’s and any
Additional Post-Cyan Obligor’s Hedging Agreements is positive, Company
Indebtedness shall be reduced by such positive amount.

    “Company Net Secured Indebtedness” means, at any time, the difference of:

(A)   Company Indebtedness at such time that is secured by Security;

less:

(B)   the average daily amount of the Company’s and any Additional Post-Cyan
Obligor Unrestricted cash and Unrestricted Cash Equivalents during the thirty
day period ending on the respective date on which “Company Net Secured
Indebtedness” is determined.

“Intercompany Loan” means a loan made by one member of the Group to another
member of the Group.
“PV-10 UK PDP” means, as of any date of determination, the present value of
future cash flows from PDP on the Company’s and any Additional Post-Cyan
Obligor’s Oil and Gas Properties in the North Sea as set forth in the most
recent Reserve Report delivered pursuant to Clause 21.1.4 (Reserve Report),
utilising 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), as of the date as of which the
information set forth in such Reserve Report is provided (as adjusted for basis
differentials) and utilising a 10% discount rate. For the purposes of
calculating PV-10 UK PDP, 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.
“PV-10 UK PDP Coverage Ratio” means, on the date of any determination, the ratio
of:

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(A)   PV-10 UK PDP on such date

to:

(B)   Company Net Secured Indebtedness on such date.

“PV-10 UK Proved” means, as of any date of determination, the present value of
future cash flows from Proved Reserves on the Company’s and any Additional
Post-Cyan Obligor’s Oil and Gas Properties in the North Sea as set forth in the
most recent Reserve Report delivered pursuant to Clause 21.1.4 (Reserve Report),
utilising 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), as of the date as of which the
information set forth in such Reserve Report is provided (as adjusted for basis
differentials) and utilising a 10% discount rate. For the purposes of
calculating PV-10 UK Proved, 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.
“PV-10 UK Proved Coverage Ratio” means, on the date of any determination, the
ratio of:

(A)   PV-10 UK Proved on such date

to:

(B)   Company Net Secured Indebtedness on such date.

“Subordination Agreement” has the meaning given to that term in Clause 21.21.2.

19.   [DELIBERATELY LEFT BLANK]   20.   REPRESENTATIONS AND WARRANTIES      
Each of the Post-Cyan Obligors hereby represents and warrants to the Bank on the
Cyan Facility Discharge Date, and in accordance with Clause 20.8 (Repetition),
as follows:   20.1   Status       Each Post-Cyan Obligor and the Company
Shareholder:

  20.1.1   is a Business duly incorporated or formed, as applicable, and validly
existing under the laws of its jurisdiction of incorporation or formation, as
applicable;     20.1.2   has the 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     20.1.3   is duly qualified and is authorised to do
business 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 authorised which, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
and     20.1.4   no certifications by any Governmental Authority are required
for operation of its business that are not in place, except for such
certifications or agreements, the

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      absence of which could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

20.2   Binding obligations       The obligations expressed to be assumed by it
in each Finance Document to which it is a party are, subject to any general
principles of law limiting its obligations which are specifically referred to in
any legal opinion delivered pursuant to Clause 4.1 (Initial conditions
precedent), legal, valid, binding and enforceable obligations.   20.3   Power
and authority

  20.3.1   Each Post-Cyan Obligor and the Company Shareholder has the power and
authority to execute, deliver and perform the terms and provisions of each of
the Finance Documents to which it is party and has taken all necessary action to
authorise the execution, delivery and performance by it of each of such Finance
Documents.     20.3.2   Each Post-Cyan Obligor and the Company Shareholder has
duly executed and delivered each of the Finance Documents to which it is party,
and each of such Finance Documents constitutes its legal, valid and binding
obligation enforceable in accordance with its terms.

20.4   Non-conflict with other obligations       The entry into and performance
by it of, and the transactions contemplated by, the Finance Documents do not and
will not conflict with:

  20.4.1   any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or Governmental Authority applicable to it;     20.4.2  
the constitutional documents of any Post-Cyan Obligor or the Company
Shareholder; or     20.4.3   any agreement or instrument binding upon any
Post-Cyan Obligor or the Company Shareholder or any of their respective assets
(or constitute a default or termination event under any such agreement or
instrument),

    or result in any breach of any of the terms, covenants, conditions or
provision of, or constitute a default under or result in the creation or
imposition of (or the obligation to create or impose) any Security (except
pursuant to the Security Documents) upon any of the property or assets of any
Post-Cyan Obligor, the Company Shareholder or any Subsidiary of a Post-Cyan
Obligor 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 Post-Cyan Obligor, the Company Shareholder
or any Subsidiary of a Post-Cyan Obligor is a party or by which it or any of its
property or assets is bound or to which it may be subject.   20.5   Approvals  
    No order, consent, approval, licence, authorisation or validation of, or
filing, recording or registration with (except filings which are necessary to
perfect the security interests created or intended to be created under the
Security Documents), or exemption by, any Governmental Authority is required to
be obtained or made by, or on behalf of, any Post-

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    Cyan Obligor, the Company Shareholder or any Subsidiary of a Post-Cyan
Obligor to authorise, or is required to be obtained or made by, or on behalf of,
any Post-Cyan Obligor, the Company Shareholder or any Subsidiary of a Post-Cyan
Obligor in connection with:

  20.5.1   the execution, delivery and performance of any Finance Document; or  
  20.5.2   the legality, validity, binding effect or enforceability of any such
Finance Document.

20.6   Governing law and enforcement

  20.6.1   The relevant law chosen as the governing law of each of the Finance
Documents to which it is a party will be recognised and enforced in its
jurisdiction of incorporation.     20.6.2   The submission by it to the
jurisdiction of the courts of England under any relevant Finance Document to
which it is a party and any undertaking given in any Finance Document by it not
to claim any immunity, in each case, is legal, valid and binding under the law
of its jurisdiction of incorporation.     20.6.3   Any judgment obtained in
England in relation to a Finance Document to which it is a party will be
recognised and enforced in its jurisdiction of incorporation.

20.7   Security Documents       The provisions of each Post-Cyan Security
Document are effective to create in favour of the Collateral Agent or (as
applicable) the Bank a legal, valid and enforceable security interest of the
type that it purports to create in all right, title and interest of the
Post-Cyan Obligors in the Collateral described therein, and the Collateral Agent
and (in relation to the Cash Collateral Agreement) the Bank has a fully
perfected security interest in all right, title and interest in all of the
Collateral described therein, subject to no other Security other than Permitted
Security.   20.8   Repetition       The representations and warranties in this
Clause 20 shall be deemed repeated on each Letter of Credit Fee Payment Date
prior to the Final Discharge Date in each case by reference to the facts and
circumstances then existing.   21.   COVENANTS       Subject to Clause 8 (Cyan
Facility Discharge Date) each Post-Cyan Obligor makes the covenants in this
Clause 21 and agrees that they shall remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance Documents
or any Commitment is in force.   21.1   Information Covenants       The Parent
and the Company will furnish to the Bank:

  21.1.1   Monthly Reports         within 30 days after the end of each fiscal
month of the Parent, the consolidated balance sheet of the Parent as at the end
of such fiscal month and the related consolidated statements of income and
statement of cash flows for such fiscal

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      month and for the elapsed portion of the fiscal year ended with the last
day of such fiscal month, in each case:

  (A)   setting forth comparative figures for the corresponding fiscal month in
the prior fiscal year and comparable forecast figures for such fiscal month as
set forth in the respective forecast delivered pursuant to Clause 21.1.5
(Projections); and     (B)   in the form prepared for the Parent’s and its
Subsidiaries’ monthly internal management reporting package.

  21.1.2   Quarterly Financial Statements         within 45 days after the close
of each quarterly accounting period (excluding the last quarterly accounting
period) in each fiscal year of the Parent:

  (A)   the consolidated balance sheet of the Parent as at the end of such
quarterly accounting period and the related consolidated statements of income
and retained earnings and consolidated 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     (B)
  management’s discussion and analysis of the important operational and
financial developments during such quarterly accounting period,

      certified by an Authorised Officer of the Parent that they fairly present
in all material respects in accordance with GAAP the consolidated financial
condition of the Parent 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;     21.1.3   Annual Financial
Statements         within:

  (A)   90 days after the close of each fiscal year of the Parent, the
consolidated balance sheet of the Parent as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and
consolidated statements of cash flows for such fiscal year, setting forth
comparative figures for the preceding fiscal year, and certified by KPMG LLP or
another independent certified public accountants of recognised national standing
reasonably acceptable to the Bank, 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
    (B)   274 days after the close of each fiscal year of each of the Company
and any Additional Post-Cyan Obligor, the audited consolidated balance sheet of
the Company and each Additional Post-Cyan Obligor as at the end of such fiscal
year,

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      with the Parent’s consolidated balance sheet including management’s
discussion and analysis of the important operational and financial developments
during the immediately preceding fiscal year of the Parent.     21.1.4   Reserve
Report         prior to the Cash Collateral Discharge Date and prior to or
concurrently with any delivery of the Parent’s financial statements under Clause
21.1.3 and, solely as to each quarter ending on 30 June, under Clause 21.1.2 (or
more frequently at the Company’s option):

  (A)   a Reserve Report (which shall be:

  (1)   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     (2)   a semi-annual Reserve Report (as so described) in the
case of a Reserve Report delivered in connection with quarterly financial
statements for the fiscal quarter ended 30 June) setting forth, among other
things:

  (a)   the Oil and Gas Properties owned by each member of the Group and covered
by such Reserve Report;     (b)   the Proved Reserves and Probable Reserves
attributable to such Oil and Gas Properties; and     (c)   a projection of the
rate of production and cash flows of such Proved Reserves and Probable Reserves
as of the date as of which the information set forth in such Reserve Report is
provided,

      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 utilising such operating cost and
other assumptions as proposed by the Company); and

  (B)   a certificate of an Authorised Officer showing any additions to or
deletions from the Oil and Gas Properties made by each member of the Group 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;

  21.1.5   Projections         prior to the Cash Collateral Discharge Date, no
later than the 15th day after the end of each fiscal year of the Parent,
projections of the Group’s and the Company’s fiscal performance in form
satisfactory to the Bank (including forecasted statements of income, cash flow
statement and balance sheets for the Company (and any Additional Post-Cyan
Obligor) and the Parent (consolidated, in the case of the Parent)) for each of
the twelve months of each succeeding fiscal

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      year to the Final Discharge Date, in each case setting forth, with
appropriate discussion, the principal assumptions upon which such projections
are based (the “Projections”);     21.1.6   Compliance Certificate         at
the time of the delivery of the financial statements provided for in Clauses
21.1.2 (Quarterly Financial Statements) and 21.1.3 (Annual Financial
Statements), compliance certificates from the chief financial officer of,
respectively, the Company (and any Additional Post-Cyan Obligor) and the Parent
in the form of Schedule 9 (Form of Compliance Certificate) (a “Compliance
Certificate”) certifying on behalf of the Company, any Additional Post-Cyan
Obligor or (as applicable) the Parent 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, and, prior to the Cash Collateral Discharge Date,
each Compliance Certificate shall also:

  (A)   set forth in reasonable detail the calculations required to establish
whether the Post-Cyan Obligors were in compliance with the provisions of Clauses
21.18.5 and 21.18.6 (Consolidation, Merger, Purchase or Sale of Assets, etc.)
21.20.1(I)(1) and 21.20.1(J) (Indebtedness) and 21.23 (Minimum Asset Coverage
Ratios) at the end of such fiscal quarter or year, as the case may be; and    
(B)   notify the Bank of the acquisition by any member of the Group of any Oil
and Gas Property or Real Property (or any interest in any Oil and Gas Property
or Real Property) having a value in excess of $5,000,000;

  21.1.7   Notice of Default, Litigation and Material Adverse Effect        
promptly, and in any event within three Business Days after any officer of a
member of the Group obtains knowledge thereof, notice of:

  (A)   the occurrence of any event which constitutes a Default or an Event of
Default;     (B)   any litigation or governmental investigation or proceeding
pending or labour dispute against any member of the Group:

  (1)   which, either individually or in the aggregate, has had, or could
reasonably be expected to have, a Material Adverse Effect; or     (2)   with
respect to any Finance Documents; or

  (C)   any other event, change or circumstance that has had, or could
reasonably be expected to have, a Material Adverse Effect;

  21.1.8   Other Reports and Filings         promptly after the filing or
delivery thereof, copies of all financial information, proxy materials and
reports, if any, which any member of the Group shall:

  (A)   publicly file with the SEC; or

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  (B)   deliver to holders (or any trustee, agent or other representative
therefor) of any Qualified Preferred Stock, any Junior Financing or any other
material Indebtedness, in each case pursuant to the terms of the documentation
governing the same;

  21.1.9   Environmental Matters         promptly after any officer of any
member of the Group 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:

  (A)   any pending or threatened Environmental Claim, proceeding, investigation
or notice of breach issued under or pursuant to any Environmental Law against
any member of the Group or any Real Property, facility or Oil and Gas Property
owned, leased or operated by any member of the Group;     (B)   any condition or
occurrence on or arising from any Real Property, facility or Oil and Gas
Property owned, leased or operated by any member of the Group that could
reasonably be expected to form the basis of an Environmental Claim, proceeding,
investigation, action or notice of breach against any member of the Group or any
such Real Property or facility under any Environmental Law;     (C)   issuance
under any Environmental Law of any liens or restrictions on the ownership,
lease, occupancy, use or transferability by any member of the Group of any Real
Property, facility or Oil and Gas Property owned, operated or leased by any
member of the Group; and     (D)   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 any member of the Group.

      All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action and
any member of the Group’s response thereto.

  21.1.10   Other Information       from time to time, such other information or
documents (financial or otherwise, and including without limitation Project
Documents and amendments thereto) with respect to any member of the Group as the
Bank may reasonably request.

    Notwithstanding the foregoing, the obligations in Clauses 21.1.2 (Quarterly
Financial Statements), 21.1.3 (Annual Financial Statements) and 21.1.8 (Other
Reports and Filings), may be satisfied with respect to financial information
(or, in the case of Clause 21.1.8 (Other Reports and Filings), other
information) of the Parent by filing the Parent’s Form 10-K or 10-Q, as
applicable (or, in the case of Clause 21.1.8 (Other Reports and Filings) such
other applicable filing) with the SEC or by making such information available on
the Parent’s website, in each case to the extent the Parent has notified the
Bank of such filing or

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    that such information is available on such website; provided that to the
extent such information is in lieu of information required to be provided under
Clause 21.1.3 (Annual Financial Statements), the Parent separately delivers to
the Bank a report and opinion of KPMG LLP or any other independent certified
public accounting firm acceptable to the Bank, which report and opinion shall be
prepared in accordance with generally acceptable auditing standards and shall
not be subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit.   21.2   Books,
Records and Inspections; Annual Meetings

  21.2.1   The Parent will, and will cause each other member of the Group 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. The Parent
will, and will cause each other member of the Group to, permit officers and
designated representatives of the Bank:

  (A)   to visit and inspect, under guidance of officers of such member of the
Group, any of the properties of such member of the Group; and     (B)   to
examine the books of account of such member of the Group and discuss the
affairs, finances and accounts of such member of the Group 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 Bank may reasonably request.

  21.2.2   At the request of the Bank, the Parent will within 120 days after the
close of each fiscal year of the Parent, hold a meeting (which may be by
conference call or teleconference), at a time and place selected by the Parent
and reasonably acceptable to the Bank, with the Bank, to review the financial
results of the previous fiscal year and the financial condition of the Group and
the Company (and any Additional Post-Cyan Obligor) and the budgets presented for
the current fiscal year of the Group and the Company (and any Additional
Post-Cyan Obligor).

21.3   “Know your customer” checks

  21.3.1   If:

  (A)   the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation made after the date of
this Agreement; or     (B)   any change in the status of any Post-Cyan Obligor
after the date of this Agreement,

      obliges the Bank to comply with “know your customer” or similar
identification procedures in circumstances where the necessary information is
not already available to it, each Post-Cyan Obligor shall promptly upon the
request of the Bank supply, or procure the supply of, such documentation and
other evidence as is reasonably requested by the Bank in order for the Bank to
carry out and be satisfied it has complied with all necessary “know your
customer” or other similar

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      checks under all applicable laws and regulations pursuant to the
transactions contemplated in the Finance Documents.     21.3.2   The Company
shall, by not less than 10 Business Days’ prior written notice to the Bank,
notify the Bank that a Subsidiary of the Company is intended to become an
Additional Guarantor pursuant to Clause 23 (Additional Guarantors).     21.3.3  
Following the giving of any notice pursuant to Clause 21.3.2 above, if the
accession of such Additional Guarantor obliges the Bank to comply with “know
your customer” or similar identification procedures in circumstances where the
necessary information is not already available to it, the Company shall promptly
upon the request of the Bank supply, or procure the supply of, such
documentation and other evidence as is reasonably requested by the Bank in order
for the Bank to carry out and be satisfied it has complied with all necessary
“know your customer” or other similar checks under all applicable laws and
regulations pursuant to the accession of such Subsidiary to this Agreement as an
Additional Guarantor.

21.4   Maintenance of Property; Insurance

  21.4.1   Prior to the Cash Collateral Discharge Date, the Parent will, and
will cause each other member of the Group to:

  (A)   keep all property necessary to the business of the Group in good working
order and condition, ordinary wear and tear excepted and subject to the
occurrence of casualty events:     (B)   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 the Group; and     (C)   furnish to the Bank, 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 Clause 21.4 shall be deemed supplemental to, but
not duplicative of, the provisions of any Security Documents that require the
maintenance of insurance.     21.4.2   The Company (and any Additional Post-Cyan
Obligor) will at all times keep its property insured in favour of the Bank (in
its capacity as Collateral Agent), and all policies or certificates (or
certified copies thereof) with respect to such insurance:

  (A)   shall be endorsed to the Bank’s satisfaction for the benefit of the Bank
(including, without limitation, by naming the Bank as loss payee and/or
additional insured);     (B)   shall state that such insurance policies shall
not be cancelled without at least 30 days’ prior written notice thereof by the
respective insurer to the Bank;

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  (C)   shall provide that the respective insurers irrevocably waive any and all
rights of subrogation with respect to the Bank; and     (D)   shall be deposited
with the Bank.

  21.4.3   If the Company (or any Additional Post-Cyan Obligor) shall fail to
maintain insurance in accordance with this Clause 21.4, or if the Company (or
any Additional Post-Cyan Obligor) shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Bank shall have the right
(but shall be under no obligation) to procure such insurance, and the Post-Cyan
Obligors jointly and severally agree to reimburse the Bank for all costs and
expenses of procuring such insurance.

21.5   Existence; Franchises; Oil and Gas Properties

  21.5.1   Prior to the Cash Collateral Discharge Date, the Company (and any
Additional Post-Cyan Obligor) will 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, licences, permits, copyrights, trademarks and patents and
pay all royalties when due; provided, however, that nothing in this Clause 21.5
shall prevent:

  (A)   sales of assets and other transactions by the Company (or any Additional
Post-Cyan Obligor) in accordance with Clause 21.18 (Consolidation, Merger,
Purchase or Sale of Assets, etc.); or     (B)   the withdrawal by any Post-Cyan
Obligor 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.

  21.5.2   Prior to the Cash Collateral Discharge Date, the Company (and each
Additional Post-Cyan Obligor) will:

  (A)   comply in all material respects with the terms and provisions of all oil
and gas leases and licences relating to the Oil and Gas Properties of the
Company (and any Additional Post-Cyan Obligor) and all contracts and agreements
relating thereto or to the production and sale of Hydrocarbons therefrom;
provided that the Company (and any Additional Post-Cyan Obligor) shall have the
right to abandon Oil and Gas Properties in the exercise of the Company’s (or the
applicable Additional Post-Cyan Obligor’s reasonable judgment, in each case in
compliance with the relevant Oil and Gas Contracts governing such Oil and Gas
Properties; and     (B)   with respect to any such Oil and Gas Properties or oil
and gas gathering assets that are operated by operators other than any member of
the Group, 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.

21.6   Compliance with Statutes, etc.

  21.6.1   Each Post-Cyan Obligor will, and the Parent will cause the Company
Shareholder to, comply with all applicable statutes, regulations and orders of,
and all

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      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 Clause 21.7 (Compliance
with Environmental Law)), except such non-compliances as could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.     21.6.2   Each Post-Cyan Obligor will, and the Parent will
cause the Company Shareholder to, maintain and comply with the terms and
conditions of any material Authorisation required under any law or regulation
(including Environmental Law):

  (A)   to enable it to perform its obligations and/or exercise its rights
under, or the validity or enforceability of, each Finance Document and Project
Document; and     (B)   to enable it to conduct the Oil and Gas Business in
which has an interest,

      except, in the case of preceding paragraph (B) 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.

21.7   Compliance with Environmental Laws

  21.7.1   The Parent will, and will cause each other member of the Group to:

  (A)   comply, with all Environmental Law 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 any Post-Cyan
Obligor, except such non-compliances as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;     (B)  
promptly pay or cause to be paid all costs and expenses for which any member of
the Group is legally obligated that are incurred in connection with such
compliance;     (C)   keep or cause to be kept all such Real Property,
facilities and Oil and Gas Properties free and clear of any Security imposed
pursuant to such Environmental Law;     (D)   to generate, use, treat, store,
Release and dispose of, and 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 any member
of the Group, 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 any member of the Group as would
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

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  21.7.2   Upon:

  (A)   the receipt by the Bank of any notice from the Company (or an Additional
Post-Cyan Obligor) of the type described in Clause 21.1.9 (Environmental
Matters);     (B)   a reasonable determination that any member of the Group is
not in compliance with Clause 21.7.1; or     (C)   the exercise by the Bank of
any of the remedies pursuant to Clause 22.14 (Acceleration),

      each Post-Cyan Obligor will (in each case) collectively, or if any
Post-Cyan Obligor so desires, individually, provide, upon the request of the
Bank at the sole expense of the Post-Cyan Obligors, as applicable, an
environmental site assessment report concerning any Real Property or facilities
owned, leased or operated by any member of the Group, prepared by an
environmental consulting firm reasonably acceptable to by the Bank, 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 any Post-Cyan
Obligor fails to provide the same within 30 days after such request was made,
the Bank may order the same, the cost of which shall be borne by the
non-responsive party; and each of the Post-Cyan Obligors shall grant and hereby
grants to the Bank and its respective agents access to such Real Property and
specifically grant the Bank an irrevocable non-exclusive licence, subject to the
rights of tenants, to undertake such an assessment at any reasonable time upon
reasonable notice to the Parent and the Company, all at the sole expense of each
of the Post-Cyan Obligors.

21.8   End of Fiscal Years; Fiscal Quarters       The Parent will cause:

  21.8.1   its and each of its Subsidiaries’ fiscal years to end on 31 December
of each calendar year; and     21.8.2   its and each of its Subsidiaries’ fiscal
quarters to end on 31 March, 30 June, 30 September and 31 December,

    provided that nothing in this Clause 21.8 shall prohibit any Subsidiary of
the Parent from maintaining a tax year that does not end on December 31.   21.9
  Performance of Obligations       The Parent will, and will cause each other
member of the Group 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.   21.10   Payment of
Taxes       The Parent will pay and discharge, and will cause each other member
of the Group to pay and discharge, all Taxes, assessments and governmental
charges or levies imposed upon it

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    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 Security or charge upon any properties of any member of
the Group not otherwise permitted under Clause 21.17.3(C) (Negative Pledge);
provided that no member of the Group 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.   21.11   Further assurances

  21.11.1   Each Post-Cyan Obligor will grant to the Collateral Agent for the
benefit of the Secured Creditors security interests and Mortgages in such assets
and Real Property of each Post-Cyan Obligor (including, without limitation, Oil
and Gas Properties and other properties of each Post-Cyan Obligor acquired
subsequent to the first Utilisation Date) as are not covered by the original
Post-Cyan Security Documents and as may be reasonably requested from time to
time by the Bank (collectively, the “Additional Post-Cyan Security Documents”).
All such security interests and Mortgages shall be granted pursuant to
documentation satisfactory in form and substance to the Bank and shall
constitute valid and enforceable perfected security interests, hypothecations
and Mortgages superior to and prior to the rights of all third parties and
enforceable against third parties and subject to no other Security except for
Permitted Security. The Additional Post-Cyan Security Documents or instruments
related thereto 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 Security in favour of the Collateral Agent or (as applicable) the Bank
required to be granted pursuant to the Additional Post-Cyan Security Documents
and all taxes, fees and other charges payable in connection therewith shall have
been paid in full. It is understood and agreed that, notwithstanding anything to
the contrary above in this Clause 21.11.1, no Post-Cyan Obligor will be required
pursuant to this Clause 21.11.1 to:

  (A)   grant a security interest in or mortgage on any Oil and Gas Property
that would not otherwise be required under Section 7.12(g) of the Cyan Facility
Agreement as in effect on the date of this Agreement;     (B)   grant a security
interest in or mortgage on any leased Real Property that is not an Oil and Gas
Property; or     (C)   grant a security interest in or mortgage on any owned
Real Property that is not an Oil and Gas Property unless:

  (1)   any such item of Real Property individually has a Fair Market Value of
at least $2,500,000; or     (2)   the aggregate Fair Market Value of such Real
Property that would otherwise be excluded from the requirements of this Clause
21.11.1 would exceed $10,000,000.

  21.11.2   Each Post-Cyan Obligor will, at the expense of the Post-Cyan
Obligors, make, execute, endorse, acknowledge, file and/or deliver to the Bank
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,

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      bailee agreements, control agreements and other assurances or instruments
and take such further steps relating to the Collateral covered by any of the
Post-Cyan Security Documents as the Bank may reasonably require. Furthermore,
the Post-Cyan Obligors will deliver to the Bank such opinions of counsel, title
insurance and other related documents as may be reasonably requested by the Bank
to assure itself that this Clause 21.11.2 has been complied with.     21.11.3  
The Post-Cyan Obligors agree that each action required under this Clause 21.11
shall be completed as soon as possible, but in no event later than 60 days after
such action is requested to be taken by the Bank; provided that, in no event
will any Post-Cyan Obligor be required to take any action, other than using its
commercially reasonable efforts, to obtain consents from third parties with
respect to its compliance with this Clause 21.11.

21.12   Ownership of Subsidiaries; etc.       Prior to the Cash Collateral
Discharge Date (without prejudice to Clause 22.12 (Change of Control), except
pursuant to a Permitted Acquisition consummated in accordance with the terms
hereof, the Parent will, and will cause the Company Shareholder and the Company
to, own, directly or indirectly, 100% of the Equity Interests of each of their
Subsidiaries (other than, in the case of a Non-U.S. Subsidiary of the Parent,
directors’ qualifying             shares and/or other nominal amounts of shares
required to be held by local nationals, in each case to the extent required by
applicable law).   21.13   Maintenance of Company Separateness       Each
Post-Cyan Obligor will, and the Parent will ensure that the Company Shareholder
will, 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. No Post-Cyan Obligor
shall, and the Parent will ensure that the Company Shareholder will not, take
any action, or conduct its affairs in a manner, which is likely to result in the
Business existence of any Post-Cyan Obligor or (as applicable) the Company
Shareholder being ignored, or in the assets and liabilities of any Post-Cyan
Obligor or (as applicable) the Company Shareholder being substantively
consolidated with those of any other person in a bankruptcy, reorganisation or
other insolvency proceeding.   21.14   Permitted Acquisitions

  21.14.1   Subject to the provisions of this Clause 21.14 and the requirements
contained in the definition of Permitted Acquisition, the Company (and any
Additional Post-Cyan Obligor) may from time to time effect Permitted
Acquisitions so long as, in the case of Permitted Acquisitions prior to the Cash
Collateral Discharge Date (in each case except to the extent the Bank otherwise
specifically agrees in writing in the case of a specific Permitted Acquisition):

  (A)   no Default or Event of Default shall have occurred and be continuing at
the time of the consummation of the proposed Permitted Acquisition or
immediately after giving effect thereto;     (B)   the Company (or the
applicable Additional Post-Cyan Obligor) shall have given to the Bank at least
10 Business Days’ prior written notice of any Permitted Acquisition (or such
shorter period of time as may be

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      reasonably acceptable to the Bank), which notice shall describe in
reasonable detail the principal terms and conditions of such Permitted
Acquisition;     (C)   drafts of the definitive documentation for each such
Permitted Acquisition shall, if so requested by the Bank, have been delivered to
the Bank at least five Business Days’ prior to the consummation thereof (with
subsequent drafts to be delivered to the Bank as and when such drafts become
available to the Company or the applicable Additional Post-Cyan Obligor);    
(D)   in the case of any Material Permitted Acquisition, calculations are made
by the Company with respect to the financial covenants contained in Clause 21.23
(Minimum Asset Coverage Ratios) for the respective Calculation Period on a Pro
Forma Basis as if the respective Material Permitted Acquisition (together with
all other Material Permitted Acquisitions theretofore consummated after the
first day of such Calculation Period) had occurred on the first day of such
Calculation Period, and such calculations shall show that such financial
covenants would have been complied with as of the last day of such Calculation
Period;     (E)   in the case of any Material Permitted Acquisition, based on
good faith projections prepared by the Company for the period from the date of
the consummation of the respective Material Permitted Acquisition to the date
which is one year thereafter, the level of financial performance measured by the
financial covenants set forth in Clause 21.23 (Minimum Asset Coverage Ratios)
shall be better than or equal to such level as would be required to provide that
no Default or Event of Default would exist under the financial covenants
contained in such Clause 21.23 (Minimum Asset Coverage Ratios) as compliance
with such financial covenants would be required through the date which is one
year from the date of the consummation of the respective Material Permitted
Acquisition;     (F)   all representations and warranties contained herein and
in the other Finance Documents shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of such Permitted Acquisition (both before and
after giving effect thereto), unless stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date; and     (G)   the
Parent shall have delivered to the Bank a certificate executed by an Authorised
Officer of the Parent, certifying to the best of such officer’s knowledge,
compliance with the requirements of preceding clauses (A) to (G), inclusive, and
containing the calculations (in reasonable detail) required by preceding
sub-clauses (D) and (E).

  21.14.2   Prior to the Cash Collateral Discharge Date, at the time of each
Permitted Acquisition involving the creation or acquisition of a Subsidiary, or
the acquisition of capital stock or other Equity Interest of any person, the
capital

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      stock or other Equity Interests thereof created or acquired in connection
with such Permitted Acquisition shall be pledged for the benefit of the Bank (in
its capacity as a Hedging Counterparty and, prior to the Cash Collateral
Discharge Date, as provider of the Facility) pursuant to (and to the extent
required by) the applicable Security Document.     21.14.3   Prior to the Cash
Collateral Discharge Date, the consummation of each Permitted Acquisition shall
be deemed to be a representation and warranty by each of the Parent and the
Company that the certifications pursuant to this Clause 21.14 are true and
correct and that all conditions thereto have been satisfied and that same is
permitted in accordance with the terms of this Agreement, which representation
and warranty shall be deemed to be a representation and warranty for all
purposes hereunder, including, without limitation, Clause 20 (Representations
and Warranties) and 22 (Events of Default).

21.15   Project Documents, etc.       Prior to the Cash Collateral Discharge
Date, the Company and any Additional Post-Cyan Obligor shall:

  21.15.1   ensure that none of its rights under or in respect of any Project
Document to which it is a party are at any time cancelled, terminated, suspended
or limited if the same would be reasonably likely to result in a Material
Adverse Effect;     21.15.2   not agree to any waiver, amendment, termination or
cancellation of any Project Document to which it is a party if the same would be
reasonably likely to result in Material Adverse Effect;     21.15.3   duly and
properly perform, in all material respects, its obligations under the Project
Documents to which it is a party (except to the extent, if any, that such
performance is inconsistent with its obligation under the Finance Documents or
any such failure to perform as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect);    
21.15.4   exercise its rights, under and in respect of the Project Documents to
which it is a party consistently with its obligations under the Finance
Document; and     21.15.5   not enter into any Project Document which would be
reasonably likely to result in a Material Adverse Effect.

21.16   Oil and Gas Properties       Prior to the Cash Collateral Discharge
Date, the Company and each Additional Post-Cyan Obligor shall:

  21.16.1   exercise such votes and other rights as it may have under the
Project Documents to which it is a party with a view to ensuring (so far as
able) that each Oil and Gas Property in which the Company or the applicable
Additional Post-Cyan Obligor 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 the Project
Documents;     21.16.2   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 the Company or the

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      applicable Additional Post-Cyan Obligor has an interest unless the Bank
has granted its prior written consent;     21.16.3   not exercise its rights on
any operating or similar committee in a manner that would be materially
prejudicial to the interests of the Company or the applicable Additional
Post-Cyan Obligor or the Bank; and     21.16.4   maintain full and proper
technical and financial records in relation to each of the Oil and Gas
Properties in which it has an interest and ensure (so far as it is able) that
the Bank (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.

21.17   Negative Pledge

  21.17.1   The Company will not create, incur, assume or suffer to exist any
Security upon or with respect to the Cash Collateral other under than the
Finance Documents.     21.17.2   Subject to Clause 21.17.3, and until the later
of the Cash Collateral Discharge Date and the date on which all liabilities of
the Company under the Secured Hedging Agreements have been fully discharged,
neither the Company nor any Additional Post-Cyan Obligor shall:

  (A)   create, incur, assume or suffer to exist any Security upon or with
respect to any of its property or assets (real or personal, tangible or
intangible), whether now or hereafter acquired;     (B)   sell any such property
or assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable with
recourse to the Parent or any of its Subsidiaries); or     (C)   permit the
registration of any security interest on any relevant register with respect to
the Company or any Additional Post-Cyan Obligor.

  21.17.3   The provisions of Clause 21.17.2 shall not prevent the creation,
incurrence, assumption or existence of the following (Security described below
is herein referred to as “Permitted Security”):

  (A)   Security in existence on the date of this Agreement listed in
Schedule 11 (Existing Security) and the property subject thereto and any
renewal, replacement or extension of such Security, provided that (i) the
aggregate principal amount of the Indebtedness, if any, secured by such Security
does not increase from that amount outstanding at the time of any such renewal,
replacement or extension and (ii) any such renewal, replacement or extension
does not encumber any additional assets or properties of the Parent or any of
its Subsidiaries;     (B)   inchoate Security for Taxes, assessments or
governmental charges or levies not yet due or Security for Taxes, assessments or
governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves have been established in accordance with
GAAP;

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  (C)   Security in respect of property or assets of the Company or any
Additional Post-Cyan Obligor imposed by law and which were incurred in the
ordinary course of business and do not secure Indebtedness for borrowed money,
and:

  (1)   which do not in the aggregate materially detract from the value of the
Company’s or any Additional Post-Cyan Obligor’s property or assets or materially
impair the use thereof in the operation of the business of the Company or that
Additional Post-Cyan Obligor; or     (2)   which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to any such
Security;

  (D)   Security created by or pursuant to this Agreement and the Security
Documents;     (E)  

  (1)   licences, sublicences, leases or subleases granted by the Company or any
Additional Post-Cyan Obligor to other persons not materially interfering with
the conduct of the business of the Company or the applicable Additional
Post-Cyan Obligor; and     (2)   any interest or title of a lessor, sublessor or
licensor under any lease or licence agreement permitted by this Agreement to
which the Company or the applicable Additional Post-Cyan Obligor is a party;

  (F)   Security upon assets of the Company or any Additional Post-Cyan Obligor
subject to Capitalised Lease Obligations to the extent such Capitalised Lease
Obligations are permitted by Clause 21.20 (Indebtedness); provided that:

  (1)   such Security only serve to secure the payment of Indebtedness arising
under such Capitalised Lease Obligation; and     (2)   the Security encumbering
the asset giving rise to the Capitalised Lease Obligation does not encumber any
other asset of the Parent or any of its Subsidiaries;

  (G)   Security placed upon equipment or machinery acquired after the first
Utilisation Date and used in the ordinary course of business of the Company or
any Additional Post-Cyan Obligor and placed at the time of the acquisition
thereof by the Company or any Additional Post-Cyan Obligor or within 90 days
thereafter to secure Indebtedness incurred to pay all or a portion of the
purchase price thereof or to secure Indebtedness incurred solely for the purpose
of financing the acquisition of any such equipment or machinery or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
amount; provided that:

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  (1)   the Indebtedness secured by such Security is permitted by Clause 21.20
(Indebtedness); and     (2)   in all events, the Security encumbering the
equipment or machinery so acquired does not encumber any other asset of the
Parent or such Subsidiary;

  (H)   easements, rights-of-way, restrictions, encroachments and other similar
charges or encumbrances, and minor title deficiencies, in each case not securing
Indebtedness and not materially interfering with the conduct of the business of
the Company or any Additional Post-Cyan Obligor;     (I)   Security arising from
precautionary UCC financing statement filings regarding leases entered into in
the ordinary course of business;     (J)   Security arising out of the existence
of judgments or awards in respect of which the Company or an applicable
Additional Post-Cyan Obligor shall in good faith be prosecuting an appeal or
proceedings for review and in respect of which there shall have been secured a
subsisting stay of execution pending such appeal or proceedings; provided that
the aggregate amount of all cash and the Fair Market Value of all other property
subject to such Security does not exceed $7,500,000 at any time outstanding;    
(K)   statutory and common law landlords’ liens under leases to which the
Company or any Additional Post-Cyan Obligor is a party;     (L)   Security
incurred in the ordinary course of business in connection with workers
compensation claims, unemployment insurance and social security benefits and
Security securing the performance of bids, tenders, leases and contracts in the
ordinary course of business, statutory obligations, surety bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business and consistent with past practice (exclusive of obligations in respect
of the payment for borrowed money);     (M)   Security arising out of any
conditional sale, title retention, consignment or other similar arrangements for
the sale of goods entered into by the Company or any Additional Post-Cyan
Obligor in the ordinary course of business to the extent such Security do not
attach to any assets other than the goods subject to such arrangements;     (N)
  Security:

  (1)   incurred in the ordinary course of business in connection with the
purchase, processing or shipping of goods or assets (or the related assets and
proceeds thereof), which Security is in favour of the seller or shipper of such
goods or assets and only attach to such goods or assets; and     (2)   in favour
of customs and revenue authorities arising as a matter of law to secure payment
of customs duties in connection with the importation of goods;

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  (O)   bankers’ liens, rights of setoff and other similar Security existing
solely with respect to cash and Cash Equivalents on deposit in one or more
accounts maintained by the Company or any Additional Post-Cyan Obligor, in each
case granted in the ordinary course of business in favour of the bank or banks
with which such accounts are maintained, securing amounts owing to such bank or
banks with respect to cash management and operating account arrangements;    
(P)   Security on insurance proceeds securing the payment of financed insurance
premiums;     (Q)   Security arising in the ordinary course of business under
rig deposits, operating agreements, joint venture agreements, partnership
agreements, oil and gas leases, Oil and Gas Contracts, overriding royalty
agreements, farm-out and farm-in agreements, division orders, contracts for the
sale, transportation or exchange of oil or natural gas, unitisation and pooling
declarations and agreements, area of mutual interest agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements and other agreements that are
customary in the Oil and Gas Business, provided that:

  (1)   the amount of any obligations secured thereby that are delinquent, that
are not diligently contested in good faith and for which adequate reserves are
not maintained by the Company or an Additional Post-Cyan Obligor, as the case
may be, do not exceed, at any time outstanding, the amount owing by the Company
or the applicable Additional Post-Cyan Obligor, as applicable, for two months’
billed operating expenses or other expenditures attributable to such person’s
interest in the property covered thereby;     (2)   the obligations secured
thereby do not constitute obligations in respect of borrowed money; and     (3)
  any such Security referred to in this Clause 21.17.321.17.3(Q) does not
materially impair the use of the property affected by such Security or the
purposes for which such property is held by the Company or any Additional
Post-Cyan Obligor or materially impair the value of such property;

  (R)   Security reserved in leases or licences of Oil and Gas Properties and in
Oil and Gas Contracts for royalties, bonus or rental payments and for compliance
with the terms of such leases, provided, that the amount of any obligations
secured thereby that are delinquent, that are not diligently contested in good
faith and for which adequate reserves are not maintained by the Company or (as
applicable) an Additional Post-Cyan Obligor do not exceed, at any time
outstanding, the amount owing by the Company or (as applicable) that Additional
Post-Cyan Obligor for two months’ payments as due thereunder;

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  (S)   Security securing Permitted Junior Debt, provided that the Permitted
Junior Debt Notes Representative in respect of such Permitted Junior Debt and
the Collateral Agent have executed and delivered the Permitted Junior Debt
Intercreditor Agreement;     (T)   Security on pipeline or pipeline facilities
that arise under operation of law;     (U)   Security not securing any
obligation arising from UCC financing statements (and similar filings) filed
inadvertently or with malicious intent, which the Company or (as applicable) an
Additional Post-Cyan Obligor diligently seeks to remove and terminate (or causes
to be removed or terminated) promptly upon, and in any event no later than 120
days following, its discovery of the same;     (V)   Security on property or
assets acquired pursuant to a Permitted Acquisition, or on property or assets of
a Subsidiary of the Company or an Additional Post-Cyan Obligor in existence at
the time such Subsidiary is acquired pursuant to a Permitted Acquisition,
provided that:

  (1)   any Indebtedness that is secured by such Security is permitted to exist
under Clause 21.20.1(G); and     (2)   such Security that is secured in
connection with, or in contemplation or anticipation of, such Permitted
Acquisition and do not attach to any other asset of the Company, any Additional
Post-Cyan Obligor or any of their respective Subsidiaries;

  (W)   Security on property or assets acquired after the date of this Agreement
provided that:

  (1)   any Indebtedness that is secured by such Security is permitted under
this Agreement; and     (2)   such Security is not incurred in connection with,
or in contemplation or anticipation of, such acquisition and do not attach to
any other assets of the Company or (as applicable) any Additional Post-Cyan
Obligor; and

  (X)   Security created to secure the Company’s or any Additional Post-Cyan
Obligor’s liabilities under Secured Hedging Agreements.

      In connection with the granting of Security of the type described in
sub-Clauses (G), (H) and (R) of this Clause 21.17.3 (Negative Pledge) by the
Company or an Additional Post-Cyan Obligor, the Bank shall, to the extent
requested by (and at the expense of) the Company or (as applicable) an
Additional Post-Cyan Obligor, provide appropriate instructions and consents to
the Collateral Agent to execute appropriate lien releases or lien subordination
agreements in favour of the holder or holders of such Security, in each case in
form and substance satisfactory to the Bank and solely with respect to the item
or items of equipment or other assets subject to such Security.

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21.18   Consolidation, Merger, Purchase or Sale of Assets, etc.       Neither
the Company nor any Additional Post-Cyan Obligor will wind up, liquidate or
dissolve its affairs or, prior to the Cash Collateral Discharge Date, enter into
any partnership, joint venture, or transaction of merger or consolidation, or
convey, sell, lease, assign or otherwise dispose of all or any part of its
property or assets, or enter into any sale-leaseback transactions, or purchase
or otherwise acquire (in one or a series of related transactions) any part of
the property or assets (including Oil and Gas Properties) but excluding
purchases or other acquisitions of Hydrocarbons and other inventory, materials
and equipment in the ordinary course of business) of any person, except that:

  21.18.1   Capital Expenditures shall be permitted;     21.18.2   the Company
and any Additional Post-Cyan Obligor may sell Hydrocarbons and other inventory
in the ordinary course of business;     21.18.3   the Company and any Additional
Post-Cyan Obligor may liquidate or otherwise dispose of obsolete, uneconomic or
worn-out property in the ordinary course of business;     21.18.4  

  (A)   Investments may be made to the extent permitted by Clause 21.21
(Advances, Investments and Loans);     (B)   Security may be granted to the
extent permitted by Clause 21.17 (Negative Pledge); and     (C)   Dividends may
be made to the extent permitted by Clause 21.19 (Dividends);

  21.18.5   the Company and any Additional Post-Cyan Obligor may dispose of
assets so long as:

  (A)   no Default or Event of Default then exists or would result therefrom;  
  (B)   each such sale is in an arm’s-length transaction and the Company or (as
applicable) that Additional Post-Cyan Obligor receives at least Fair Market
Value;     (C)   the consideration received by the Company or (as applicable)
that Additional Post-Cyan Obligor consists of at least 90% cash and is paid at
the time of the closing of such sale; and     (D)   the aggregate amount of the
cash and non-cash proceeds received from all assets sold pursuant to this Clause
21.18.5 shall not exceed $25,000,000 in any fiscal year of the Company (for this
purpose, using the Fair Market Value of property other than cash);

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  21.18.6   the Company and any Additional Post-Cyan Obligor may sell, in one or
more transactions, up to 50% of the 2P Reserves located in the North Sea listed
in the Parent’s Reserve Report delivered pursuant to Clause 4.1 (Initial
conditions precedent) so long as:

  (A)   no Default or Event of Default is continuing or would result therefrom;
    (B)   each such sale is in an arm’s-length transaction and the Company or
(as applicable) that Additional Post-Cyan Obligor receives at least Fair Market
Value; and     (C)   the consideration received by the Company or (as
applicable) that Additional Post-Cyan Obligor consists of at least 90% cash and
is paid at the time of closing of such sale; and     (D)   if the disposal
yields Net Sale Proceeds of more than $5,000,000, at least five Business Days
prior to the proposed date of disposal a revised Projection is delivered to the
Bank containing calculations made by the Parent with respect to the financial
covenants contained in Clause 21.23 (Minimum Asset Coverage Ratios) for the
respective Calculation Period on a Pro Forma Basis as if the relevant
transaction(s) had occurred on the first day of such Calculation Period and such
calculations show that such financial covenants would have been complied with as
of the last day of such Calculation Period.

  21.18.7   the Company and any Additional Post-Cyan Obligor may dispose of Oil
and Gas Properties and acquire Oil and Gas Properties in contemporaneous
exchanges; provided that:

  (A)   such acquired Oil and Gas Properties have a comparable or higher value
as reasonably determined by the Parent;     (B)   the only consideration paid
for such acquisition is the Oil and Gas Property disposed of in connection with
such acquisition or other consideration independently permitted under any other
clause of this Clause 21.18;     (C)   if the Fair Market Value of the Oil and
Gas Properties to be disposed exceeds $50,000,000, the Company or (as
applicable) that Additional Post-Cyan Obligor shall obtain a resolution of its
Board of Directors approving such exchange and deliver such resolutions to the
Bank; and     (D)   if the Fair Market Value of the Oil and Gas Properties to be
disposed exceeds $5,000,000, at least five Business Days prior to the proposed
date of disposal a revised Projection is delivered to the Bank containing
calculations made by the Company with respect to the financial covenants
contained in Clause 21.23 (Minimum Asset Coverage Ratios) inclusive for the
respective Calculation Period on a Pro Forma Basis as if the relevant
transaction(s) had occurred on the first day of such Calculation Period and such
calculations show that such financial covenants would have been complied with as
of the last day of such Calculation Period.

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  21.18.8   the Company and any Additional Post-Cyan Obligor may lease (as
lessee) or licence (as licensee) real or personal property other than Oil and
Gas Properties, so long as any such lease or licence does not create a
Capitalised Lease Obligation except to the extent permitted by Clause 21.20
(Indebtedness);     21.18.9   the Company and any Additional Post-Cyan Obligor
may sell or discount, in each case without recourse and in the ordinary course
of business, accounts receivable arising in the ordinary course of business, but
only in connection with the compromise or collection thereof and not as part of
any financing transaction;     21.18.10   the Company and any Additional
Post-Cyan Obligor may grant licences, sub-licences, leases or subleases to other
persons not materially interfering with the conduct of its business, in each
case so long as no such grant otherwise affects the Bank’s security interest in
the asset or property subject thereto;     21.18.11   the Company and any
Additional Post-Cyan Obligor may liquidate or otherwise dispose of Cash
Equivalents in the ordinary course of business, in each case for cash at Fair
Market Value; and     21.18.12   the Company and any Additional Post-Cyan
Obligor may dispose of Hydrocarbon Interests in exchange for a commitment of the
transferee to bear a disproportionate share of the costs attributable to the Oil
and Gas Properties to which such Hydrocarbon Interests relate.

    To the extent the Bank waives the provisions of this Clause 21.18 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Clause 21.18 (other than to the Parent or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Security created by the Security
Documents, and the Bank shall execute appropriate releases (including
instructions to the Collateral Agent) in order to effect the foregoing to the
extent requested by (and at the expense of) the Company. For the avoidance of
doubt, Parent’s and the Company’s use of cash and Cash Equivalents to acquire
assets in accordance with this Clause 21.18 shall not constitute a conveyance,
sale, lease or other disposition of property or assets that is subject to the
restrictions set forth in this Clause 21.18.   21.19   Dividends

  21.19.1   Prior to the later of the Cash Collateral Discharge Date and the
date on which all liabilities of the Company under the Secured Hedging
Agreements have been fully discharged, neither the Company nor any Additional
Post-Cyan Obligor will authorise, declare or pay any Dividend while a Default is
continuing without the prior written consent of the Bank.     21.19.2   Except
as provided in Clauses 21.19.3 and 21.19.4, prior to the later of the Cash
Collateral Discharge Date and the date on which all liabilities of the Company
under the Secured Hedging Agreements have been fully discharged, the Parent will
not (subject to this Clause 21.19) authorise, declare or pay any Dividends with
respect to the Parent while a Default is continuing without the prior written
consent of the Bank.     21.19.3   The Parent may pay regularly scheduled
Dividends on its Qualified Preferred Stock pursuant to the terms thereof solely
through the issuance of additional units of such Qualified Preferred Stock (but
not in cash); provided that in lieu of

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      issuing additional units of such Qualified Preferred Stock as Dividends,
the Parent may increase the liquidation preference of the units of Qualified
Preferred Stock in respect of which such Dividends have accrued.     21.19.4  
The Parent may pay regularly scheduled cash Dividends on all outstanding shares
of its Class C Convertible Preferred Stock.

21.20   Indebtedness

  21.20.1   Prior to the Cash Collateral Discharge Date, neither the Company nor
any Additional Post-Cyan Obligor will not create, incur, assume or suffer to
exist any Indebtedness, except for Indebtedness referred to in sub-Clauses (A)
to (M) below (the “Permitted Indebtedness”):

  (A)   Indebtedness incurred pursuant to this Agreement and the other Finance
Documents;     (B)   Existing Indebtedness outstanding on the first Utilisation
Date and listed on Schedule 7 (Existing Indebtedness) (as reduced by any
repayments of principal thereof), plus extensions, renewals or refinancings
thereof (“Refinancing Debt”); provided that:

  (1)   the aggregate principal amount of the Indebtedness to be extended,
renewed or refinanced (“Refinanced Debt”) does not increase from that amount
outstanding at the time of any such extension, renewal or refinancing;     (2)  
the weighted average life to maturity of such Refinancing Debt is greater than
or equal to that of the related Refinanced Debt;     (3)   the final stated
maturity of such Refinancing Debt shall be no earlier than the maturity date
applicable to the related Refinanced Debt; and     (4)   no Refinancing Debt
shall have greater security than the related Refinanced Debt;

  (C)   Indebtedness of the Company and any Additional Post-Cyan Obligor under
Hedging Agreements so long as such Hedging Agreements are entered into in the
course of normal treasury management of the Company or (as applicable) that
Additional Post-Cyan Obligor and are not for speculative purposes;     (D)  
Indebtedness of the Company and any Additional Post-Cyan Obligor evidenced by
Capitalised Lease Obligations and purchase money Indebtedness described in
Clause 21.17.3(F) (Negative Pledge); provided that in no event shall the sum of
the aggregate principal amount of all Capitalised Lease Obligations and purchase
money Indebtedness permitted by this sub-Clause exceed $5,000,000 at any time
outstanding;     (E)   Indebtedness constituting Intercompany Loans to the
extent permitted by Clauses 21.21.1 (Advances, Investments and Loans);

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  (F)   Indebtedness consisting of guarantees by the Company or any Additional
Post-Cyan Obligor of other members of the Group’s Indebtedness and lease and
other contractual obligations permitted under this Agreement, provided that the
Company and each Additional Post-Cyan Obligor shall ensure that, at any time,
the aggregate amount of such guarantees issued by it and outstanding at that
time does not, when aggregated with:

  (1)   the amount of all Intercompany Loans made by the Company or any
Additional Post-Cyan Obligor to other members of the Group outstanding at that
time; and     (2)   the Distributions made by the Company or any Additional
Post-Cyan Obligor in respect of the previous fiscal year,

      exceed the distributable reserves of the Company or (as applicable) that
Additional Post-Cyan Obligor in the previous fiscal year;     (G)   Indebtedness
of the Company and any Additional Post-Cyan Obligor acquired pursuant to an
acquisition of an asset after the date of this Agreement (or Indebtedness
assumed at the time of such acquisition of an asset security such Indebtedness),
provided that:

  (1)   such Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition; and     (2)   such
Indebtedness does not constitute debt for borrowed money, it being understood
and agreed that Capitalised Lease Obligations and purchase money Indebtedness
shall not constitute debt for borrowed money for the purposes of this provision;

  (H)   Indebtedness arising from the honouring by a bank or other financial
institution of a cheque, draft or similar instrument inadvertently (except in
the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business, so long as such Indebtedness is extinguished within
four Business Days of the incurrence thereof;     (I)   Indebtedness of the
Company and any Additional Post-Cyan Obligor with respect to letters of credit,
performance bonds, surety bonds, appeal bonds or customs bonds, or obligations
in respect of letters of credit posted in lieu of, or to secure, any such bonds,
required in the ordinary course of business or in connection with the
enforcement of rights or claims of a member of the Group or in connection with
judgments that do not result in a Default or an Event of Default,        
provided that:

  (1)   the aggregate outstanding amount of all such letters of credit,
performance bonds, surety bonds, appeal bonds, customs bonds and letters of
credit issued in lieu of any such bonds permitted by this sub-Clause shall not
at any time exceed $60,000,000; and     (2)   all Indebtedness under this
sub-Clause shall be unsecured, except as permitted under Clause 21.17 (Negative
Pledge);

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  (J)   Indebtedness of the Company and any Additional Post-Cyan Obligor which
may be deemed to exist in connection with agreements providing for
indemnification, purchase price adjustments and similar obligations in
connection with the acquisition or disposition of assets in accordance with the
requirements of this Agreement, so long as any such obligations are those of the
person making the respective acquisition or sale, and are not guaranteed by any
other person except as permitted by sub-Clause (F);     (K)   Indebtedness
consisting of the financing of insurance premiums;     (L)   Permitted Junior
Debt; and     (M)   so long as no Default or Event of Default then exists or
would result therefrom, additional Indebtedness other than sub-Clauses (A) to
(L) above, of the Company and any Additional Post-Cyan Obligor in an aggregate
principal amount not to exceed $7,500,000 at any time outstanding.

21.21   Advances, Investments and Loans       Prior to the later of the Cash
Collateral Discharge Date and the date on which all liabilities of the Company
under the Secured Hedging Agreements have been fully discharged, neither the
Company nor any Additional Post-Cyan Obligor will, directly or indirectly, lend
money or credit or make advances to any person, or purchase or acquire any
stock, obligations or securities of, or any other Equity Interest in, or make
any capital contribution to, any other person, or purchase or own a futures
contract or otherwise become liable for the purchase or sale of currency or
other commodities at a future date in the nature of a futures contract, or hold
any cash or Cash Equivalents (each of the foregoing an “Investment” and,
collectively, “Investments”), except:

  21.21.1   the Company and any Additional Post-Cyan Obligor may make
Intercompany Loans to other members of the Group provided that the Company and
each Additional Post-Cyan Obligor shall ensure that, at any time, the aggregate
amount of such Intercompany Loans made by it and outstanding at that time does
not, when aggregated with:

  (1)   the amount of all guarantees issued by the Company or any Additional
Post-Cyan Obligor in respect of the obligations of other members of the Group
outstanding at that time; and     (2)   the Distributions made by the Company or
any Additional Post-Cyan Obligor in respect of the previous fiscal year,

      exceed the distributable reserves of the Company or (as applicable) that
Additional Post-Cyan Obligor in respect of the previous fiscal year;     21.21.2
  any member of the Group (other than the Company and any Additional Post-Cyan
Obligor) may make an Intercompany Loan to the Company or any Additional
Post-Cyan Obligor provided that any such loan and all of the rights of the
Parent or its Subsidiary (as applicable) are subordinated to all amounts due to
the Bank from the Obligors under the Finance Documents pursuant to a
subordination agreement in form and substance satisfactory to the Bank (each a
“Subordination Agreement”);

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  21.21.3   the Company and any Additional Post-Cyan Obligor may acquire and
hold accounts receivables owing to any of them, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms of the Parent or such Subsidiary;     21.21.4   subject to
the limitations set forth in Clauses 21.21.1 and 21.21.9 the Company and any
Additional Post-Cyan Obligor may acquire and hold cash and Cash Equivalents;    
21.21.5   the Company and any Additional Post-Cyan Obligor may hold the
Investments held by them on the first Utilisation Date and described in
Schedule 10 (Investments); provided that any additional Investments made with
respect thereto shall be permitted only if permitted under the other provisions
of this Clause 21.21;     21.21.6   the Company and any Additional Post-Cyan
Obligor may acquire and own investments (including debt obligations) received in
connection with the bankruptcy or reorganisation of suppliers and customers and
in good faith settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;     21.21.7
  the Company and any Additional Post-Cyan Obligor may make loans and advances
to their officers, employees and consultants for moving, relocation and travel
expenses and other similar expenditures, in each case in the ordinary course of
business in an aggregate amount not to exceed $2,500,000 at any time (determined
without regard to any write-downs or write-offs of such loans and advances);    
21.21.8   the Company and any Additional Post-Cyan Obligor may acquire and hold
obligations of their officers, employees and consultants in connection with such
officers’, employees’ and consultants’ acquisition of shares of Parent Common
Stock (so long as no cash is actually advanced by any member of the Group in
connection with the acquisition of such obligations);     21.21.9   subject to
Clause 21.27 (Limitation on Commodity Hedging), the Company and any Additional
Post-Cyan Obligor may enter into Hedging Agreements to the extent permitted by
21.20.1(C)(Indebtedness);     21.21.10   the Company and any Additional
Post-Cyan Obligor may own the Equity Interests of its Subsidiaries created or
acquired in accordance with the terms of this Agreement (so long as all amounts
invested in such Subsidiaries are independently justified under another
provision of this Clause 21.21);     21.21.11   Contingent Obligations permitted
by Clause 21.20 (Indebtedness), to the extent constituting Investments, shall be
permitted;     21.21.12   the Company and any Additional Post-Cyan Obligor may
acquire and hold non-cash consideration issued by the purchaser of assets in
connection with a sale of such assets to the extent permitted by Clause 21.18.4
(Consolidation, Merger, Purchase or Sale of Assets etc.); and     21.21.13  
Permitted Acquisitions shall be permitted in accordance with the requirements of
Clause 21.14 (Permitted Acquisitions).

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21.22   Transactions with Affiliates       Prior to the Cash Collateral
Discharge Date, the Parent will not, and will not permit any of its Subsidiaries
to, enter into any transaction or series of related transactions with any
Affiliate of the Parent or any of its Subsidiaries, other than in the ordinary
course of business and on terms and conditions substantially as favourable to
the Parent or such Subsidiary as would reasonably be obtained by the Parent or
such Subsidiary at that time in a comparable arm’s-length transaction with a
person other than an Affiliate, except that the following in any event shall be
permitted:

  21.22.1   Dividends may be paid to the extent not prohibited by Clause 21.19
(Dividends);     21.22.2   loans may be made and other transactions may be
entered into by the Parent and its Subsidiaries to the extent not prohibited by
Clauses 21.18 (Consolidation, Merger, Purchase or Sale of Assets etc.), 21.20
(Indebtedness) and 21.21 (Advances, Investments and Loans);     21.22.3  
customary fees, indemnities and reimbursements may be paid to non-officer
directors or managers of the Parent and its Subsidiaries;     21.22.4   members
of the Group may enter into, and may make payments under, employment agreements,
employee benefits plans, stock compensation plans, indemnification provisions
and other similar compensatory arrangements with officers, employees, managers
and directors of members of the Group in the ordinary course of business; and  
  21.22.5   members of the Group may pay management fees, licensing fees and
similar fees to other members of the Group.

21.23   Minimum Asset Coverage Ratios

  21.23.1   Prior to the Cash Collateral Discharge Date, the Company will not
permit the PV-10 UK Proved Coverage Ratio as of the last day of any fiscal
quarter of the Parent ending after the first Utilisation Date to be less than
3.00:1.00.     21.23.2   Prior to the Cash Collateral Discharge Date, the
Company will not permit the PV-10 UK PDP Coverage Ratio as of the last day of
any fiscal quarter ending:

  (A)   after the first Utilisation Date and on or prior to 31 December 2011, to
be less than 1.10:1.00; and     (B)   after 31 December 2011, to be less than
1.50:1.00.

21.24   Issuance of Equity Interests       Prior to the Cash Collateral
Discharge Date, neither the Company nor any Additional Post-Cyan Obligor will
issue any capital stock or other Equity Interests (including by way of sales of
treasury stock) or any options or warrants to purchase, or securities
convertible into, capital stock or other Equity Interests except with the prior
consent of the Bank unless the issuance will not result in a Change of Control
and the Equity Interests are subject to Security in favour of the Collateral
Agent.

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21.25   Business

  21.25.1   The Parent will not, and will not permit any of its Subsidiaries to,
engage directly or indirectly in any business other than the Oil and Gas
Business.     21.25.2   Prior to the Cash Collateral Discharge Date,
notwithstanding the foregoing or anything else in this Agreement to the
contrary, the Parent will not:

  (A)   have any material liabilities other than:

  (1)   liabilities arising under the Finance Documents, any Class C Convertible
Preferred Stock and any Junior Financing;     (2)   other liabilities which are
permitted by this Agreement and are incurred in connection with the financing
and operation of the Parent and its Subsidiaries’ businesses; and     (3)  
Taxes and other liabilities arising under any applicable law; or

  (B)   own any material assets or engage in any operations or business (other
than:

  (1)   its direct or indirect ownership of its Subsidiaries; and     (2)  
investments permitted under 21.21 (Advances, Investments and Loans)).

  21.25.3   Prior to the Cash Collateral Discharge Date, the Company and each
Additional Post-Cyan Obligor will ensure that Endeavour North Sea Limited will
be dormant and will not own any material assets or engage in any operations or
business or incur any material liabilities other than its liabilities as at the
date of this Agreement and any Taxes and other liabilities arising under
applicable law.

21.26   Limitation on Creation of Subsidiaries

  21.26.1   Subject to Clause 21.26.2 below, neither the Company nor any
Additional Post-Cyan Obligor will, and will not permit any of its Subsidiaries
to, establish, create or acquire after the first Utilisation Date and prior to
the Cash Collateral Discharge Date, any Subsidiary.     21.26.2   The Company,
each Additional Post-Cyan Obligor and their respective Subsidiaries may
establish, create and, to the extent permitted by this Agreement, acquire
Subsidiaries so long as, in each case:

  (A)   at least ten days’ prior written thereof is given to the Bank (or such
shorter period of time as is acceptable to the Bank in any given case); and    
(B)   any capital stock issued by the new or (as applicable) newly-acquired
Subsidiary (held by the Company, any Additional Post-Cyan Obligor or their
respective Subsidiaries) is promptly pledged as Security in favour of the
Collateral Agent.

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21.27   Limitation on Commodity Hedging

  21.27.1   Without prejudice to Clauses 21.20.1(C) (Indebtedness) and 21.21.8
(Advances, Investments and Loans), the Parent shall not and shall ensure that no
other member of the Group shall, enter into any Contingent Hedge unless such
Contingent Hedge is entered into in accordance with Clause 21.27.2 below.    
21.27.2   Any member of the Group may enter into any Commodity Hedging Agreement
for the purposes of hedging its exposure to fluctuations in Hydrocarbon prices
provided that upon execution of any Contingent Hedge the notional volume of
Hydrocarbons from 2P Reserves located in the North Sea which are hedged pursuant
to such Contingent Hedge (when aggregated with the notional volume of
Hydrocarbons from 2P Reserves located in the North Sea which are hedged pursuant
to any other Contingent Hedges at that time) shall not at any time exceed 70 per
cent. of the production of Hydrocarbons from 2P Reserves located in the North
Sea that are projected in the then most recent Reserves Report delivered to the
Bank under this Agreement.

22.   EVENTS OF DEFAULT       Each of the events or circumstances set out in
this Clause 22 is an Event of Default (other than Clause 22.14 (Acceleration)).
  22.1   Payments

  22.1.1   Any Post-Cyan Obligor:

  (A)   defaults in the payment when due of any principal under any Finance
Document; or     (B)   defaults, and such default continues unremedied for three
or more Business Days, in a payment when due of any interest or any Fees or any
other amounts owing hereunder or under any other Finance Document.

  22.1.2   No Event of Default shall occur under Clause 22.1.1(A) if the Company
fails to pay an amount due to the Bank under Clause 5.7 (Demands under Letters
of Credit) solely as a result of a technical or administrative failure outside
of the control of the Company and any other member of the Group and such payment
is made no later than 8 Business Days following a demand made under Clause 5.7
(Demands under Letters of Credit).

22.2   Representations, etc.       Any representation, warranty or statement
made or deemed made by any Post-Cyan Obligor or the Company Shareholder herein
or in any other Finance Document or in any certificate delivered to the Bank
pursuant hereto or thereto is or proves to be untrue in any material respect on
the date as of which made or deemed made.   22.3   Covenants       Any Post-Cyan
Obligor:

  22.3.1   defaults in the due performance or observance by it of any term,
covenant or agreement contained in Clauses 21.1.1, 21.1.4 and 21.1.6
(Information

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      Covenants), Clause 21.4.1 (Maintenance of Property Insurance), Clause 21.5
(Existence; Franchises, Oil and Gas Properties), Clause 21.12 (Ownership of
Subsidiaries, etc.), Clause 21.14 (Permitted Acquisitions) and Clause 21.17
(Negative Pledge) to Clause 21.27 (Limitation on Commodity Hedging); or    
22.3.2   defaults in the due performance or observance by it of any other term,
covenant or agreement contained in any Finance Document (other than those set
forth in Clauses 22.1 and 22.2 (Events of Default)) and such default shall
continue unremedied for a period of 30 days following the earlier of:

  (A)   any Post-Cyan Obligor’s actual knowledge of such default; and     (B)  
written notice from the Bank specifying such default.

22.4   Default Under Other Agreements

  22.4.1   Prior to the Cash Collateral Discharge Date, any member of the Group:

  (A)   defaults in any payment of any Indebtedness (other than the Obligations)
beyond the period of grace, if any, provided in an instrument or agreement under
which such Indebtedness was created; or     (B)   defaults in the observance or
performance of any agreement or condition relating to any Indebtedness (other
than the Obligations) 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, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause (determined without regard to whether
any notice is required), any such Indebtedness to become due prior to its stated
maturity; or

  22.4.2   Prior to the Cash Collateral Discharge Date, any Indebtedness (other
than the Obligations) of any Post-Cyan Obligor is declared to be (or becomes)
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 22.4 unless the
aggregate principal amount of all Indebtedness as described in preceding Clauses
22.4.1(A) 22.4.1(A)and 22.4.1(B) is at least $10,000,000.

22.5   Insolvency

22.5.1

  (A)   Any Post-Cyan Obligor or Relevant Holding Company commences a voluntary
case concerning itself under Title 11 of the United States Code entitled
“Bankruptcy,” as now or hereafter in effect, or any successor thereto (the
“Bankruptcy Code”); or     (B)   an involuntary case is commenced against a
Post-Cyan Obligor or a Relevant Holding Company, 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 the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of any Post-Cyan
Obligor or any Relevant

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      Holding Company, to operate all or any substantial portion of the business
of such Post-Cyan Obligor or Relevant Holding Company.

  22.5.2   Without prejudice to Clause 22.5.1, any Post-Cyan Obligor or Relevant
Holding Company:

  (A)   is, or is deemed for the purposes of any law to be, unable to pay its
debts as they fall due or is insolvent;     (B)   admits its inability to pay
its debts as they fall due;     (C)   suspends making payments on any of its
debts or announces an intention to do so;     (D)   by reason of actual or
anticipated financial difficulties, begins negotiations with any creditor for
the rescheduling of any of its indebtedness; or     (E)   has a moratorium is
declared in respect of any of its indebtedness.

  22.5.3   Except as provided in Clause 22.5.1 or 22.5.2 any of the following
occurs in respect of an Post-Cyan Obligor or a Relevant Holding Company:

  (A)   any step is taken with a view to a composition, assignment or similar
arrangement with any of its creditors;     (B)   a meeting of it is convened for
the purpose of considering any resolution for (or to petition for) its
winding-up, administration, or dissolution or any such resolution is passed;    
(C)   any person presents a petition, files an application or takes any other
analogous steps for its winding-up, administration, or dissolution;     (D)   an
order for its winding-up, administration, or dissolution is made;     (E)   any
Insolvency Officer is appointed in respect of it or any of its assets; or    
(F)   any other analogous step or procedure is taken in any jurisdiction.

  22.5.4   Clause 22.5.3 does not apply to:

  (A)   a petition for winding-up presented by a creditor which is being
contested in good faith and with due diligence and is discharged or struck out
within 14 days; or     (B)   any petition, action, proceeding or step which is
demonstrated by the Company to the reasonable satisfaction of the Bank to be
frivolous, vexatious or otherwise an abuse of process of court.

22.6   Security Documents

  22.6.1   Any of the Security Documents ceases to be in full force and effect,
or ceases to give the Bank or (as applicable) the Collateral Agent, the
Security, rights, powers and privileges purported to be created thereby
(including, without limitation, a perfected security interest in, and Security
on, all of the Collateral (other than any

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      immaterial portion thereof), in favour of the Bank or (as applicable) the
Collateral Agent, subject to no other Security (except Permitted Security).    
22.6.2   Any Post-Cyan Obligor or the Company Shareholder defaults 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.     22.6.3   Upon and
following the Cash Collateral Discharge Date (but subject at all times to Clause
7.4) this Clause 22.6 shall apply only to the Cash Collateral Agreement.

22.7   Creditors’ process       Any expropriation, attachment, sequestration,
distress or execution affects any asset or assets of any Post-Cyan Obligor or
the Company Shareholder.   22.8   Repudiation       A Post-Cyan Obligor or the
Company Shareholder rescinds or repudiates a Finance Document or evidences an
intention to rescind or repudiate a Finance Document.   22.9   Judgments      
One or more judgments or decrees is entered against the Parent or any Subsidiary
of the Parent involving in the aggregate for the Parent and its Subsidiaries a
liability (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, and the aggregate amount of all
such judgments equals or exceeds $7,500,000.   22.10   Nationalisation      
Prior to the Cash Collateral Discharge Date, all or any part of the interest of
the Company or any Additional Post-Cyan Obligor in any Oil and Gas Property (or
any Hydrocarbons or revenues or other monies arising in respect of it) is:

  22.10.1   nationalised, expropriated, compulsorily acquired or seized by any
Governmental Authority; or     22.10.2   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.

22.11   Project Documents

  22.11.1   Prior to the Cash Collateral Discharge Date, all or any part of any
Project Document to which the Company or any Additional Post-Cyan Obligor is a
party is not, or ceases to be, a legal, valid and binding obligation of any
person party thereto in any circumstance which is reasonably likely to have a
Material Adverse Effect.

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  22.11.2   Prior to the Cash Collateral Discharge Date, any party to any
Project Document to which the Company or any Additional Post-Cyan Obligor is a
party defaults under such Project Document in the circumstances which are
reasonably likely to result in a Material Adverse Effect.     22.11.3   Prior to
the Cash Collateral Discharge Date, all or any part of any Project Document to
which the Company or any Additional Post-Cyan Obligor is a party is suspended,
terminated or revoked in circumstances which are reasonably likely to result in
a Material Adverse Effect.

22.12   Change of Control       A Change of Control occurs.       22.13 Cash
Collateral       The Company fails to pay an amount of Cash Collateral in
accordance with Clause 6 (Cash Collateral).   22.14   Acceleration       If any
Event of Default occurs and while the same is continuing, the Bank may, by
written notice to the Company, take any or all of the following actions, without
prejudice to the rights of the Bank to enforce its claims against any Post-Cyan
Obligor (provided that, if an Event of Default specified in Clause 22.5
(Insolvency) shall occur with respect to the Company, the result which would
occur upon the giving of written notice by the Bank as specified in Clauses
22.14.1 and 22.14.2 below, shall occur automatically without the giving of any
such notice):

  22.14.1   declare the Commitment terminated, whereupon the Commitment shall
forthwith terminate immediately without any other notice of any kind;    
22.14.2   declare the principal of and any accrued interest in respect of all
Obligations owing under the Finance Documents 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 Post-Cyan Obligor;  
  22.14.3   declare that full cash cover in respect of each Letter of Credit is
immediately due and payable whereupon it shall become immediate due and payable;
    22.14.4   enforce all Security and security interests created pursuant to
the Security Documents; and     22.14.5   pay an amount up to the face value of
any Letter of Credit to the beneficiary under such Letter of Credit.

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SIGNATURE PAGES
The Company

             
SIGNED BY
    )      
on behalf of
    )      
ENDEAVOUR ENERGY
    )     CATHERINE STUBBS
UK LIMITED
    )      
 
          Name: Catherine Stubbs
 
          Title: Authorised Signatory
 
           
The Original Guarantors
           
SIGNED BY
    )      
on behalf of
    )      
ENDEAVOUR INTERNATIONAL
    )     CATHERINE STUBBS
CORPORATION
    )    
 
          Name: Catherine Stubbs
 
          Title: Authorised Signatory
SIGNED BY
    )    
on behalf of
    )      
ENDEAVOUR ENERGY NORTH
    )     CATHERINE STUBBS
SEA LLC
    )      
 
          Name: Catherine Stubbs
 
          Title: Authorised Signatory and Director
 
           
SIGNED BY
    )      
on behalf of
    )      
ENDEAVOUR ENERGY NORTH
    )     CATHERINE STUBBS
SEA L.P.
    )    
 
          Name: Catherine Stubbs
 
          Title: Authorised Signatory and Director
SIGNED BY
    )    
on behalf of
    )      
ENDEAVOUR OPERATING
    )     CATHERINE STUBBS
CORPORATION
    )      
 
          Name: Catherine Stubbs
 
          Title: Authorised Signatory
 
           
SIGNED BY
    )      
as attorney for
    )      
ENDEAVOUR INTERNATIONAL
    )     CATHERINE STUBBS
HOLDING B.V.
    )      
under a power of attorney
    )     Name: Catherine Stubbs
dated 22 June 2011
    )     Title:Attorney for Endeavour International Holding B.V.

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

 

             
SIGNED BY
    )      
as attorney for
    )      
ENDEAVOUR ENERGY
    )     CATHERINE STUBBS
NETHERLANDS B.V.
    )      
under a power of attorney
    )     Name: Catherine Stubbs
dated 22 June 2011
    )     Title:Attorney for Endeavour Energy Netherlands B.V.
 
           
SIGNED BY
    )      
on behalf of
    )      
ENDEAVOUR ENERGY NEW
    )     CATHERINE STUBBS
VENTURES INC.
    )      
 
          Name: Catherine Stubbs
 
          Title: Authorised Signatory
 
           
SIGNED BY
    )      
on behalf of
    )     CATHERINE STUBBS
END MANAGEMENT COMPANY
    )      
 
          Name: Catherine Stubbs
 
          Title: Authorised Signatory
 
           
The Bank
           
SIGNED BY
    )      
on behalf of
    )      
COMMONWEALTH BANK OF
    )     JONATHAN VERLANDER
AUSTRALIA
    )    
 
          Name: Jonathan Verlander
 
          Title: Head of Oil & Gas, Europe